ITO 13(2)(2), MUMBAI V. KUMARPAL P. GANDHI, MUMBAI

ITA 5798/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2285 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 54F; 142(1); 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5798/MUM/2012 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD-13(2)(2), R. NO.477, 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. SHRI KUMARPAL P. GANDHI, FLAT NO.3804, 38 TH FLOOR, SHREEPATI ARCADE, A-WING, A.K.MARG, NANA CHOWK, MUMBAI-400036 ( / REVENUE) ( ! ' /ASSESSEE) PAN. NO. AADPG0200D # $ % ' & / DATE OF HEARING : 03/12/2015 % ' & / DATE OF ORDER: 07/12/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 24/07/2012 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE ONLY GROUND AGITATED IN THIS APPEAL BY THE ! / REVENUE BY MOHAMMED RIZWAN ! ' ! / ASSESSEE BY SHRI SURESH PATNI SHRI KUMARPAL P GANDHI ITA NO.5798/MUM/2012 2 REVENUE PERTAINS TO HOLDING THAT THE ASSESSEE WAS E NTITLED TO EXEMPTION U/S 54F OF THE INCOME TAX ACT, 1961 (HERE INAFTER THE ACT) AMOUNTING TO RS.34,62,522/- WITHOUT APPREC IATING THE FACT THAT THE PURCHASE AND CANCELLATION TRANSAC TIONS CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE WITH M/S DEVENDRA ASSOCIATES, WHEREIN, THE ASSESSEE IS A PAR TNER, IS A SHAM TRANSACTION. 2. DURING HEARING, THE LD. DR, SHRI MOHAMMAD RIZWAN , ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED ABOVE. ON THE OTHER HAND, SHRI SURESH PATNI, LD. C OUNSEL FOR THE ASSESSEE, ADVANCED ARGUMENTS IN SUPPORT OF THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRI EF, ARE THAT THE ASSESSEE, AN INDIVIDUAL AND ALSO PARTNER IN THE FIRM NAMELY M/S DEVENDRA ASSOCIATES, IS ENGAGED INTEREST HE BUSINESS OF BUILDER AND DEVELOPER, DECLARED INCOME OF RS.2,47,290/- IN HIS RETURN FILED ON 05/02/2010, WH ICH WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF THE A SSESSEE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICE U/S 143(2) WAS SERVED UPON THE ASSESSEE ALONG WITH SUBSEQUENT NOTICE U/S 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE. THE ASSESSEE ATTE NDED THE PROCEEDINGS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED INCOME FROM M/S RED ROSE ENTERPRISE, M/S D EVENDRA ASSOCIATES, M/S SAMYAK FAB, CAPITAL GAIN AND ALSO I NCOME FROM OTHER SOURCES. DURING THE YEAR UNDER CONSIDER ATION, THE SHRI KUMARPAL P GANDHI ITA NO.5798/MUM/2012 3 ASSESSEE SOLD NON-AGRICULTURE LAND FOR A CONSIDERAT ION OF RS.40 LAKH, WHICH WAS EARLIER PURCHASED ON 15/09/20 05 AT THE COST OF RS.4,58,980/- (INDEXED COST RS.5,37,478 /-) RESULTING INTO LONG TERM CAPITAL GAIN OF RS.34,62,5 22/-. THE ASSESSEE INVESTED THE SALE PROCEEDS OF RS.40 LAKH O F PURCHASE OF NEW FLAT ON 15/12/2009, WHEREAS, THE SALE OF NON - AGRICULTURE LAND TOOK PLACE ON 21/12/2008, THUS, TH E CAPITAL GAINS ACCRUED TO THE