ITO, Bangalore V. Shri. Kiran Kumar, Bangalore

ITA 6/BANG/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80727 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRASAD J
• Assessee Lawyers: H N KHINCHA
• Keywords: Cost of acquisition
• Section: 143(3); 54F; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 6 / BANG/20 14 (ASSESSMENT YEAR: 2009 - 10 ) INCOME - TAX OFFICER, WARD - 7(2), BANGALORE. APPEL LANT VS. SHRI KIRAN KUMAR, NO.777, 2 ND MAIN, 1 ST CROSS, CHOWDESHWARI LAYOUT, MARATHAHALLI, BANGALORE. RESPONDENT PAN:ARJPK1614J APPELLANT BY: DR.K.SHANKAR PRASAD, JCIT(DR) RESPONDENT BY: SHRI H.N.KHINCHA, CA. DAT E OF HEARING : 25 - 09 - 2014 DATE OF PRONOUNCEMENT: 31 - 1 0 - 2014 O R D E R PER JASON P BOAZ, AM : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - II, BANGALORE, DATED 8/10/2013 FOR ASSESSMENT YEAR 2009 - 10. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 2 OF 9 2.1 THE ASSESSEE, AN INDIVIDUAL, HAVING INCOME FROM SALARIES, CAPITAL GAINS AND INCOME FROM OTHER SOURCES, FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 10 ON 16/1/2010 DECLARING TOTAL INCOME OF RS.1,05,780/ - . T HE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT'] AND THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 2/12/2011 WHEREIN THE INCOME OF THE ASSESSEE W AS COMPUTED AT RS.71,45,805/ - AS AGAINST THE RETURNED INCOME OF RS.1,05,780/ - . THIS WAS IN VIEW OF THE ASSESSING OFFICER RE - COMPUTING THE LONG - TERM CAPITAL GAINS (LTCG) BY DENYING THE ASSESSEE S CLAIM FOR EXEMPTION U/S 54F OF THE ACT AMOUNTING TO RS.70,40 ,028/ - . 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2009 - 10 DATED 2/12/2012, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) - II, BANGALORE. T HE LD.CIT(A) ALLOWED THE ASSESSEE S APPEAL VIDE ORDER DATED 8/10/2013. 3. AGGRIEVE D BY THE ORDER OF THE CIT(A) - II, BANGALORE, DATED 8/10/2013 FOR ASSESSMENT YEAR 2009 - 10, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL RAISING THE FOLLOWING GROUNDS: - 1) THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 3 OF 9 ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54F OF THE IT ACT EVEN THOUGH THE UNUTILIZED SALE CONSIDERATION WAS DEPOSITED IN THE CAPITAL GAINS ACCOUNT ON A DATE LATER THAN THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1). 3) FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSES SING OFFICER MAY BE RESTORED. 4) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 4. THE G ROUNDS RAISED AT SL.NOS.1, 3 AND 4 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 5. EXEMPTION U/S 54F OF THE ACT: 5.1 THE ONLY ISSUE OF DISPUTE IN THIS APPEAL IS WITH REGARD TO THE EXEMPTION U/S 54F OF THE ACT. IN THIS REGARD, REVENUE CONTENDS THAT THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT IN SPITE OF THE FACT THAT THE UNUTILIZED CONSIDERATION WAS DEPOSITED IN THE CAPITAL GAINS ACCOUNT ON A DATE LATER THAN THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT. 5.2 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT ON 4/9/2008, THE ASSESSEE HAD SOLD A PROPERTY MEASURING 2 ACRES IN SURVEY NO.23/4, KALLUBISANAHALLI VILLAGE, VARTHUR HOBLI, BANGALORE, WHICH WAS INHERITED BY HIM, FOR ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 4 OF 9 A SALE CONSIDERATION OF RS.70,69,000/ - . THIS PROPER TY WAS ACQUIRED BY THE ASSESSEE BY INHERITANCE PRIOR TO 1/4/1981 AND HE ADOPTED THE INDEXED COST OF ACQUISITION AT RS.28,972/ - . THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD DEPOSITED RS.70,70,000/ - IN THE CAPITAL GAINS ACCOUNT SCHEME WITH SBI, M ARATHAHALLI BRANCH ; RS.27,17,000/ - ON 15/1/2010 AND RS.43,53,000/ - ON 16/1/2010 AND CLAIMED EXEMPTION OF RS.70, 40,028 / - U/S 54F OF THE ACT (I.E. RS.70,79,000/ - LESS RS.28,972/ - ). ON EXAMINATION OF THE ASSESSEE S CLAIM FOR EXEMPTION U/S 54F OF THE ACT, THE ASSESSING OFFICER ACCEPTED THE ASSESSEE S ADOPTION OF THE INDEXED COST OF ACQUISITION AT RS.28,792/ - . THE ASSESSING OFFICER , HOWEVER, REJECTED THE ASSESSEE S CLAIM FOR EXEMPTION U/S 54F OF THE ACT AMOUNTING TO RS.70,40, 028/ - HOLDING THAT THE ASSESSEE OUG HT TO HAVE INVESTED THE NET SALE CONSIDERATION IN THE CAPITAL GAINS ACCOUNT SCHEME NOT BEYOND THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT I.E. 31/7/2009 IN THE CASE ON HAND. 5.3 ON APPEAL, THE LD.CIT(A) HELD THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT AMOUNTING TO RS.70,40,028/ - , AS HE HAD INVESTED A TOTAL OF RS.70,70,000/ - IN THE CAPITAL GAINS ACCOUNT SCHEME ON 15/1/2010 AND 16/1/2010 WHICH WAS WITHIN THE EXTENDED TIME LIMIT FOR FILING THE RETURN U/S 139(4 ) OF THE ACT, WHICH WAS UP TO 31/3/2011 IN THE CASE ON HAND. IN COMING TO THIS FINDING, THE LD.CIT(A) FOLLOWED THE ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 5 OF 9 DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF SMT.FATIMA BAI VS. ITO (2009) 32 DTR 243(KAR) . 5.4 THE LD. DR WAS HEARD I N RESPECT OF THE GROUNDS RAISED BY REVENUE. THE LD. DR SUBMITTED THAT SINCE THE ASSESSEE HAD NOT DEPOSITED THE NET SALE CONSIDERATION RECEIVED ON SALE OF THE SAID PROPERTY BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT, THE ASSE SSING OFFICER S ACTION IN DENYING THE ASSESSEE S CLAIM FOR EXEMPTION U/S 54F OF THE ACT WAS IN ORDER AND OUGHT TO BE UPHELD. 5.5.1 PER CONTRA, THE LD. AR SUPPORTED THE ORDER OF THE LD.CIT(A) IN ALLOWING THE ASSESSEE EXEMPTION U/S 54F OF THE ACT. THE LD. AR CONTENDED THAT THE ISSUE OF DISPUTE IN RESPECT OF THE ASSESSEE S ELIGIBILITY TO EXEMPTION U/S 54F OF THE ACT AROSE DUE TO THE ASSESSING OFFICER S INTERPRETING THAT SECTION 139 MENTIONED IN SECTION 54F OF THE ACT SHOULD BE READ AS SECTION 139(1) OF THE ACT WHEN THERE WAS NO MENTION THEREIN OF ANY SUB - SECTION OF SECTION 139. IN SUPPORT OF THIS PROPOSITION, THE LD. AR PLACED RELIANCE ON THE FOLLOWING JUDICIAL DECISIONS: I) NIPU N MEHROTRA VS. ACIT (2008) 297 ITR(AT) 110 II) CIT VS. RAJESH KUMAR J A LAN (2006) 286 ITR 274(GAU) III) P.R.KULKARNI & SONS (HUF) VS. ADDL.CIT 004 TAX CORP AT 23062(BANG) ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 6 OF 9 5.5.2 THE LD. AR CONTENDED THAT IN VIEW OF THE FINDINGS RENDERED IN THE DECISIONS CITED ABOVE, THE TIME LIMIT FOR DEPOSIT OF THE NET SALE CONSIDERATIO N IN THE CAPITAL GAINS ACCOUNT SCHEME IS AS PER THE EXTENDED DUE DATE U/S 139(4) OF THE ACT WHICH IS 31/3/2011 IN THE CASE ON HAND AND NOT BEFORE THE PERIOD SPECIFIED U/S 139(1) OF THE ACT I.E. 31/7/2009, AS CONTENDED BY REVENUE. IT IS CONTENDED BY THE LD . AR THAT THIS POSITION WAS UPHELD BY THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF SMT.FATIMA BAI VS. ITO (2009) 32 DTR 243(KAR). IT IS SUBMITTED BY THE LD. AR THAT SINCE THE ORDER OF THE LD.CIT(A) IS IN ACCORDANCE WITH THE ABOVE JUDICIAL PRONOUNCEMENT IT OUGHT TO BE UPHELD AND CONSEQUENTLY REVENUE S APPEAL DISMISSED. 5.6.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD INCLUDING THE JUDICIAL DECISIONS CITED AND PLACED RELIANCE UPON. THERE IS NO DISPUTE WITH RESPECT TO THE BASIC FACT S THAT ON 4/9/2008, THE ASSESSEE SOLD A PROPERTY MEASURING 2 ACRES IN SURVEY NO.23/4, KALLUBISANAHALLI VILLAGE, VARTHUR HOBLI, FOR A CONSIDERATION OF RS.70,69,000/ - . THIS PROPERTY WAS INHERITED BY HIM PRIOR TO 1 /4/1981 AND IN COMPUTING LTCG THEREON, THE ASSESSEE HAD ADOPTED THE INDEXED COST OF THE PROPERTY AT RS.28,972/ - , IN RESPECT OF WHICH THERE WAS NO DISPUTE. THE ASSESSEE HAD CLAIMED EXEMPTION OF RS.70,40,028/ - U/S 54F OF THE ACT ON ACCOUNT OF DEPOSITS AMOUN TING TO RS.70,70,000/ - IN THE CAPITAL ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 7 OF 9 GAINS ACCOUNT SCHEME WITH SBI, MARATHAHALLI BRANCH, VIZ., RS.27,17,000/ - ON 15/1/2010 AND RS.43,53,000/ - ON 16/1/2010. THE ONLY POINT OF DISPUTE IN THIS APPEAL IS WITH RESPECT TO THE ASSESSEE S CLAIM FOR EXEMPTION U/ S 54F OF THE ACT. THE PROPOSITION CANVASSED BY THE ASSESSEE THAT HE COULD UTILIZE THE NET SALE CONSIDERATION FOR DEPOSIT IN THE CAPITAL GAINS ACCOUNT SCHEME BEFORE THE EXTENDED DUE DATE U/S 139(4) OF THE ACT AND NOT BEFORE THE DUE DATE U/S 139(1) AS CONTE NDED BY REVENUE, FINDS SUPPORT IN THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF SMT.FATIMA BAI VS. ITO (SUPRA) . IN THIS CASE, THE HON BLE HIGH COURT HAS HELD AS UNDER: THE SEC.139(4) DECLARES THAT THE ASSESSEE SHOULD FILE RETURN S WITHIN THE TIME PRESCRIBED, IF HE FAILS TO FILE RETURNS, HE MAY FILE RETURNS FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE EXPIRY OF ONE YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR. IN THE INSTANT CASE, THE DUE DATE FOR FILING OF RETURN IS 30.7.88 . U/S 139(4) THE ASSESSEE WAS ENTITLED TO FILE RETURNS IN THE EXTENDED TIME, WHICH IS WITHIN 31.3.1990. THE EXTENDED DUE DATE U/S 139(4) WOULD BE 31.3.1990. THE ASSESSEE DID NOT FILE THE RETURNS WITHIN THE EXTENDED DUE DATE, BUT FILED THE RETURNS ON 27.2.2000. HOWEVER, THE ASSESSEE HAD UTILIZED THE ENTIRE CAPITAL GAINS BY PURCHASE OF A HOUSE PROPERTY WITHIN THE STIPULATED PERIODS OF SEC.54(2) I.E. BEFORE THE EXTENDED DUE DATE FOR RETURNS U/S 139. THE ASSESSEE TECHNICALLY MAY HAVE DEFAULTED IN NOT FILING THE RETURNS U/S 139(4). BUT, HOWEVER, UTILIZED THE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE EXTENDED DUE DATE U/S 139(4). THE ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 8 OF 9 CONTENTION OF THE REVENUE THAT THE DEPOSIT IN THE SCHEME SHOULD HAVE BEEN MADE BEFORE THE INITIAL DUE DATE AND N OT THE EXTENDED DUE DATE IS AN UNTENABLE CONTENTION. THE GAUHATI HIGH COURT IN COMMISSIONER OF INCOME TAX VS. RAJKAMAL JALAN HAS TAKEN A SIMILAR VIEW THAT EH TIME LIMIT FOR DEPOSIT UNDER THE SCHEME OR UTILIZATION CAN BE MADE BEFORE THE DUE DATE F OR FILING OF RETURNS U/S 139(4) . 5.6.2. SIMILAR VIEWS HAVE ALSO BEEN TAKEN BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NIPU N MEHROTRA (SUPRA), FOLLOWING THE DECISION OF THE HON BLE GAUHATI HIGH COURT IN THE CASE OF RAJESH KUMAR JALAN (SUPR A) WHEREIN IT WAS HELD THAT SECTION 139 MENTIONED IN SECTION 54F OF THE ACT NOT ONLY INCLUDES SECTION 139(1) OF THE ACT BUT WILL ALSO INCLUDE ALL SUB - SECTIONS OF SECTION 139 OF THE ACT. 5.6.3 IN THE CASE ON HAND, FOLLOWING THE ABOVE BINDING JUDICI AL DECISIONS REFERRED TO AND THE FACTS OF THE CASE ON HAND, WE FIND MERIT IN THE ASSESSEE S CONTENTION THAT, IF THE NET SALE CONSIDERATION HAS BEEN DEPOSITED IN THE CAPITAL GAINS ACCOUNT SCHEME ON OR BEFORE THE EXTENDED PERIOD FOR FILING THE RETURN OF INCO ME AS PER THE PROVISIONS OF SECTION 139(4) OF THE ACT, THE ASSESSEE WOULD BE ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. IN THE CASE ON HAND, IT IS SEEN THAT THE ASSESSEE HAD FILED HIS RETURN ON 16/1/2010 AND MADE THE DEPOSITS OF RS.27,17,000/ - ON 15/1/201 0 AND RS.43,53,000/ - ON 16/1/2010 IN THE CAPITAL GAINS ITA NO . 6 /BANG/20 14 SHRI KIRAN KUMAR. PAGE 9 OF 9 ACCOUNT SCHEME AMOUNTING TO RS.70,70,000/ - WHICH WAS WELL WITHIN THE EXTENDED TIME AVAILABLE U/S 139(4) OF THE ACT VIZ. 31/3/2011. THIS BEING THE FACTUAL MATRIX OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF SMT.FATIMA BAI (SUPRA), WE CONCUR WITH AND UPHOLD THE DECISION OF THE LD. CIT(A) THAT THE ASSESSEE IS ELIGIBLE TO CLAIM AND BE ALLOWED EXEMPTION U/S 54F OF THE ACT TO THE EXTENT OF RS.70,40,02 8/ - AND CONSEQUENTLY DISMISS GROUND NO.2 RAISED BY REVENUE. 6. IN THE RESULT, REVENUE S APPEAL IS DISMISSED. PRON OUNCED IN THE OPEN COURT ON 31 ST OF OCTO BER , 201 4. S D/ - S D/ - ( RAJPAL YADAV ) (JASON P BOAZ) J UDICIAL MEMBER ACCOUNTANT MEMBER EKSRINIVASULU , COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE