ACIT, New Delhi V. M/s Shashi Malhotra, New Delhi

ITA 6005/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58867 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 21-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: UMESH GUPTA
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.6005 /DEL/2010 ASSESSMENT YEAR : 2007-08 ACIT, SMT. SHASHI MALHOTRA, CIRCLE-23 (1), AALIANZ HOUSE, 2 ND FLOOR, NEW DELHI. V. 273-CAPT. CAUR MARG, SRINIVASPURI, N. DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AJHPM AJHPM AJHPM AJHPM- -- -6202 6202 6202 6202- -- -F FF F APPELLANT BY : SHRI S. MOHANTY, SR. DR. RESPONDENT BY : SHRI UMESH GUPTA, C.A. ORDER PER KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A)- XXIII, NEW DELHI DATED 11.10.2010 FOR ASSESSMENT YEAR 2 007-08. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE L D CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADD ITION OF `.37,42,760/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEDUCTION U/S 54F. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND AN Y OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE APPEAL. ITA NO6005/DEL/2010 2 2. THE ASSESSEE MRS. SHASHI MALHOTRA IS AN INDIVIDUAL WHO HAD INHERITED PROPERTY NO.W-67, GREATER KAILASH, PART-I, NEW DELHI FROM HER MOTHER SMT. KAUSHALAYA KAPOOR ON HER DEATH IN FEBRU ARY, 2002. THE MOTHER HAD GIVEN THE ENTIRE GROUND FLOOR ALONG WITH FRONT LAWN, REAR COURTYARD, GARAGE, FIRST AND SECOND FLOOR SERVANT QUAR TER ABOVE THE GARAGE TO THE ASSESSEE. THE ENTIRE FIRST FLOOR WITH TERR ACE RIGHT WAS GIVEN TO MRS. SUSHMA WADERA THE SECOND DAUGHTER OF THE DECEASED SMT. KAUSHALAYA KAPOOR. DURING THE ASSESSMENT YEAR 2007- 08, THE ASSESSEE SMT. SHASHI MALHOTRA ENTERED INTO AN AGREEMENT WITH A BUILDER M/S DUGGAL BUILDERS PVT. LTD. VIDE CONSTRUCTIO N AGREEMENT DATED 17.1.2007. IN TERMS OF THE AGREEMENT THE BUILD ER WAS TO DEMOLISH THE EXISTING TWO STOREYED BUILDING AND RECONST RUCT THE PROPERTY WITH BASEMENT, GROUND-1, II & IIIRD FLOOR, SERVANT QUARTERS AND GARAGE AND AFTER RECONSTRUCTION THE ASSESSEE WAS TO RECE IVE THE ENTIRE GROUND FLOOR, FRONT LAWN, REAR COURTYARD, GARAGE, I ST, IIND & IIIRD FLOOR SERVANT QUARTERS ABOVE THE GARAGE WITH TERRACE RIGHT AND PROPORTIONATE UNDIVIDED, INDIVIDUAL AND IMPARTIBLE OWNERSHIP RIGHT S OF THE SAID PLOT OF LAND MEASURING 500 SQ. YDS. THE ASSESSEE SURRENDERED THE BASEMENT RIGHTS AND IN LIEU OF THAT SHE RECEIVED `.30 LAKHS AS C ONSIDERATION OF TRANSFER OF BASEMENT RIGHT. THE ASSESSING OFFICER ADDED THE COST OF CONSTRUCTION OF `.37,42,760/- AS PART OF SALE CONSIDERA TION ON THE GROUND THAT THE COST OF CONSTRUCTING THE ENTIRE GROU ND FLOOR AFRESH WAS ALSO ON ACCOUNT OF RIGHT THAT ASSESSEE HAD IN THE PLOT O F LAND TO THE EXTENT. THE ASSESSEE WENT IN FOR APPEAL AGAINST THE ADDI TION AND ALSO PRAYED BEFORE LD CIT(A) THAT IF THE VALUE OF SALE CO NSIDERATION IS TO BE INCREASED WITH THE AMOUNT OF NEW NOTIONAL CONSTRUCTIO N COST THEN CORRESPONDING DEDUCTION SHOULD BE GIVEN U/S 54/54F OF THE ACT I.E. THE DEEMED INVESTMENT MADE IN THE CONSTRUCTION OF GROUND FLOOR, SERVANT QUARTER, GARAGE AND FRONT LAWN. ITA NO6005/DEL/2010 3 3. THE CIT(A) WHILE DISPOSING OF THE APPEAL AGREED W ITH THE FINDINGS OF ASSESSING OFFICER AND UPHELD THE ADDITION MADE BY TH E ASSESSING OFFICER BUT AT THE SAME TIME ON THE BASIS OF EQUITY HE CONSIDERED THE DEEMED AMOUNT TO BE AN INVESTMENT IN THE RESIDENTIAL HOUSE TO THE EXTENT OF `.37,42,760/- AND CONSEQUENTLY MADE THE TA XABLE CAPITAL GAINS AS NIL. TECHNICALLY HE DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER AND HENCE THE PRESENT APPEAL BY REVENUE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE OPINION THAT THE LD CIT(A) HAS RIGHTLY UPHELD THE VIEW OF ASSESSING O FFICER REGARDING TREATING THE COST OF CONSTRUCTION AS PART OF SALE CONSID ERATION. THIS VIEW IS ALSO SUPPORTED BY THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF CIT V. RADHE DEVELOPERS 341 ITR 403 (GUJ). WHEREIN BESIDE S OTHER SECTIONS, SECTION 2(47) REGARDING TRANSFER WAS ALSO CONSI DERED AND IT WAS HELD THAT COMBINED READING OF SECTION 2(47)(V) OF SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882 WOULD LEAD TO CONCLUSI ON THAT WHERE LAND WAS GIVEN TO DEVELOPER FOR DEVELOPMENT, IT WOU LD BE CONSIDERED AS TRANSFER FOR THE PURPOSE OF INCOME TAX ACT AND IF I N THE PRESENT CASE BUILDING GIVEN FOR DEVELOPMENT IS CONSIDERED AS TRANSFE R, LIABILITY OF CAPITAL GAIN WILL ARISE. 5. AS REGARDS DEDUCTION U/S 54/54F NOWHERE IN ASSESSING OF FICERS ORDER OR IN THE ORDER OF LD CIT(A) THERE IS ANY FIND INGS ON THE ELIGIBILITY OF ASSESSEE AS TO WHETHER ASSESSEE FULFILS THE CONDITIONS LAID DOWN IN SECTION 54 OR SECTION54F FOR CLAIMING DEDUCTION UNDER THE RESPECTIVE SECTIONS. 6. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THE CASE SHOULD GO BACK TO THE ASSESSING OFFICER SO THAT HE COULD GIVE C LEAR FINDINGS AS ITA NO6005/DEL/2010 4 TO WHETHER THE ASSESSEE WAS ELIGIBLE FOR CLAIMING DEDUCT ION U/S 54/54F OF THE ACT. IF THE ASSESSEE IS FOUND TO BE ELIGIBLE FO R CLAIMING DEDUCTION U/S 54/54F ON THE AMOUNT OF CONSTRUCTION THEN THE ASSESSI NG OFFICER WILL GRANT SUCH DEDUCTION AS PER PROVISIONS OF LAW. IT IS NEEDLESS TO OBSERVE THAT HE WILL PROVIDE A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE TO PROVE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTIO N ON THIS AMOUNT EITHER U/S 54 OR 54F OF THE ACT. WITH THESE OB SERVATIONS, THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFI CER. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE 16TH D AY OF MARCH, 2012. SD/- SD/- (I.P. BANSAL) (T.S. KA POOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.16.3.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO6005/DEL/2010 5