ITO, Kannur V. Smt.Rosamma Korah, Kannur

ITA 646/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73915 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 09-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: T M SREEDHARAN SENIOR
• Keywords: Capital asset
• Section: 54F; 139

Judgement Text

1 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 646/COCH/2013 (ASSESSMENT YEAR 2005-06) THE ITO, WD.1, KANNUR VS SMT. ROSAMMA KORAH PP XI/709, NEERKKAL HOUSE CHETTIPEEDIKA, PALLIKUNNU KANNUR PAN : APNPR1374L (APPELLANT) (RESPONDENT) I.T.A NO. 663/COCH/2013 (ASSESSMENT YEAR 2007-08) SMT. ROSAMMA KORAH VS THE ITO, WD.1(2) PP XI/709, NEERKKAL HOUSE KANNUR CHETTIPEEDIKA, PALLIKUNNU KANNUR (APPELLANT) (RESPONDENT) REVENUE BY : SMT. LATHA V KUMAR RESPONDENT BY : SHRI T.M. SREEDHARAN SENIOR COUNSEL DATE OF HEARING : 11-02-2014 DATE OF PRONOUNCEMENT : 07-03-2014 2 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE FILED THE APPEAL FOR THE ASSESSMENT YE AR 2005-06 AND THE ASSESSEE FILED THE APPEAL FOR THE ASSESSMENT YE AR 2007-08. SINCE THE ISSUE RAISED BY THE ASSESSEE AND THE REVENUE IS IDE NTICAL IN NATURE BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS EXEMP TION U/S 54F OF THE ACT. 3. SMT. LATHA V KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS NOT DEPOSITED THE NET SALE CONSIDERATION WHICH WAS NOT APPROPRIATED / USED IN THE CAPITAL GAIN ACCOUNT SCHEME WITHIN THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT. THEREFORE, ACCORDING TO THE LD.DR, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 54F OF T HE ACT, AS CLAIMED. THE CIT(A), HOWEVER, FOUND THAT THE ASSESSEE HAS CONSTR UCTED THE HOUSE WITHIN THE PERIOD OF THREE YEARS. ACCORDING TO THE LD.DR, FOR CLAIM OF EXEMPTION ONLY THE UTILIZED PORTION OF THE SALE CON SIDERATION HAS TO BE CONSIDERED FOR THE YEAR UNDER CONSIDERATION. THE U NUTILIZED PORTION OF THE SALE CONSIDERATION IS NOT ELIGIBLE FOR EXEMPTION IN CASE IT WAS NOT DEPOSITED 3 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 IN THE CAPITAL GAIN ACCOUNT SCHEME WITHIN THE DUE D ATE FOR FILING OF RETURN OF INCOME. THE CIT(A) CONFUSED THE INVESTMENT MADE BY THE ASSESSEE WITH THE TRANSFER OF THE CAPITAL ASSET WHICH WAS UNDER C ONSTRUCTION. WHAT WAS REFERRED BY CIT(A) IS WITH REGARD TO SALE OF THE FL AT WHICH WAS ALLOTTED TO THE SHARE OF THE ASSESSEE FOR WHICH THE ASSESSEE IS LIA BLE TO PAY SHORT TERM CAPITAL GAIN SEPARATELY. THIS FACT WAS NOT CONSIDE RED PROPERLY BY THE CIT(A). ACCORDING TO THE LD.DR, THE CIT(A) HAS COM PLETELY IGNORED THE PROVISIONS OF SECTION 54F(4) OF THE ACT. THE LD.DR PLACED RELIANCE ON THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF CI T VS VR DESAI (2011) 197 TAXMAN 52 (KER). 4. ON THE CONTRARY, SHRI T.M. SRIDHARAN, THE LD.SEN IOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE CONSTRUCT ED RESIDENTIAL HOUSE WITHIN THE PERIOD OF THREE YEARS, THERE IS NO NECES SITY FOR DEPOSITING THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME. ACCORDI NG TO THE LD.SENIOR COUNSEL, IN FACT, THE ASSESSEE HAS CONSTRUCTED A HO USE WITHIN THE PERIOD OF THREE YEARS. REFERRING TO THE ORDER OF THIS TRIBUN AL IN MUTHULETCHUMI JANARDANAN IN ITA 372/COCH/2011 DATED 07-12-2012, T HE LD.SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT SECTION 54F IS A BE NEFICIAL PROVISION, THEREFORE, THE TIME LIMIT PROVIDED U/S 139(4) FOR F ILING THE RETURN OF INCOME SHALL ALSO BE TAKEN INTO CONSIDERATION. IN VIEW OF THE DECISION OF THIS 4 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 TRIBUNAL, ACCORDING TO THE LD.SENIOR COUNSEL, THE A SSESSEE IS ENTITLED FOR EXEMPTION U/S 54F OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. A BARE R EADING OF SECTION 54F CLEARLY SHOWS THAT THE ASSESSEE IS ENTITLED FOR EXE MPTION IN CASE HE / SHE CONSTRUCTS A RESIDENTIAL HOUSE WITHIN A PERIOD OF T HREE YEARS AFTER THE SALE OF THE CAPITAL ASSET. HOWEVER, SUB CLAUSE (4) OF S ECTION 54F CLEARLY SAYS THAT THE UNUTILIZED PORTION OF THE NET SALE CONSIDE RATION WHICH IS OTHERWISE LIABLE FOR CAPITAL GAIN TAX SHALL BE DEPOSITED IN T HE CAPITAL GAIN ACCOUNT SCHEME WITHIN THE PERIOD OF DUE DATE FOR FILING RET URN OF INCOME U/S 139. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER TH E DUE DATE MENTIONED IN SECTION 54F(4) IS THE DUE DATE FOR FILING THE RETUR N U/S 139(1) OR THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(4) OF THE ACT. 6. WE HAVE CAREFULLY GONE THROUGH THE DECISION OF T HIS TRIBUNAL IN THE CASE OF MUTHUYLETCHUMI JANARDANAN (SUPRA). THIS TR IBUNAL, AFTER REFERRING TO THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS MS. JAGRITI AGGARWAL 339 ITR 610 (P&H) FOUND THAT T HE ASSESSEE CAN DEPOSIT THE AMOUNT WITHIN THE TIME LIMIT PROVIDED F OR FILING THE RETURN U/S 139(4) OF THE ACT. WE FIND THAT THE APEX COURT HAD AN OCCASION TO INTERPRET 5 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 THE PROVISIONS OF INCOME-TAX ACT, MORE PARTICULARLY , THE TERM DUE DATE IN PRAKASH NATH KHANNA AND ANOTHER VS CIT (2004) 266 I TR 1 (SC). THE APEX COURT FOUND THAT DUE DATE MEANS THE DUE DATE F OR FILING THE RETURN U/S 139(1) AND NOT 139(4). NO DOUBT, THE TERM DUE DAT E WAS INTERPRETED BY THE SUPREME COURT IN THE CONTEXT OF PROSECUTION U/S 276CC OF THE ACT. NORMALLY, THE COURT SHOULD TAKE A LIBERAL CONSTRUCT ION OF THE PROVISIONS IN THE CASE OF CRIMINAL PROSECUTION. THE SUPREME COUR T, AFTER CONSIDERING THE SCHEME OF THE INCOME-TAX ACT AND THE RULE OF IN TERPRETATION, MORE PARTICULARLY, THE LAWS OF TAXATION HAS OBSERVED AS FOLLOWS AT PAGE 9 OF THE ITR: IT IS A WELL SETTLED PRINCIPLE IN LAW THAT THE CO URT CANNOT READ ANYTHING INTO A STATUTORY PROVISION WHICH IS P LAIN AND UNAMBIGUOUS. A STATUTE IS AN EDICT OF THE LEGISLAT URE. THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR OF LEGISLATIVE INTENT. THE FIRST AND PRIMARY RULE OF CONSTRUCTION IS THAT THE INTENTION OF THE LEGISLATION MUST BE FOUND IN THE WORDS USED BY THE LEGISLATURE ITSELF. THE QUESTION IS NO T WHAT MAY BE SUPPOSED AND HAS BEEN INTENDED BUT WHAT HAS BEEN SAID. STATUTES SHOULD BE CONSTRUED, NOT AS THEOREMS OF E UCLID. JUDGE LEARNED HAND SAID, BUT WORDS MUST BE CONSTRU ED WITH SOME IMAGINATION OF THE PURPOSES WHICH LIE BEHIND T HEM. (SEE LENIGH VALLEY COAL CO. V. YENSAVAGE (218 FR 54 7). THE VIEW WAS REITERATED IN UNION OF INDIA V. FILIP TIAG O DE GAMA OF 6 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 VEDEM VASCO DE GAMA, AIR 1990 SC 981 AND PADMA SUNDARA RAO V. STATE OF TAMIL NADU [2002] 3 SCC 533 ; [2002] 255 ITR 147 (SC)). IN D.R. VENKATACHALAM V. DEPUTY TRANSPORT COMMISSIONER [1977] 2 SCC 273 IT WAS OBSERVED THAT COURTS MUST AVOID THE DANGER OF A PRIORI DETERMINATION OF THE MEANING OF A PROVISION BASED ON THEIR OWN PRECONCEIVED NOTI ONS OF IDEOLOGICAL STRUCTURE OR SCHEME INTO WHICH THE PROV ISION TO BE INTERPRETED IS SOMEWHAT FITTED. THEY ARE NOT ENTIT LED TO USURP LEGISLATIVE FUNCTION UNDER THE DISGUISE OF INTERPRE TATION. WHILE INTERPRETING A PROVISION THE COURT ONLY INTE RPRETS THE LAW AND CANNOT LEGISLATE IT. IF A PROVISION OF LAW IS MISUSED AND SUBJECTED TO THE ABUSE OF PROCESS OF LAW, IT IS FOR THE LEGISLATURE TO AMEND, MODIFY OR REPEAL IT, IF DEEME D NECESSARY. (SEE RISHABH AGRO INDUSTRIES LTD V. P.N .B. CAPITAL SERVICES LTD. [2005] 5 SCC 515; [2000] 101 COMP CAS 284). THE LEGISLATIVE CAUSUS OMISSUS CANNOT BE SUPPLIED B Y JUDICIAL INTERPRETATIVE PROCESS. 7. AFTER REFERRING TO THEM DUE DATE, THE APEX COU RT HAS ALSO OBSERVED AS FOLLOWS AT PAGES 10 & 11 OF THE ITR: ON OF THE SIGNIFICANT TERMS USED IN SECTION 276CC IS IN DUE TIME. THE TIME WITHIN WHICH THE RETURN IS TO BE FURNISHED IS INDICATED ONLY IN SUB-SECTION (1) OF SECTION 139 AND NOT IN 7 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 SUB-SECTION (4) OF SECTION 139. THAT BEING SO, EVE N IF A RETURN IS FILED IN TERMS OF SUB-SECTION (4) OF SECTION 139 THAT WOULD NOT DILUTE THE INFRACTION IN NOT FURNISHING THE RETURN IN DUE TIME AS PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 139. O THERWISE, THE USE OF THE EXPRESSION IN DUE TIME WOULD LOSE ITS RELEVANCE AND IT CANNOT BE SAID THAT THE SAID EXPRE SSION WAS USED WITHOUT ANY PURPOSE. BEFORE SUBSTITUTION OF T HE EXPRESSION CLAUSE (I) OF SUB-SECTION (1) OF SECTIO N 142 BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, WITH EFFECT FROM APRIL 1, 1989, THE EXPRESSION USED WAS SUB-SECTION (2) O F SECTION 139. AT THE RELEVANT POINT OF TIME THE ASSESSING OFFICER WAS EMPOWERED TO ISSUE A NOTICE REQUIRING FURNISHING OF A RETURN WITHIN THE TIME INDICATED THEREIN. THAT MEANS THE INFRACTIONS WHICH ARE COVERED BY SECTION 276CC RELATE TO NON-FU RNISHING OF RETURN WITHIN THE TIME IN TERMS OF SUB-SECTION ( 1) OR INDICATED IN THE NOTICE GIVEN UNDER SUB-SECTION (2) OF SECTIO N 139. THERE IS NO CONDONATION OF THE SAID INFRACTION, EVE N IF A RETURN IS FILED IN TERMS OF SUB-SECTION (4). ACCEPTING SU CH A PLEA WOULD MEAN THAT A PERSON WHO HAS NOT FILED A RETURN WITHIN THE DUE TIME AS PRESCRIBED UNDER SUB-SECTION (1) OR (2) OF SECTION 139 WOULD GET BENEFIT BY FILING THE RETURN UNDER SE CTION 139(4) MUCH LATER. THIS CANNOT CERTAINLY BE THE LEGISLATI VE INTENT. 8. THE APEX COURT FURTHER FOUND THAT HAD THE INTENT IONS OF THE LEGISLATURE WAS TO PERMIT THE ASSESSEE TO FILE THE RETURN U/S 139(4) ALSO, THE USE OF THE EXPRESSION SECTION 139 ALONE WOULD HAVE BEEN SUFFICED. THE LEGISLATURE WOULD NOT HAVE SAID THAT IT SHOULD BE FILED U/S 139(1). 8 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 WHEN THE LEGISLATURE SPECIFICALLY REFERS TO SECTION 139(1), IT CANNOT BE THE INTENTION TO PERMIT THE ASSESSEE TO FILE THE RETURN U/S 139(4) ALSO. THE SUPREME COURT SPECIFICALLY OBSERVED THAT IT CANNOT BE SAID THAT THE LEGISLATURE WITHOUT ANY PURPOSE OR INTENT SPECIFIED ONLY THE SUB-SECTIONS (1) AND (2) AND THE CONSPICUOUS OMISSION OF SUB-SEC TION (4) HAS NO MEANING OR PURPOSE BEHIND IT. SUB-SECTION (4) OF S ECTION 139 CANNOT BY ANY STRETCH OF IMAGINATION CONTROL THE OPERATION OF SUB-SECTION (1) WHEREIN A FIXED PERIOD FOR FURNISHING THE RETURN IS STIPULA TED. 9. THIS JUDGMENT OF THE APEX COURT WAS NOT CONSIDER ED BY THE CIT(A). THE ASSESSEE ALSO HAD NO OCCASION TO BRING THIS JUD GMENT TO THE NOTICE OF THE CIT(A). WHEN LEGISLATURE SPECIFICALLY REFERS O NLY SECTION 139(1) AND OMITTED TO REFER SECTION 139(4), THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT MAKING A REFERENCE TO SECTION 139(4) CANNOT BE PROPER. THIS JUDGMENT OF THE APEX COURT IN PRAKASH NATH KHANNA AND ANOTHE R (SUPRA) WAS ALSO NOT BROUGHT TO THE NOTICE OF THE BENCH OF THIS TRIB UNAL WHEN THE CASE OF MUTHULETCHUMI JANARDANAN (SUPRA) WAS DECIDED. THER EFORE, THIS TRIBUNAL APPARENTLY FOLLOWED THE JUDGMENT OF THE PUNJAB & HA RYANA HIGH COURT IN THE CASE OF MS. JAGRITI AGGARWAL (SUPRA). THE JUDG MENT OF THE KERALA HIGH COURT IN THE CASE OF V.R. DESAI (SUPRA) ALSO WAS NO T CONSIDERED BY THIS TRIBUNAL IN THE CASE OF MUTHULETCHUMI JANARDANAN (S UPRA). THEREFORE, THIS 9 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF PRAKASH NATH KHANNA AND A NOTHER (SUPRA) AND THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE O F V.R. DESAI (SUPRA). ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ISSUE OF EXEMPTION U/S 54(F) IS RESTORED TO THE FILE OF T HE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT IN THE CASE PRAKASH NATH KHANNA AND ANOTHER (SUPRA) AND THE JUDGMENT OF THE KERALA HIGH COURT I N V.R. DESAI (SUPRA) AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH L AW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND THE REVENUE STAND ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07 TH MARCH, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 07 TH MARCH, 2014 PK/- 10 ITA NO.646/COCH/2013 ITA NO.663/COCH/2013 COPY TO: 1. THE ITO, WD.1, KANNUR 2. SMT. ROSAMMA KORAH, PP XI/709, NEERKKAL HOUSE, C HETTIPEEDIKA, PALLIKUNNU, KANNUR 670 004 3. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE 4. THE COMMISSIONER OF INCOME-TAX(A), AAYAKAR BHAVA N MANANCHIRA, KOZHIKODE 673 001 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH