AFTAB MOHAMMAD, Hoshagabad V. The ITO 2, Itarsi

ITA 627/IND/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5750 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Section: 54F; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 627/IND/2014 A.Y. : 2008-09 SHRI AFTAB MOHAMMAD, ITO (2), EKTA CHOWK, VS. ITARSI HOSHANGABAD APPELLANT RESPONDENT PAN NO. AUNPM8953H A PPELLANT S BY : SHRI ASHISH GOYAL AND SHRI N. D. PATWA, ADV. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL DATED 18.07.2014 FOR THE ASSESS MENT YEAR 2008-09. DATE OF HEARING : 2 2 .12.2015 DATE OF PRONOUNCEMENT : 08.02 .201 6 SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 2 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED THE RETURN OF INCOME ON 12.06.2012 SHOWING TH E LONG TERM CAPITAL GAINS OF RS. 39,951/- AND AGRICULTURAL INCOME OF RS. 1,20,000/-. THE ASSESSEE, HIS BROTHER AND HIS M OTHER SOLD THE PLOT ADMEASURING 3894 SQ.FT. SITUATED AT CIVIL LINES, WARD NO.14, HOSHANGABAD AND SHRI ABDUL SHAKIL S/O MOHD. YUSUF SOLD HIS PLOT ADMEASURING 4580 SQ.FT. SITUATED AT C IVIL LINE WARD NO.14, HOSHANGABAD, COMBINEDLY THROUGH SINGLE SALE DEED. THUS, TOTAL LAND ADMEASURING 8474 SQ.FT. WAS SOLD FOR SALE CONSIDERATION OF RS. 25,00,000/-. HENCE, THE S ALE CONSIDERATION OF RS. 25,00,000 WAS APPORTIONED BETW EEN THE TWO FAMILIES ACCORDING TO SIZE OF THEIR PLOTS AND, THUS, RS. 16,00,000/- WAS GIVEN TO ABDUL SHAKIL WHICH IS EVID ENT FROM THE PERUSAL OF PASS BOOK AND RS. 9,00,000/- REMAINE D WITH ASSESSEES FAMILY TO BE APPORTIONED BETWEEN THE ASS ESSEE AND SMT. HAMIDA BEE AND BROTHER SHRI MOHD. MEHTAB. BUT AS PER MARKET VALUE ADOPTED BY THE STAMP VALUING AUTHORITY , SUB- REGISTRAR, HOSHANGABAD AT RS. 36,35,000/-. THE SALE CONSIDERATION WAS WORKED OUT IN THE HANDS OF SMT. H AMIDA BEE AND HER TWO SONS, WHICH WORKED OUT TO RS. 16,70 ,367/-. SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 3 3 HOWEVER, THE ASSESSEE WORKED OUT THEIR SHARE AT RS. 16,66,080/- THAT IS ON LITTLE LOWER SIDE. THE CORRE CT SALE CONSIDERATION IN HAND WORKED OUT AT RS. 16,70,367/- . THEREFORE, LONG TERM CAPITAL GAIN WAS WORKED OUT AT RS. 16,70,367/-. THE SHOW CAUSE NOTICE WAS GIVEN AND IN REPLY TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT SHE HAS CONSTRUCTED HOUSE WITHIN TWO YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET. HENCE, THE DEDUCTION U/S 54F SHO ULD BE ALLOWED, WHICH WAS NOT ALLOWED. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL. 4. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. AUTHORIZED REPRESENTATIVE HAS FILED THE WRITTEN SUB MISSIONS, WHICH READS AS UNDER :- SALE OF OLD PROPERTY 3.09.2007 CONSTRUCTION OF NEW RESIDENTIAL HOUSE COMPLETED IN OCTOBER, 2009 TIME LIMIT FOR CONSTRUCTION U/S 54F 3 YEARS FROM THE DATE OF TRANSFER I.E. UP TO 03.09.2010 TIME LIMIT FOR RETURN U/S 139(1) 31.07.2008. NOT FIL ED TIME LIMIT FOR RETURN U/S 139(4) 31.03.2010. NOT FIL ED RETURN FILED IN RESPONSE TO 148 12.06.2012. TREATED AS RETURN U/S 139. SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 4 4 THE ASSESSEE HAD NOT DEPOSITED THE AMOUNT IN CAPITAL GAIN ACCOUNT SCHEME. HOWEVER, THE ASSESSEE HAD UTILIZED THE AMOUNT IN THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE WITHIN 3 YEARS FROM THE DATE OF TRANSFER. THE LD. AO DENIED THE DEDUCTION HOLDING THAT THE ASSESSEE HAD NOT DEPOSITED THE AMOUNT UPTO DUE DATE OF FILING OF RETURN U/S 139(1). THE ASSESSEE SUBMITS THAT U/S 54F, THERE ARE TWO TIME LIMITS PROVIDED :- - CONSTRUCTION OF NEW HOUSE - DATE OF FILING OF RE TURN U/S 139 - DEPOSIT IN CAPITAL GAIN ACCOUNT SCHEME DUE DATE O F FILING OF RETURN U/S 139(1) THE REQUIREMENT OF DEPOSITING IN THE CAPITAL GAINS ACCOUNT SCHEME ARISES ONLY WHEN THE AMOUNT IS NOT INVESTED UPTO THE DATE OF FILING OF RETURN U/S 139. IT IS IMPORTANT TO NOTE THAT SECTION 54F USES THE PHRASE 139, AND DOES NOT REFER TO ANY SPECIFIC SUB-SECTION OF 139. THEREFORE, 139(1) CANNOT BE PRESUMED. IF THE SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 5 5 ASSESSEE, INSTEAD OF DEPOSITING THE AMOUNT IN THE CAPITAL GAINS ACCOUNT SCHEME UTILIZES THE AMOUNT OF THE CONSTRUCTION OF NEW HOUSE, BEFORE THE DATE OF FILING OF RETURN U/S 139, THE EXEMPTION IS AVAILABL E. THIS VIEW HAS BEEN TAKEN IN VARIOUS JUDGMENTS AS UNDER :- RAJESH KR. JALAN ,286 ITR 274 ( GAU) CIT VS. JAGRITI AGRAWAL, 339 ITR 610 ( P& H) KISHORE H. GALAIYA, 24 TAXMANN.COM 11 (MUM) CIT VS. JAGTAR SINGH CHAWLA, 33 TAXMANN.COM 38 (P & H ) THE ASSESSEE FURTHER SUBMITS THAT THE AMOUNT HAS BE EN UTILISED IN THE CONSTRUCTION OF NEW HOUSE WITHIN 3 YEARS OF THE DATE OF TRANSFER. THE PROOF OF INVESTMENT IS AS UNDER :- 1. APPROVAL FROM MUNICIPAL AUTHORITY IS DATED 17.11. 2006. 2. PERMISSION FROM MUNICIPAL CORPORATION ALONGWITH PROPERTY TAX RECEIPT IS DATED 2.12.2007. SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 6 6 3. DETAILS OF VARIOUS EXPENSES INCURRED ON THE CONSTRUCTION. COPY OF VARIOUS BILLS FOR CONSTRUCTIO N. 4. COMPLETION CERTIFICATE FROM CIVIL ENGINEER DATED 5.1.2010. THIS CERTIFICATE STATES THE DATE OF COMPLETION AS OCTOBER NOVEMBER, 2009. THUS, THE ASSESSEE SUBMITS THAT SINCE THE ASSESSEE HAD CONSTRUCTED THE NEW RESIDENTIAL HOUSE WITHIN TH REE YEARS FROM THE DATE OF TRANSFER AND BEFORE FILING T HE RETURN U/S 139, THE EXEMPTION CANNOT BE DENIED. 5. THE LD. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 6. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE F ACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT IN THIS CASE, THE ASSESSEE HAS SOLD OLD PROPERTY ON 03.09.2007 AND AS SESSEE HAS COMPLETED NEW RESIDENTIAL HOUSE IN OCTOBER 2009 . THE TIME LIMIT FOR CONSTRUCTION OF NEW HOUSE, WHICH AVA ILABLE TO THE ASSESSEE WAS THREE YEARS FROM THE DATE OF TRANS FER OF THE PROPERTY I.E. ON 03.09.2010. THE ASSESSEE HAS NOT F ILED THE RETURN OF INCOME U/S 139, WHICH IS AVAILABLE TO THE ASSESSEE SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 7 7 FOR ASSESSMENT YEAR 2007-08 ON 31.07.2008. THE TIME LIMIT FOR RETURN U/S 139 WAS 31 ST MARCH, 2010. NO RETURN WAS FILED. THE ASSESSEE FILED THE RETURN IN RESPONSE TO NOTICE U/S 148 ON 12.6.2012. IT IS THE CONTENTION OF THE ASSESSEE THA T THE ASSESSEE HAS NOT DEPOSITED ANY AMOUNT IN CAPITAL GA IN ACCOUNT SCHEME. HOWEVER, THE ASSESSEE HAS UTILIZED THIS AMOUNT IN CONSTRUCTION NEW RESIDENTIAL HOUSE WITHIN 3 YEARS FROM THE DATE OF TRANSFER. THE AO HAS DISALLOWED TH E CLAIM ON THE GROUND THAT THE ASSESSEE HAS EARNED THE CAPITAL GAIN IN ASSESSMENT YEAR 2007-08 AND IN 2007-08, IF THE ASSE SSEE WANTED TO CONSTRUCT THE NEW HOUSE AND IF IT IS NOT FINISHED WITHIN ONE YEAR THEN THE AMOUNT OF CAPITAL GAINS MU ST BE DEPOSITED IN CAPITAL GAIN DEPOSIT ACCOUNT IN ASSES SMENT YEAR 2008-09. SIMILARLY, THE ASSESSEE HAS ALSO NOT FILED THE RETURN AND ASSESSEE HAS FILED THE RETURN FOR ASSESSMENT YE AR 2008- 09 IN RESPONSE TO NOTICE U/S 148 AND THE RETURN WAS FILED ON 12.6.2012. THOUGH THE ASSESSEE HAS NOT FILED THE R ETURN OF INCOME IN TIME AND NOT DEPOSITED THE AMOUNT BUT THE ASSESSEE HAS USED THE CAPITAL GAIN FOR CONSTRUCTION OF THE N EW HOUSEL. IN SUPPORT OF THE CLAIM OF THE ASSESSEE, THE ASSESS EE HAS FILED SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 8 8 APPROVAL FROM MUNICIPAL AUTHORITY, AND PERMISSION O F THE MUNICIPAL CORPORATION AND DETAILS OF THE EXPENDITUR E FOR CONSTRUCTION OF THE HOUSE AND COMPLETION CERTIFICAT E FROM THE CIVIL ENGINEER. FROM ALL THESE DOCUMENTARY EVIDENCE S WHICH PROVE THAT THE ASSESSEE HAS CONSTRUCTED NEW HOUSE W ITHIN 3 YEARS FROM THE SALE OF OLD PROPERTY. WE FIND THAT T HE ASSESSEE HAS NOT FILED THE RETURN OF INCOME IN TIME, BUT THE ASSESSEE AHS NOT DEPOSITED IN THE CAPITAL ACCOUNT. BUT THE A SSESSEE HAS FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE U/ S 148. THEREFORE, THE DEDUCTION CLAIMED U/S 54F SHOULD BE ALLOWED AND WHETHER THE ASSESSEE HAS NOT FILED THE RETURN A ND IF HE HAS FILED THE RETURN IN RESPONSE TO NOTICE U/S 148 AND IF THE RETURN IS ACCEPTED, THEN THE ASSESSEE IS ENTITLED F OR SUCH DEDUCTION. WE FIND THAT SIMILAR ISSUE HAD COME UP B EFORE HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. R AJESH KUMAR JALAN, (2006) 157 TAXMAN 398 (GAU), WHEREIN T