Anita Miglani, Ghaziabad V. DCIT, Ghaziabad

ITA 5828/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5110 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VANSHIKA TANEJA
• Keywords: Sale consideration of property below Jantri Value; Deduction for capital gain; Capital asset; Benefit of exemption; Capital Gains
• Section: 50C; 54F; 205; 48; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI DR. B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO.5828DEL/2016 ASSESSMENT YEAR 2009-10 ANITA MIGLANI, KJ-2, KAVI NAGAR, GHAZIABAD. V. DCIT, CENTRAL CIRCLE, GHAZIABAD. TAN/PAN: AAVPM0623N (APPELLANT) (RESPONDENT) APPELLANT BY: MS. VANSHIKA TANEJA, ADV. RESPONDENT BY: SHRI AMIT JAIN, SR.D.R. DATE OF HEARING: 10 02 2020 DATE OF PRONOUNCEMENT: 17 02 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 20.10.2016, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-IV, KANPUR FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3)/153A FOR TH E ASSESSMENT YEAR 2009-10. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED TAXATION OF LONG TERM CAPIT AL GAIN, WHICH HAS BEEN ENHANCED BY THE LD. CIT(A) TO RS.64, 07,515/- IN PLACE OF RS.30,17,456/- ON ACCOUNT OF INVESTMENT MADE IN PURCHASE OF NEW RESIDENTIAL HOUSE AS PROVIDED U/S. 54F(1)(A). 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT HERE IN THIS CASE, ORIGINAL ASSESSMENT WAS COMPLETE D U/S.143 (3) BY DETERMINING THE TOTAL INCOME OF RS.38,35,743 /- AFTER I.T.A. NO.5828/DEL/2016 2 MAKING FOLLOWING TWO ADDITIONS / DISALLOWANCES: 1. DISALLOWANCE OF CLAIM U/S.54F OF THE ACT - RS.30,17,056 2. DISALLOWANCE OF CLAIM OF INTEREST RS.18,544 RS.30,35,600 3. IN THE FIRST APPEAL, THE LD. CIT (A) HAS NOT ONL Y DISMISSED THE APPEAL VIDE ORDER DATED 29.03.2013 BUT HAS FURT HER ENHANCED THE DISALLOWANCE. THEREAFTER, ASSESSEE HAD FILED FURTHER APPEAL BEFORE THE ITAT; AND NOW THE ITAT VI DE ORDER DATED 18.11.2019 HAS DELETED THE SAID ADDITION AS W ELL AS ENHANCEMENT MADE BY THE LD. CIT (A). EXACTLY SIMILA R ADDITION HAS BEEN MADE IN THE IMPUGNED PROCEEDINGS PASSED U/S. 153A, THEREFORE, THE IMPUGNED ADDITION CANNOT BE SUSTAINED AS SAME STANDS DELETED BY THE TRIBUNAL. 4. LD. DR ALSO ACCEPTED THAT THIS ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE. 5. AFTER CONSIDERING THE AFORESAID SUBMISSION AND O N PERUSAL OF THE MATERIAL PLACED ON RECORD, WE FIND T HAT THE TRIBUNAL IN THE FIRST ROUND OF APPEAL, THAT IS, IN THE ORIGINAL ASSESSMENT PROCEEDINGS AGAINST THE APPELLATE ORDER DATED 29.03.2016 PASSED BY LD. CIT (A)-4 HAS CONSIDERED T HE ISSUE IN DETAIL AND HAS DELETED THE ADDITION. THE RELEVAN T OBSERVATION AND FINDING OF THE TRIBUNAL IN THIS REG ARD READS AS UNDER: 5. THE LD. AR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE ALONG WITH HER HUSBAND SOLD TWO PROPERTIES (EACH HAVING 1/2 SHARE) AND THE SALE PRO CEEDS WERE I.T.A. NO.5828/DEL/2016 3 INVESTED IN THE PURCHASE OF RESIDENTIAL HOUSE. THE PROPERTIES WERE SOLD FOR A TOTAL VALUE OF RS.2,60,61,000/- WHILE TH E STAMP DUTY PAID ON A TOTAL VALUE OF RS.4,71,91,000/-. THE CAPITAL G AIN ON THE SALE OF THE PROPERTY WAS CLAIMED AS EXEMPT BY THE ASSESSEE IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 54F(1)(B) OF THE AC T. THE ASSESSING OFFICER WHILE NOT DISPUTING THE CLAIM OF THE ASSESS EE FOR EXEMPTION U/S 54F(1)(B) OF THE ACT IN RESPECT OF INVESTMENT OF LO NG TERM CAPITAL GAIN HAS CALCULATED AND WORKED OUT THE ADDITION OF RS.30 ,17,456/- TO THE INCOME AS PER WORKING CONSIDERING THE FULL VALUE OF CONSIDERATION AS PER SECTION 50C WHILE DETERMINING EXEMPTION. THE AS SESSEE FILED APPEAL BEFORE THE CIT(A), GHAZIABAD. THE LD. AR FUR THER SUBMITTED THAT PENDING THE DISPOSAL OF THE APPEAL FILED BEFOR E THE CIT(A), GHAZIABAD, A SEARCH WAS CONDUCTED ON 19.02.2013 BY THE DEPARTMENT AT THE BUSINESS PREMISES OF THE COMPANY AND ALSO AT THE RESIDENCES OF THE DIRECTORS. AS A RESULT OF WHICH T HE CASES WERE CENTRALIZED WITH THE ACIT, AND LIKEWISE, THE APPEAL WHICH WAS PENDING WITH CIT(A), GHAZIABAD WAS TRANSFERRED TO T HE CIT(A), KANPUR. THE CIT(A), KANPUR VIDE ORDER DATED 29.03.2 016 WHEREBY THE CAPITAL GAIN ASSESSED BY THE ASSESSING OFFICER AT R S.30,17,056/- WAS ENHANCED TO THE RS.64,07,515/- AS PER CALCULATIONS GIVEN IN THE ORDER. THE CIT(A) HELD THAT NO EXEMPTION WOULD BE AVAILABL E SINCE THE ASSESSEE HAS SUFFERED CAPITAL LOSS, EVEN THOUGH CAP ITAL GAIN IS BEING CHARGED TO TAX AFTER APPLICATION OF SECTION 50C OF THE ACT. THE ADDITION OF LONG TERM CAPITAL GAIN WAS ENHANCED BY THE CIT(A ), KANPUR FROM THE ASSESSED LONG TERM CAPITAL GAIN OF RS.30,17,456/- T O RS.64,07,515/-. THE LD. AR SUBMITTED THAT THE ISSUE UNDER CONSIDERATION IS RELATING TO WORKING ADOPTED FOR CA LCULATING THE BENEFIT OF EXEMPTION AVAILABLE TO THE ASSESSEE UNDER SECTIO N 54F(1)(B) OF THE ACT. THE ONLY DISPUTE WITH THE ASSESSING OFFICER IS WITH THE WORKING OF THE EXEMPTION AS CLAIMED U/S 54 OF THE ACT. THE ASS ESSEE CALCULATED EXEMPTION U/S 54 FOR THE INVESTMENT MADE BY THE ADO PTING THE FIGURE OF ACTUAL SALE CONSIDERATION RECEIVED AND THE LEARN ED ASSESSING I.T.A. NO.5828/DEL/2016 4 OFFICER CALCULATED THE EXEMPTION U/S 54 OF THE INVE STMENT MADE BY ADOPTING THE FIGURE OF THE SALE CONSIDERATION BY IN VOKING SECTION 50C OF THE ACT. THE CIT(A) HAS MISDIRECTED AND ENHANCED THE ADDITION. THE INVESTMENT MADE IN THE PURCHASE OF NEW RESIDENTIAL HOUSE, THE ESSENTIAL CRITERIA FOR ALLOWING BENEFIT OF DEDUCTIO N U/S 54F(1)(B) OF THE ACT WAS IGNORED. THE LD. AR SUBMITTED THAT SECTION 54F CLEARLY STATES THAT IF THE COST OF NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ASSET TRANSFERRED, SO MUCH OF THE CA PITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN, THE SAME PROPORTI ON AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED U/S 54F. NOWHERE DOES IT MENTION CONSIDERATION AS PER S ECTION 50C. THE FICTION U/S 50C IS EXTENDED ONLY TO THE ASPECT OF C OMPUTATION OF CAPITAL GAINS AND THE SAME DOES NOT EXTEND TO THE CHARGING SECTION OR THE EXEMPTIONS TO THE CHARGING SECTION. THE LEGISLATURE CONSCIOUSLY INTENDED TO APPLY THE FICTION UNDER SECTION 50C ONL Y TO THE EXPRESSION USED IN SECTION 48 AND NOT IN ANY OTHER PLACE. SECT ION 50C HAS NO EFFECT FOR CALCULATING EXEMPTION U/S 54F. THE LONG TERM CAPITAL GAIN EXEMPTION IS ADMISSIBLE U/S 54F(1)(B) OF THE ACT AS PER WORKING PROVIDED BY THE ASSESSEE WHEREIN TOTAL TAXABLE GAIN IS RS.2,68,830/- ONLY. DEEMING FICTION CREATED IN SECTION 50C IS LIM ITED ONLY TO THE EXTENT AND FOR THE PURPOSE OF SECTION 48 AND THIS D EEMING FICTION CANNOT BE EXTENDED OR INTERPRETED AS MEANT FOR THE PURPOSE OF OTHER PROVISIONS OF THE ACT INCLUDING SECTION 54F. THE PR OCESS OF ARRIVING AT CAPITAL GAINS AND EXEMPTIONS ARE DISTINCT AND SEPAR ATE AND ONE DOES NOT OVERRIDE THE OTHER. SECTION 54F IS AN EXEMPTION PROVISIONS AND A COMPLETE CODE IN ITSELF AND SINCE IT IS A COMPLETE CODE IN ITSELF, COMPUTATION OF ELIGIBLE EXEMPTION HAS TO BE WORKED OUT WITHIN ITS FRAMEWORK AS FAR AS POSSIBLE AND DEEMING FICTION CO NTAINED IN ANY OTHER PROVISION CANNOT BE BROUGHT INTO SECTION 54F. SECTION 54F HAS TO BE APPLIED ONLY FOR THE DEFINITE AND LIMITED PURPOS E FOR WHICH IT IS CREATED. THE LD. AR SUBMITTED THAT IT IS NOT PERMIS SIBLE TO SUB-JOIN OR TRACK A FICTION UPON FICTION. THUS, THE LD. AR SUBM ITTED THAT AS FAR AS I.T.A. NO.5828/DEL/2016 5 THE EXEMPTION ALLOWABLE U/S 54F, ONE HAS TO STRICTL Y FOLLOW THE PROVISIONS OF THE PARTICULAR SECTION AND COMPUTE TH E EXEMPTION ACCORDINGLY WITHOUT IMPOSING ANY SECTION CREATING A LEGAL FICTION INTO THE SECTION. THE LD. AR RELIED UPON THE FOLLOWING D ECISIONS: I. SMT. SABITA DEVI AGARWAL VS. ITO, WARD-2(3), SIL IGURI [2019] 69 ITR(T) 231 (KOLKATA TRIB.) II. ANANT CHETAN AGARWAL VS. CIT, [2018] 172 ITD 52 5 (LUCKNOW TRIB.) III. ITO VS. RAJ KUMAR PARASHAR [2017] 167 ITD 237 (JAIPUR TRIB.) IV. DCIT VS. DR. CHALASANI MALLIKARJUNA RAO (2016) 161 ITD 721 (VISAKHAPATNAM TRIB.) V. NAND LAL SHARMA VS. ITO [2015] 40 ITR(T) 518 (JA IPUR TRIB.) VI. DHANVEER SINGH GAMBHIR VS. ITO, 3(2), INDORE [2 015] 56 TAXMANN.COM 205 (INDORE TRIB.) VII. PRAKASH KARNAWAT VS. ITO (2011) 16 TAXMANN.COM 357 (JAIPUR) VIII. GYAN CHAND BATRA VS. ITO [2010] 6 ITR(T) 147 (JAIPUR) IX. RAJ BABBAR VS. ITO (2013) 29 TAXMANN.COM 11 (MU MBAI TRIB.) X. COMMISSIONER OF INCOME TAX VS. GEORGE HENDERSON AND CO. LTD. [1967] 66 ITR 622 (SC) XI. CIT VS. SMT. NILOFER I. SINGH (2008) 309 ITR 23 3 (DELHI HC) XII. ITO VS. MANJIT SINGH [2010] 128 TTJ 82 (CHANDI GARH) (UO) XIII. CIT, PANJI VS. V. S. DEMPO COMPANY LTD. [2016 ] 387 ITR 354 (SC) XIV. CIT VS. ACE BUILDERS (P.) LTD. (2005) 281 ITR 210 (BOM. HC) XV. CIT VS. ASSAM PETROLEUM INDUSTRIES (P.) LTD. (2 003) 262 ITR 587 (GAU. HC) 6. THE LD. AR FURTHER SUBMITTED THAT THE CASE LAWS RELIED BY THE ASSESSING OFFICER IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS JUDGMENT STATES THAT SECTION 50C WILL BE APPLICA BLE TO DETERMINE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION O F CAPITAL GAIN AND NOT FOR PURPOSE OF EXEMPTION. THE JUDGMENT IS NOT I N RESPECT OF APPLICABILITY OF SECTION 50C ON EXEMPTION CLAIMED O N CAPITAL GAIN. THE LD. AR FURTHER SUBMITTED THAT THE CASE LAWS RELIED BY THE CIT(A) ONLY I.T.A. NO.5828/DEL/2016 6 SUPPORTS THE CASE OF THE ASSESSEE WHEREBY IT IS HEL D THAT THE DEEMING FICTION CREATED BY VIRTUE OF SECTION 50C IN DETERMI NING THE CAPITAL GAIN CANNOT BE EXTENDED TO SECTION 54F AND THE CAPITAL G AINS ARISING FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSETS FOR TH E PURPOSES OF SECTION 54F HAS TO BE WORKED OUT THE APPLYING SECTION 48 WI THOUT IMPOSING SECTION 50C INTO IT. 7. THE LD. DR RELIED UPON THE ORDER OF CIT(A) AND S UBMITTED THAT THE CIT(A) HAS TAKEN THE COGNIZANCE OF THE HONBLE KARN ATAKA HIGH COURTS DECISION IN CASE OF M/S. GAULI MAHADEVAPPA VS. ITO 259 CTR 579. THE LD. DR SUBMITTED THAT THE ENHANCEMENT IS P ROPERLY JUSTIFIED BY THE CALCULATION GIVEN BY THE CIT(A) IN THE ORDER . 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORDS. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER ADMITTED THE CLAIM OF THE ASSESSE E FOR EXEMPTION U/S 54F(1)(B) IN RESPECT OF INVESTMENT ON LONG TERM CAPITAL GAIN BUT INSTEAD OF TAKING ACTUAL SALE CONSIDERATION RECEIVE D, HAS ADOPTED THE FIGURE OF SALE CONSIDERATION BY INVOKING SECTION 50 C. THIS IS NOT IN ACCORDANCE WITH THE PROVISION OF SECTION 50C WHICH HAS CREATED A DEEMING FICTION. SECTION 54F IS AN EXEMPTION PROVIS ION AND IT HAS GIVEN ITS APPLICABILITY IN ITSELF, THEREFORE, SECTI ON 50C WILL NOT COME UNDER PICTURE. THE LONG TERM CAPITAL GAIN EXEMPTION IS ADMISSIBLE U/S 54F(1)(B) OF THE INCOME TAX ACT, 1961 WHEREIN T OTAL TAXABLE GAIN COMES TO RS.2,68,830/- ONLY AS THE INVESTMENT MADE BY THE ASSESSEE ADOPTING THE FIGURE OF THE ACTUAL SALE CONSIDERATIO N RECEIVED IN CONSEQUENCE WITH SECTION 54F OF THE INCOME TAX ACT. THEREFORE, THE CIT(A) WHILE ENHANCING THE ADDITION HAS IGNORED THE VERY EFFECT OF THE PROVISIONS OF SECTION 54F. BESIDES THIS, THE CIT(A) WHILE ENHANCEMENT HAS NOT GIVEN ANY REASONS AS TO WHY THE ENHANCEMENT IS NECESSARY AND WHY THE ASSESSEE IS NOT JUSTIFIED IN ADOPTING T HE FIGURE OF THE ACTUAL SALE CONSIDERATION RECEIVED. THUS THE ASSESS ING OFFICER AS WELL AS CIT(A) FAILED TO JUSTIFY THE STAND BY MAKING ADD ITION OF I.T.A. NO.5828/DEL/2016 7 RS.30,17,456/- IN RESPECT OF LONG TERM CAPITAL GAIN WITHOUT GRANTING EXEMPTION U/S 54F OF THE INCOME TAX ACT. THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. THUS, IN VIEW OF THE AFORESAID FACT THAT SIMILAR ENHANCEMENT OF ADDITION HAS BEEN DELETED IN ORIGINA L ASSESSMENT PROCEEDINGS, THEREFORE, THE SAME ADDITIO N CANNOT BE ROPED IN THE ASSESSMENT PROCEEDINGS U/S.153A AND HENCE SAME IS DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2020. SD/- SD/- [DR. B.R.R. KUMAR] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH FEBRUARY, 2020 PKK: