Sh. Vijay Chaudhary, New Delhi V. ITO, Gurgaon

ITA 6432/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1492 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESID ENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 6432/DEL/2015 A.Y 2012-13 SH. VIJAY CHAUDHARY C/O RAVI GUPTA, ADVOCATE E-6A, KAILASH COLONY NEW DELHI 110 048 PAN: AHIPC1553B VS ITO, WARD 4(4) GURGAON (APPELLANT) (RESPONDENT) APPELLANT BY SH. RAJESH JAIN, C.A. RESPONDENT BY SH. AMIT KATOCH, SR.D.R. ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 28/09/2015 PASSED BY THE CIT(A)-2, GURGAON FOR ASSESSMENT YE AR 2012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ORDER OF THE AO. 2. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE REDUCTION OF EXEMPTION U/S 54 BY RS.46,75,657/-. 3. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTEMPORARY JURISPRUDENCE. DATE OF HEARING 04.06. 2019 DATE OF PRONOUNCEMENT 10 .0 6 .2019 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012- -- -13 1313 13 SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO 2 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AN Y/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. THE ASSESSEE HAS FILED RETURN DECLARING TOTAL INCO ME OF RS.6,40,320/- ON 27.9.2012. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE SOLD RESIDENTIAL HOUSE SITU ATED AT RAJ NAGAR, GHAZIABAD ON 19.08.2011 FOR A CONSIDERATION OF RS.1 ,05,00,000/-. CAPITAL GAIN ON THIS TRANSACTION WAS SHOWN AT RS.1,02,03,90 7/-. THIS CAPITAL GAIN WAS CLAIMED AS EXEMPT U/S 54 OF THE INCOME TAX ACT, 196 1 (THE ACT) ON THE GROUND THAT THE ASSESSEE CONSTRUCTED THE RESIDENTIAL HOUSE WITHIN THE STIPULATED TIME. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE PU RCHASED A RESIDENTIAL PLOT IN SECTOR 9, GURGAON ON 12.05.2011 FOR AN AMOUNT OF RS.52,65,000 + STAMP DUTY OF RS.2,63,250/- IN THE NAME OF HIS WIFE SMT . RENU CHAUDHARY. AFTER PURCHASING THE PLOT, THE ASSESSEE CONSTRUCTED A HOU SE WHICH WAS COMPLETED WITHIN 3 YEARS AS THE COMPETENT AUTHORITY ISSUED TH E OCCUPATION CERTIFICATE ON 25.07.2014. THE ASSESSEE, HOWEVER, DID NOT DEPOSIT THE UNUTILIZED PART OF THE SALE CONSIDERATION IN AN ACCOUNT IN A SPECIFIC BANK OR INSTITUTION BEFORE DUE DATE OF FILING RETURN U/S 139(1). THE ASSESSEE BEF ORE THE ASSESSING OFFICER SUBMITTED THAT THE WHOLE OF FUNDS FOR PURCHASE OF N EW PLOT FOR THE PURPOSE OF CONSTRUCTION OF NEW RESIDENTIAL HOUSE TO CLAIM EXEM PTION U/S 54 OF THE ACT WERE UTILIZED BY THE ASSESSEE OUT OF ADVANCE MONEY RECEIVED FROM SALE OF OLD RESIDENTIAL HOUSE. THE SALE FUNDS THOUGH INVESTED BY ASSESSEE IN HIS WIFES NAME WERE OUT OF SALE PROCEEDS OF OLD HOUSE ONLY. THE ASSESSEE FURTHER SUBMITTED BEFORE THE ASSESSING OFFICER THAT IN THES E CIRCUMSTANCES THE INVESTMENT TOWARDS PURCHASE OF PLOT IN THE NAME OF HIS WIFE OUT OF ADVANCE RECEIVED FROM SALE OF HOUSE WAS ELIGIBLE FOR DEDUCT ION U/S 54 OF THE ACT. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE LAWS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER CONSIDERING ASSESSEES CONT ENTIONS, DISALLOWED RS.46,75,657/- AS CLAIMED BY ASSESSEE AS DEDUCTION U/S 54 OF THE ACT. THE ASSESSING OFFICER HELD THAT THE CLAIM OF DEDUCTION ON THE BALANCE AMOUNT WAS ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012- -- -13 1313 13 SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO 3 NOT ALLOWABLE AS ASSESSEE FAILED TO DEPOSIT THE BAL ANCE AMOUNT IN THE ACCOUNT IN SPECIFIED BANK OR INSTITUTION BEFORE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSES SEE FILED APPEAL BEFORE THE CIT(A) AND DISMISSED THE APPEAL OF THE ASSESSE E. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS PURCHAS ED THE RESIDENTIAL PLOT FROM THE SALE PROCEEDS OF THE EARLIER RESIDENT IAL HOUSE. THE SALE PROCEEDS WERE UTILIZED FOR CONSTRUCTION OF RESIDENTIAL HOUSE AND, THEREFORE, DEDUCTION U/S 54 IS RIGHTLY CLAIMED BY THE ASSESSEE. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SHRI K RAMCHANDRA RAO (2014) 89, CCH 396. (KAR HC). 6. THE LD. DR DISTINGUISHED THE DECISION OF HONBLE KARNAT AKA HIGH COURT AND SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) RIGHTLY DISALLOWED THE CLAIM U/S 54 MADE BY THE ASSESSEE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE MATERIAL AVAILABLE ON RECORD. THE HONBLE KARNATAKA HIGH COURT IN CASE OF SHRI K RAMCHANDRA RAO (SUPRA) HELD AS UNDER: 3. . 2) WHETHER THE ASSESSEE INVESTS THE ENTIRE SALES CO NSIDERATION IN CONSTRUCTION OF A RESIDENTIAL HOUSE WITHIN THREE YE ARS FROM THE DATE OF TRANSFER CAN HE BE DENIED EXEMPTION UNDER SECTION 5 4F ON THE GROUND THAT HE DID NOT DEPOSIT THE SAID AMOUNT IN CAPITAL GAINS ACCOUNT SCHEME BEFORE THE DUE DATED PRESCRIBED UNDER SECTION 139(1) OF TH E IT ACT? 4. RE. QUESTION NO. 2: AS IS CLEAR FROM SUB SECTION (4) IN THE EVENT OF TH E ASSESSEE NOT INVESTING THE CAPITAL GAINS EITHER IN PURCHASING THE RESIDENTIAL HOUSE OR IN CONSTRUCTING A ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012- -- -13 1313 13 SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO 4 RESIDENTIAL HOUSE WITHIN THE PERIOD STIPULATED IN S ECTION 54F(1), IF THE ASSESSEE WANTS THE BENEFIT OF SECTION 54F, THEN HE SHOULD DEPOSIT THE SAID CAPITAL GAINS IN AN ACCOUNT WHICH IS DULY NOTIFIED BY THE CENTRAL GOVERNMENT. IN OTHER WORDS IF HE WANT OF CLAIM EXEMPTION FROM P AYMENT OF INCOME TAX BY RETAINING THE CASH, THEN THE SAID AMOUNT IS TO BE I NVESTED IN THE SAID ACCOUNT. IF THE INTENTION IS NOT TO RETAIN CASH BUT TO INVES T IN CONSTRUCTION OR ANY PURCHASE OF THE PROPERTY AND IF SUCH INVESTMENT IS MADE WITHIN THE PERIOD STIPULATED THEREIN, THEN SECTION 54F(4) IS NOT AT A LL ATTRACTED AND THEREFORE THE CONTENTION THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE BANK ACCOUNT AS STIPULATED AND THEREFORE, HE IS NOT ENTI TLED TO THE BENEFIT EVEN THOUGH HE HAS INVESTED THE MONEY IN CONSTRUCTION IS ALSO NOT CORRECT. 5. FOR THE AFORESAID REASONS BOTH THE SUBSTANTIAL Q UESTIONS OF LAW ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THEREFORE, WE DO NOT SEE MERIT IN ANY OF THE APPEALS. ACCORDINGLY , ALL THE FOUR APPEALS ARE DISMISSED. IN THE PRESENT CASE, THE ASSESSEE HAS PURCHASED THE RESIDENTIAL PLOT FROM THE SALE PROCEEDS OF THE EARLIER RESIDENTIAL HOUSE. TH E SALE PROCEEDS WERE UTILIZED FOR CONSTRUCTION OF RESIDENTIAL HOUSE WITH THE THRE E YEARS ITSELF. THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IS APT IN THE PRES ENT CASE AS THE HONBLE HIGH COURT HELD THAT IT IS NOT A PRE-CONDITION TO I NVEST THE MONEY IN THE SPECIFIED CENTRAL GOVT. SCHEME OF THE SALE PROCEEDS IF THE PROPERTY IS PURCHASED AND CONSTRUCTED FOR RESIDENTIAL PURPOSES. THOUGH THE LD. DR TRIED TO DISTINGUISH THE FACTUAL MATRIX BUT THE SAME IS N OT TENABLE AS THE RATIO AND THE FACTS DETERMINED BY THE HONBLE KARNATAKA HIGH COURT ARE SIMILAR TO THE PRESENT ASSESSEES CASE AS WELL. THEREFORE, THE APP EAL OF THE ASSESSEE IS ALLOWED. ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012 ITA NO.6432/DEL/2015 AY: 2012- -- -13 1313 13 SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO SH. VIJAY CHAUDHARY VS. ITO 5 8. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2019 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 10/06/2019 *GMV *GMV *GMV *GMV COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE DRAFT DICTATED ON 04/06/19 DRAFT PLACED BEFORE AUTHOR 06/06/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : /06/19 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.