K.S. NAIR, TRIVENDRAM V. ITO 22(2)(1), NAVI MUMBAI

ITA 6426/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101144 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA J MENON
• Assessee Lawyers: S N MAKHIJA
• Keywords: Period of limitation; Benefit of exemption
• Section: 54; 139

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANJAY GARG,JUDICIAL MEMBER /. ITA NO.6 426 /MUM/2013, / ASSESSMENT YEAR - 200 9 - 1 0 SHRI K.S. NAIR AMBALAYAM, APRA 96, SAMADHI LANE, PALKULANGARA TRIVANDRUM - 695 024. PAN:AACPN 2236 M VS INCOME TAX OFFICER - 22(2)(1) TOWE R 6, 3 RD FLOOR VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI - 400 075. /ASSESSEE BY :SH. S.N.MAKHIJA / REVENUE BY :SH. VINITA J. MENON / DATE OF HEARING : 16 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 23 - 09 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(AC T) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 0 2 .0 9 .201 3 ,OF THE CIT(A) - 33 ,MUMBAI THE ASSESS EE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF EXEMPTION CLAIMED U/S . 54(2) OF THE LT. ACT, 1961 WITHOUT APPRECIATING THE FACTS OF THE CASE AS WELL LAW. 2.WITHOUT PREJUDICE TO THE ABOVE LEARNED CIT(A) HAS ERRED IN DECIDING THE ISSUE AGAINST APPELLANT IN COMPLETE DISREGARD OF DECISIONS OF VARIOUS JUDICIAL FORUMS. 3. THE LEARNED CIT(A) HAS ERRED IN NOT PROPERLY APPRECIATING THE FACTS OF THE CASE AS WELL INTENTION OF THE LEGISLATURE TO THE EFFECT THAT ASSESSEE SHOULD DEPOSIT NET CONSIDERATION IN BANK ACCOUNT AND SHOULD NOT UTILIZE THE SAME FOR ANY OTHER PURPOSE, OTHER TH AN ACQUIRING A NEW RESIDENTIAL PROPERTY TO AVAIL EXEMPTION WHICH APPELLANT HAS DULY COMPLIED WITH / FULFILLED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/ OR VARY ANY OF THE GROUNDS AT THE TIME OR BEFORE THE HEARING OF THIS APPEAL. 5. THE APPELLANT THEREFORE PRAYS THAT EXEMPTION CLAIMED U/S. 54 OF THE I. T. ACT MAY PLEASE BE ALLOWED . ASSESSEE ,AN INDIVIDUAL,DERIVING INCOME FROM DISTRIBUTING POWDER USED FOR IN POWDER COATING INDUSTRY,FROM FILED HI S RETURN OF INCOME ON 30.0 6 .200 9 , DECLARING A TOTAL INCOME OF RS. 1 . 3 1 LAKH S .THE ASSESSING OFFICER(AO) COMPLETED THE ASSESS MENT ON 09 .12.20 11 , DETERMINING THE TOTA L INCOME OF THE ASSESSEE AT RS. 2 0 . 52 LAKHS . 2. EFFECTIVE GROUND OF APPEAL DEALS WITH DISALLOWANCE OF EXEMPTION CLAIMED U/S.54(2)OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD SOLD HIS FLAT ON 14.10.2008,FOR RS.40 LAKHS AND HAD PURCHASED ANOTHER PROPERTY AT TRIVANDRUM FOR RS.58 LAKHS ON 03.10.2009,THAT HE HAD CLAIMED EXEMPTION U/S.54(2)OF THE ACT.HE ASKED THE A SSESSEE AS TO WHY THE EXEMPTION CLAIMED SHOULD NOT BE DISALLOWED AS HE HAD NOT DEPOSITED THE SALE PROCEEDS IN A SPECIFIED BANK OR INSTITUTION AS PER THE PROVISIONS OF SECTION 54(2)OF THE ACT.IN HIS REPLY THE ASSESSEE STATED THAT HE WAS U NDER THE IMPRESSION THAT AMOUNT REALIS ED WAS TO BE UTILIZED FOR PURCHASING ANOTHER PROPERTY WITHIN A YEAR,THAT PURCHA SE AGREEMENT WAS MADE ON 03.10. 2009 BY MAKING FULL PAYMENT IN ADVANCE,THAT THE PROPERTY WAS REGISTERED ON 14.10. 