HE ASSESSEE HAS SOLD HIS ONE FOURTH SHARE IN A RESIDE NTIAL PROPERTY FOR A CONSIDERATION TO THE STATE GOVERNMEN T ON 21.12.1995 AND EARNED CAPITAL GAIN. THE ASSESSEE NE GOTIATED AND ENTERED IN TO THE TWO AGREEMENTS DATED 9.5.1996 AND SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 9 9 17.5.1996 WITH THE OWNERS R AND A FOR THE PURCH ASE OF THEIR RESIDENTIAL FLAT FOR A CONSIDERATION. THE AO REJECT ED THE ASSESSEES CLAIM OF EXEMPTION U/S 54 ON THE GROUND THAT THE ASSESSEE FAILED TO COMPLY WITH SECTION 54 BY NOT DE POSITING THE UNUTILIZED AMOUNT OF CAPITAL GAIN IN THE CAPITAL GA INS DEPOSIT SCHEME, 1998, WITHIN THE STIPULATED TIME OF FURNISH ING THE RETURN OF INCOME, THE TRIBUNAL HAS ALLOWED THE CLAI M, WHEREIN THE HON'BLE HIGH COURT HAS ALLOWED THE CLAIM BY OBS ERVING AS UNDER :- FROM A PLAIN READING OF SUB-SECTION (2) OF SECTION 54, IT IS CLEAR THAT ONLY SECTION 139 IS MENTIONED IN SECTION 54(2) IN THE CONTEXT THAT THE UNUTILIZED PORTION OF THE CAPI TAL GAIN ON THE SALE OF PROPERTY USED FOR RESIDENCE SHOULD BE DEPOSITED BEFORE THE DATE OF FURNISHING THE RETURN OF THE INCOME-TAX UNDER SECTION 139. SECTION 139 CANNOT ME AN ONLY SECTION 139(1) BUT IT MEANS ALL SUB-SECTIONS O F SECTION 139. UNDER SUB-SECTION (4) OF SECTION 139, ANY PERS ON WHO HAS NOT FURNISHED A RETURN WITHIN THE TIME ALLOWED TO HIM UNDER SUB-SECTION (1) OF SECTION 142, MAY FURNISH T HE RETURN FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 10 10 OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT, WHICHEV ER IS EARLIER. SUCH BEING THE SITUATION, IT WAS THE CASE OF THE ASSESSEE THAT HE COULD FULFILL THE REQUIREMENT U/S 54 FOR EXEMPTION OF THE CAPITAL GAIN FROM BEING CHARGED TO INCOME-TAX ON THE SALE OF PROPERTY USED FOR RESIDEN CE UP TO 30-3-1998, INASMUCH AS THE RETURN OF INCOME TAX FOR THE ASSESSMENT YEAR 1996-97, COULD BE FURNISHED BEFORE THE EXPIRY OF ONE YEAR FORM THE END OF THE RELEVANT ASS ESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER, UNDER SUB-SECTION (4) OF SECT ION 139. 7. WE FIND THAT THE SIMILAR ISSUE WAS DECIDED IN THE C ASE OF CIT VS. MS.JAGRITI AGGARWAL, (2011) 15 TAXMANN. COM 146 ( P & H). WE ALSO FIND THAT SIMILAR ISSUE WAS ALSO DE CIDED BY THE MUMBAI TRIBUNAL, WHEREIN THE TRIBUNAL IN THE CASE O F KISHORE H. GALAIYA V. ITO, (2012) 24 TAXMANN.COM 12 (MUM) H AS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. SHRI AFTAB MOHAMMAD, HOSHANGABAD VS. ITO, ITARSI I.T.A.NO. 627/IND/2014 A.Y. 2008-09 11 11 8. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, I ALLOW THE APPEAL OF THE ASSESSEE. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 8 TH FEBRUARY, 2016. SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 8 TH FEBRUARY, 2016. CPU* 4.13