ASSESSEE ON THE DATE OF SALE. THE STAND OF THE ASSESSING OFFICER AS WELL AS OF THE LD. DR IS THAT SINCE, AS PER THE PROVISIONS OF SECTION 54F OF THE ACT, IF TH E AMOUNT IS NOT UTILIZED FOR PURCHASE/CONSTRUCTION OF NEW HOUSE , TILL THE DATE OF FILING OF RETURN, THEN THE AMOUNT SHOULD BE DEPOSITED IN CAPITAL GAIN DEPOSIT ACCOUNTS SCHEME AND SINCE THE ASSESSEE HAD INVESTED THE SALE PROCEED FOR THE PURC HASE OF THE NEW FLAT ONLY ON 15/12/2009, THEREFORE, THE ASSESSE E WAS ASKED AS TO WHY THE CLAIMED CAPITAL GAIN OF RS.34,6 2,522/- SHOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE AS PER PROVISIONS OF SECTION 54(II)/54F OF THE ACT. THE AS SESSEE EXPLAINED THAT HE MADE THE INVESTMENT OF RS.40 LAKH VIDE REGISTERED DEED DATED 15/12/2009 AND THE SOURCE OF THE INVESTMENT WAS SALE PROCEED OF RS. 40 LAKH, RECEIVE D ON SALE OF AGRICULTURE LAND ON 21/12/2008 AND FURTHER THE SALE CONSIDERATION WAS UTILIZED IN NEW RESIDENTIAL HOUSE AND THE ASSESSEE FURNISHED THE DETAILS OF RETURN OF INCOME ON 30/09/2009, THEREFORE, THE SAME WAS NOT REQUIRED TO BE DEPOSITED IN CAPITAL GAIN ACCOUNT SCHEME. HOWEVER, NOT SHRI KUMARPAL P GANDHI ITA NO.5798/MUM/2012 4 SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE CLAIMED EXEMPTION U/S 54F WAS DENIED TO THE ASSESSEE. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS), THE FACTUAL MATRIX WAS CONSIDERED AN D BY FOLLOWING THE DECISION IN NIPUN MEHROTRA VS ACIT (2 008) 110 ITD 520 (BANGLORE), CIT VS RAJESH KUMAR JALAN (2006 ) 286 ITR 274 (GUWAHATI), CIT VS PREM NARAYAN BHATIA (195 TAXMAN 152) (P & H) AND VARIOUS OTHER DECISIONS, THE CLAIM ED EXEMPTION WAS ALLOWED TO THE ASSESSEE. NOW THE REVE NUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THE MAIN OBJECTION OF T HE DEPARTMENT IS THAT WHILE COMING TO A PARTICULAR CON CLUSION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NO T APPRECIATE THAT DUE DATE OF FILING OF RETURN IS THE DATE AS PER PROVISIONS OF SECTION 139(1) AND NOT SECTION 139(4) OF THE ACT. WE FIND THAT THIS ISSUE HAS BEEN DELIBERATED UPON B Y HONBLE GUWAHATI HIGH COURT IN CIT VS RAJESH KUMAR JALAN (S UPRA) BY HOLDING THAT SECTION 139 MENTIONED WITH RESPECT TO SECTION 54F(4) SHALL INCLUDE ALL SUB-SECTIONS OF SECTION 13 9 OF THE ACT. THUS, THIS FACT IS NOT IN DISPUTE EVEN BY THE LD. A SSESSING OFFICER THAT SALE CONSIDERATION WAS UTILIZED FOR PU RCHASE OF RESIDENTIAL PROPERTY BEFORE FILING OF RETURN U/S 13 9(4) OF THE SHRI KUMARPAL P GANDHI ITA NO.5798/MUM/2012 5 ACT. IN THE PRESENT CASE, THE DATE OF FILLING OF RE TURN OF INCOME U/S 139(4) OF THE ACT WAS 31/03/2010, WHEREAS, THE ASSESSEE FILED HIS RETURN ON 05/02/2010. THE ASSESSEE UTILIZ ED THE SALE PROCEEDS BY INVESTING IN THE RESIDENTIAL FLAT ON 15 /12/2009, THEREFORE, WE FIND THAT SECTION 54(2) WAS SUBSTITUT ED BY FINANCE ACT, 1987, WHICH