2010.THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND HELD THAT FOR AVAILING EXEMPTION OF SECTION 54(2)THE CAPITAL GAIN OR THE NET CONSIDERATION,IF NOT UTILIZED TOWARDS ACQUISITION OF NEW PROPERTY BEFORE THE DATE OF FURNISHING OF RETURN U/S.139(1)OF THE ACT,HAD TO 6 426 /1 3 - AY.0 9 - 10 , KSNAIR 2 BE DEPOSITED IN AN ACCOUNT WITH ANY SPECIFIED BANK OR INSTITUTION AND HAD TO BE UTILI S ED IN ACCORDANCE WITH CAPITAL GAINS ACCOUNT SCHEME,THAT HE HAD NOT DEPOSITED THE AMOUNT IN A SPECIFIED BANK,THAT HE WAS NOT ELIGIBLE FOR EXEMPTION U/S.54 OF THE ACT. 2.1. AGGRIEVED BY THE PENALTY O RDER OF THE AO,THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FAA. BEFORE HIM,IT WAS ARGUED THAT SALE PROCEEDS WERE PLACED IN THE FD WITH INDIAN OVERSEAS BANK,THAT THE NEW ASSET WAS ACQUIRED ON 03.10.2010 WHICH WAS WELL BEFORE THE DUE DATE FOR FILING THE RETUR N WITH REFERENCE TO SECTION 139(4)OF THE ACT.HE RELIED UPON THE CASE OF RAKESH KUMAR JALAN,BAJAJ TEMPO LTD.(196ITR188) ,JAGTARSINH CHAWALA. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND PENALTY ORDER,THE FAA HELD THAT PROVISIONS OF SECTION 54(2) STIPU LATED THAT WHERE NET CONSIDERATION WAS NOT UTILISED BY THE ASSESSEE IN NEW ASSETS IT HAD TO BE DEPOSITED IN NOTIFIED SCHEME,THAT SUCH DEPOSIT WAS TO BE MADE BEFORE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1)OF THE ACT,THAT THE ASSESSEE HAD NOT COMPLI ED WITH THE PROVISIONS OF THE ACT,THAT PRESON CLAIMING EXEMPTION HAD TO PROVE THAT HE WAS ENTITLED TO EXEMPTION,THAT THE AO WAS JUSTIFIED IN DISALLOWING THE CLAIM MADE BY THE THE ASSESSEE . 2.2. DURING THE COURSE OF HEARING,B EFORE US, T HE AUTHORISED REPRESEN TATIVE(AR)CONTENDED THAT THE ASSESSEE HAD ACQUIRED THE NEW ASSET BEFORE THE DUE DATE FOR FILING THE RETURN WITH REFERENCE TO SECTION 139(4)OF THE ACT,THAT MONEY WAS LYING WITH THE BANK.HE RELIED UPON THE CASES OF RAJESH KUMAR JALAN(286ITR274),JAGTARSINGH C HAWALA(ITA NO.71 OF 2012 DATED 20.03.2013) OF THE HONBLE P & H HIGH COURT,FATIMA BAI(32DTR243). DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FA A. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT THE AO HAD DENIE D THE ASSESSEE BENEFIT OF EXEMPTION OF SECTION 54(2)OF THE ACT AS THE SALE PROCEEDS OR THE NET CONSIDERATION WAS NOT DEPOSITED IN THE SPECIFIED BANK ACCOUNT AND THE INVESTMENT WAS NOT MADE IN STIPULATED TIME,THAT FAA HAD UPHELD THE ORDER OF THE AO,THAT THE ASSESSEE HAD SOLD A FLAT IN OCTOBER,2008 AND HAD PURCHASED ANOTHER PROPERTY AT TRIVANDRUM IN OCTOBER,2009.THE ISSUE OF FILING OF RETURN AS PER THE PROVISIONS OF SECTION 139 OF THE ACT HAS BEEN DELIBERATED AND DECIDED BY THE HONBLE GAUHATI HIGH COURT IN T HE MATTER OF RAJESH KUMAR JALAN(SUPRA)IN DETAIL.WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE DECISION AND SAME READS AS UNDER: WHILE CONSTRUING A BENEFICIAL ENACTMENT THE VIEW THAT ADVANCES THE OBJECT OF THE BENEFICIAL ENACTMENT AND SERVES ITS P URPOSE MUST BE PREFERRED TO THAT WHICH OBSTRUCTS THE OBJECTS AND PARALYSES THE PURPOSE OF THE BENEFICIAL ENACTMENT.THE LEGISLATIVE INTENTION IS THAT EVERY PART OF THE STATUTE SHOULD BE GIVEN EFFECT.THAT FROM A READING OF SUB - SECTION (2) OF SECTION 54 OF THE ACT IT IS CLEAR THAT ONLY SECTION 139 HAS BEEN MENTIONED THEREIN, IN THE CONTEXT THAT THE UNUTILISED PORTION OF THE CAPITAL GAINS ON THE SALE OF PROPERTY USED FOR RESIDENCE SHOULD BE DEPOSITED BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER S ECTION 139 OF THE INCOME - TAX ACT, 1961. SECTION 139 CANNOT MEAN ONLY SECTION 139(1) BUT IT MEANS ALL SUB - SECTIONS OF SECTION 139 . UNDER SUB - SECTION (4) OF SECTION 139 ANY PERSON WHO HAS NOT FURNISHED A RETURN WITHIN THE TIME ALLOWED TO HIM UNDER SUB - SECTI ON (1) OF SECTION 142 MAY FURNISH THE RETURN FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT WHICHEVER IS EARLIER. THE ASSESSEES CASE WAS THAT SINCE TH E RETURN FOR THE ASSESSMENT YEAR 1996 - 97 COULD BE FURNISHED BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER, UNDER SUB - SECTION (4) , HE WAS ENTITLED TO FULFIL THE C ONDITIONS FOR EXEMPTION UNDER SECTION 54 UP TO MARCH 30, 1998. THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 54 ON THE ENTIRE CAPITAL GAINS ON THE SALE OF HIS HOUSE PROPERTY. 6 426 /1 3 - AY.0 9 - 10 , KSNAIR 3 IN THE CASE OF JAGRITI AGGARWAL(339ITR610)THE HONBLE P & H HIGH COURT A LSO DEALT THE ISSUE. THE FACTS OF THE CASE WERE THAT THE ASSESSEE SOLD HER HOUSE PROPERTY FOR RS. 45 LAKHS ON 13 .01.2006 AND HAVING PURCHASED A NEW RESIDENTIAL PROPERTY ON 0 2 .01.2007, CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT . THE A O DECLINED THE CLAIM HOLDING THAT THE ASSESSEE FAILED TO DEPOSIT THE AMOUNT IN THE CAPITAL GAINS ACCOUNT SCHEME AND ALSO FAILED TO PURCHASE HOUSE PROPERTY BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. THE FAA HELD THAT THE ASSESSEE HAD PURCHASED A NEW RESIDENTIAL PROPERTY ON 0 2 .01. 2007 AND THE DUE DATE ACCORDING TO SECTION 139(4) 31 .03.2007,AND, THUS, S HE HAD COMPLIED WITH THE PROVISIONS OF SECTION 54 OF THE ACT. THIS ORDER WAS AFFIRMED BY THE TRIBUNAL. DECIDING THE APPEAL,THE HONBLE COURT HELD: THE SALE OF THE ASSET HAD T AKEN PLACE ON JANUARY 13, 2006, FALLING IN THE PREVIOUS YEAR 2006 - 07, THE RETURN COULD BE FILED BEFORE THE END OF THE RELEVANT ASSESSMEN T YEAR 2007 - 08, I.E., MARCH 31,2007. THUS, SUB - SECTION (4) OF SECTION 139 PROVIDES THE EXTENDED PERIOD OF LIMITATION AS A N EXCEPTION TO SUB - SECTION (1) OF SECTION 139 OF THE ACT. SUB - SECTION (4) WAS IN RELATION TO THE TIME ALLOWED TO AN ASSESSEE UNDER SUB - SECTION (1) TO FILE THE RETURN. THEREFORE, SUCH PROVISION WAS NOT AN INDEPENDENT PROVISION, BUT RELATES TO THE TIME CONTE MPLATED UNDER S UB - SECTION (1) OF SECTION 139. THEREFORE, SUB - SECTION (4) HAD TO BE R EAD ALONG WITH SUB - SECTION (1). THEREFORE, THE DUE DATE FOR FURNISHING THE RETURN OF INCOME ACCORDING TO SECTION 139(1) OF THE ACT WAS SUBJECT TO THE EXTENDED PERIOD PROVIDED UNDER SUB - SECTION (4) OF SECTION 139 OF THE ACT. IN THE CASE UNDER CONSIDERATION,THE ASSESSEE HAD PURCHASED THE NEW ASSET BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME WITH REFERENCE TO SECTION 139(4)OF THE ACT.THEREFORE, RESPECTFULLY FOLLOWIN G THE ABOVE JUDGMENTS,WE ARE REVERSING THE DECISION OF THE FAA. EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWE D . . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER,2015. 23 , 2015 SD/ - SD/ - ( / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE : 23 .09.2015 . . . JV. SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.