HAS BEEN ELABORATED IN CIR CULAR NO.495 DATED 22/10/1987. THE DECISION FROM HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS PREM NARAYAN BHATIA (195 TAXMAN 152) SUPPORTS THE CASE OF THE ASSESSEE. UNDI SPUTEDLY, THE ASSESSEE WITHIN ONE YEAR AFTER THE DATE OF TRAN SFER, RESULTING IN CAPITAL GAINS, INVESTED THE CLAIMED SA LE PROCEEDS OF RS.40 LAKH IN PURCHASE OF THE FLAT, THUS, THE DE CISION FROM HONBLE GUWAHATI HIGH COURT IN RAJESH KUMAR JALAN ( SUPRA) COMES TO THE RESCUE OF THE ASSESSEE, BECAUSE, THE A SSESSEE UTILIZED THE SALE PROCEEDS AND ACQUIRED NEW ASSET B EFORE FILING THE RETURN U/S 139 (4) OF THE ACT. THE REQUIREMENT OF SECTION 54F IS THAT THE ASSESSEE HAS UTILIZED THE AMOUNT/SA LE CONSIDERATION FOR ACQUIRING NEW ASSET BEFORE FURNIS HING OF RETURN U/S 139 AND SINCE NO DISCRIMINATION HAS BEEN MADE U/S 139(1) OR 139(4) WITH RESPECT TO SECTION 54F OF THE ACT, THEREFORE, WE FIND MERIT IN THE CONTENTION OF THE A SSESSEE. 2.4. BY THE FINANCE ACT, 2000, A NEW PROVISO HAS B EEN SUBSTITUTED (W.E.F.01/04/2001). THE SCOPE AND EFFEC T OF THE SUBSTITUTION HAVE BEEN ELABORATED IN DEPARTMENTAL C IRCULAR NO.794 DATED 09/08/2000. THE PROVISIONS OF SECTION 54F OF THE ACT SPECIFICALLY DEAL WITH THE SITUATION, WHERE THE ASSESSEE SHRI KUMARPAL P GANDHI ITA NO.5798/MUM/2012 6 IN ORDER TO SAVE HIMSELF FROM PAYMENT OF TAX OF CAP ITAL GAINS DECIDES TO EITHER PURCHASE A HOUSE OR CONSTRUCT A H OUSE WITHIN THE SPECIFIED PERIOD AND IF HE FAILS TO DO S O, THE STATUTE PROVIDES AS TO WHEN THE CAPITAL GAINS ARE TO BE TRE ATED AS HAVING ARISEN. THE RATIO LAID DOWN IN CIT VS SARDA R MAL KOTHARI (2008) 302 ITR 286 (MADRAS), CIT VS S UDAY KUMAR (2012) 345 ITR 389 (KARNATAKA), CIT VS JAWAHAR BHATTACHARYAJI (2012) 342 ITR 74 (GUWAHATI ) AND CI T VS GITA DUGGAL 357 ITR 153 (DEL.), CIT VS P R SEHSHADRI 329 ITR 377 (KARN.), CIT VS RAJIV SHUKLA 334 ITR 138(DEL.), CIT VS ASHOK KUMAR RALLHAN 360 ITR 575 (DEL.) SUPPORTS OUR VIEW. THERE IS CATEGORICAL FINDING IN THE IMPUGNED ORDER THAT THE ASSESSEE SOLD THE ASSESSEE ON 251/12/2008 AND UTILIZED THE S AME FOR PURCHASE OF NEW ASSET ON 15/12/2009 I.E. BEFORE DAT E OF FURNISHING OF RETURN OF INCOME U/S 139(4) OF THE AC T (WHICH WAS FILED ON 05/02/2010), THEREFORE, WE FIND NO INF IRMITY, IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TA X (APPEALS). IT IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 03/12/2015 SD/- SD/- ( RAJENDRA ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER # $ MUMBAI; ( DATED : 07/12/2015 SHRI KUMARPAL P GANDHI ITA NO.5798/MUM/2012 7 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 # 1' ( *+ ) / THE CIT, MUMBAI. 4. 0 0 # 1' / CIT(A)- , MUMBAI 5. 34 .' , 0 *+& * 5 , # $ / DR, ITAT, MUMBAI 6. 6 7$ / GUARD FILE. ! / BY ORDER, /3+' .' //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI