Kanaiyalal Muljibhai Patel, Ahmedabad V. Income Tax Officer, Ward-15(1), Ahmedabad

ITA 649/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3369 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Capital asset; Question of law
• Section: 143(3); 54F; 143(1); 54; 263

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.649/AHD/2016 / ASSTT. YEAR: 2010-11 KANAIYALAL MULJIBHAI PATEL B-1, 53A, STERLING CITY NR.SHIV ASHISH SCHOOL BOPAL, AHMEDABAD 380058 PAN : AAMPP 6820 D VS. ITO, WARD-15(1) NOW ITO, WARD-7(1)(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR WITH SHRI MEHUL TALERA, AR REVENUE BY : SHRI S.K. DEV, SR.DR ! / DATE OF HEARING : 14/02/2019 '#$ ! / DATE OF PRONOUNCEMENT: 20/02/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-7, AHMEDABAD DATED 11.12.2015 PASSED FOR THE ASSTT.YEAR 2010-11. 2. THOUGH THE GROUNDS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES; THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NA TURE. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF EXEMPTION UNDER SECTI ON 54F OF THE ITA NO.649/AHD/2016 2 INCOME TAX ACT, 1961 AMOUNTING TO RS.57,74,673/- RE VISED BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT ORIGINALLY ASSES SEE HAS FILED HIS RETURN OF INCOME ON 15.6.2010 DECLARING TAXABLE INCOME OF RS.3,76,810/-. THIS RETURN WAS PROCESSED UNDER SEC TION 143(1) OF THE ACT. THEREAFTER, AN ASSESSMENT WAS MADE UNDER SECTION 143(3) ON 18.1.2012 DETERMINING TAXABLE INCOME AT R S.3,76,810/- . FRESH ASSESSMENT HAS BEEN MADE IN PURSUANCE OF O RDER PASSED BY THE LD.COMMISSIONER UNDER SECTION 263 OF THE INC OME TAX ACT. IT EMERGES OUT THAT THE ASSESSEE ALONG WITH 10 OTHE R CO-OWNERS HAD SOLD LAND ADMEASURING 11432 SQ.YARDS FOR CONSID ERATION OF RS.3,33,59,314/-. CAPITAL GAIN OF RS.35,91,912/- W AS COMPUTED, BUT THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTIO N 54F OF THE ACT. IT WAS CONTENDED BY THE ASSESSEE THAT A PLOT OF LAND AT BOPAL WAS PURCHASED VIDE PURCHASE DEED DATED 12.6.2009 FO R RS.10.05 LAKHS AND HE CONSTRUCTED A HOUSE AT THE COST OF RS. 31,38,000/-. THUS, TOTAL COST OF THE RESIDENCE WAS SHOWN AT RS.4 1.83 LAKHS. THIS EXEMPTION WAS DENIED TO THE ASSESSEE ON THE GR OUND THAT NEW PLOT WAS NOT PURCHASED BY HIM IN HIS INDIVIDUAL NAME, BUT IT WAS PURCHASED IN THE NAME OF HUF. HE HAS SIGNED AS KARTA /MANAGER OF THE HUF. APPEAL TO THE LD.CIT(A) DID N OT BRING ANY RELIEF TO THE ASSESSEE. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE ISSUE BEFORE US IS, WHETHER THE HOUSE CONSTRUCTED BY THE ASSESSEE ON A PLOT PURCHAS ED IN THE NAME OF HUF, EXEMPTION UNDER SECTION 54F, IS AVAILAB LE TO THE ASSESSEE OR NOT ? THE REVENUE IS OF THE OPINION TH AT FOR CLAIMING ITA NO.649/AHD/2016 3 EXEMPTION UNDER SECTION 54F, THE INVESTMENT OUGHT T O HAVE BEEN MADE IN THE ASSESSEES INDIVIDUAL NAME AND NOT IN T HE NAME OF HUF, BECAUSE, HUF IS A SEPARATE TAXABLE ENTITY. ON T HE OTHER HAND, STAND OF THE ASSESSEE IS THAT NEW HOUSE HAS B EEN CONSTRUCTED ON A PLOT PURCHASED IN THE NAME OF HUF, BUT MEMBERS OF THE HUF HAVE NOT CONTRIBUTED ANY MONEY, RATHER WH OLE INVESTMENT WAS MADE FROM THE SALE PROCEEDS OF EARLI ER CAPITAL ASSET/LAND AS WELL AS CONTRIBUTION MADE BY THE ASSE SSEE ONLY, AND THEREFORE, IT FULFILLED ALL THE REQUISITE CONDITION S. IT WAS CONTENDED BEFORE US, THAT THIS ASPECT HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT AND KARNATAKA HIGH COURT AS WELL A S ITAT, AHMEDABAD BENCH, WHEREIN THE HONBLE HIGH COURTS AND TRIBUNAL CONCURRED UNANIMOUSLY THAT IT IS NOT NECESSARY TO P URCHASE NEW HOUSE ONLY IN THE NAME OF INDIVIDUAL, AND IF OTHER FAMILY MEMBERS HAS ALSO BEEN MADE AS CO-OWNERS, THEN ALSO EXEMPTIO N UNDER SECTION 54F COULD BE CLAIMED. A REFERENCE TO THE F OLLOWING DECISION WAS MADE: I) CIT VS. RAVINDER KUMAR ARORA, 342 ITR 38 (DEL) II) DCIT VS. MRS. JENIFFER BHIDE, 349 ITR 080 (KAR) III) CIT VS. KAMAL WAHAL, 351 ITR 04 (DEL) IV) CHITRANG M. DAVE, ITA NO.2627/AHD/2017 5. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE FIND THAT ITAT IN THE CASE OF SHRI CHITRANG M. DAVE RENDERED IN ITA NO.2627/AHD/2017 (SUPRA) HAS ALLOWED THE EXEMPTION UNDER SECTION 54F. IN THIS CASE, THE ASSESSEE HAS PURCHA SED A FLAT IN A HOUSING SOCIETY AND INCLUDED THE NAME OF HIS FATHER ALONG WITH HIM. THE DEDUCTION WAS DISALLOWED TO THE ASSESSEE TO THE EXTENT ITA NO.649/AHD/2016 4 OF THE SHARE OF HIS FATHER I.E. 50%, BUT TRIBUNAL A LLOWED THE DEDUCTION TO THE ASSESSEE. IN THE CASE OF CIT VS. KAMAL WAHAL, 351 ITR 04 (DEL), THE ASSESSEE PURCHASED NEW HOUSIN G IN THE NAME OF HIS WIFE. THE EXEMPTION WAS DISALLOWED UND ER SECTION 54F. HOWEVER, IT WAS ALLOWED BY THE CIT(A) AS WELL AS BY THE TRIBUNAL AND THE HONBLE DELHI HIGH COURT HAS UPHEL D THE ORDER OF THE TRIBUNAL. HONBLE DELHI HIGH COURT HAS MADE RE FERENCE TO THE DECISION OF HONBLE MADRAS HIGH COURT AS WELL AS KA RNATAKA HIGH COURT. THE DISCUSSION MADE BY THE HONBLE DELHI HI GH COURT IS WORTH TO NOTE. IT READS AS UNDER: 7. WE HAVE NO HESITATION IN AGREEING WITH THE VIEW TAKEN BY THE TRIBUNAL. APART FROM THE FACT THAT THE JUDGMENT S OF THE MADRAS AND KARNATAKA HIGH COURTS (SUPRA) ARE IN FAV OUR OF THE ASSESSEE, THE REVENUE FAIRLY BROUGHT TO OUR NOT ICE A SIMILAR VIEW OF THIS COURT IN CIT V. RAVINDER KUMAR ARORA [2012] 342 ITR 38/[2011] 203 TAXMAN 289/15 TAXMANN.COM 307. THAT WAS ALSO A CASE WHICH AROSE U NDER SECTION 54F OF THE ACT. THE NEW RESIDENTIAL PROPERT Y WAS ACQUIRED IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE. THE INCOME TAX AUTHORITIES RESTRICTED THE DEDUCTION UND ER SECTION 54F TO 50% ON THE FOOTING THAT THE DEDUCTION WAS NO T AVAILABLE ON THE PORTION OF THE INVESTMENT WHICH ST ANDS IN THE NAME OF THE ASSESSEE'S WIFE. THIS VIEW WAS DISA PPROVED BY THIS COURT. IT NOTED THAT THE ENTIRE PURCHASE CO NSIDERATION WAS PAID ONLY BY THE ASSESSEE AND NOT A SINGLE PENN Y WAS CONTRIBUTED BY THE ASSESSEE'S WIFE. IT ALSO NOTED T HAT A PURPOSIVE CONSTRUCTION IS TO BE PREFERRED AS AGAINS T A LITERAL CONSTRUCTION, MORE SO WHEN EVEN APPLYING THE LITERA L CONSTRUCTION, THERE IS NOTHING IN THE SECTION TO SH OW THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESS EE ONLY. AS A MATTER OF FACT, SECTION 54F IN TERMS DOE S NOT REQUIRE THAT THE NEW RESIDENTIAL PROPERTY SHALL BE PURCHASED IN THE NAME OF THE ASSESSEE; IT MERELY SAYS THAT TH E ASSESSEE SHOULD HAVE PURCHASED/CONSTRUCTED 'A RESID ENTIAL HOUSE'. ITA NO.649/AHD/2016 5 8. THIS COURT IN THE DECISION CITED ALONE ALSO NOTI CED THE JUDGMENT OF THE MADRAS HIGH COURT (SUPRA) AND AGREE D WITH THE SAME, OBSERVING THAT THOUGH THE MADRAS CASE WAS DECIDED IN RELATION TO SECTION 54 OF THE ACT, THAT SECTION WAS IN PARI MATERIA WITH SECTION 54F. THE JUDGMENT OF T HE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V. GURNAM SINGH [2010] 327 ITR 278/[2008] 170 TAXMAN 160 IN W HICH THE SAME VIEW WAS TAKEN WITH REFERENCE TO SECTION 5 4F WAS ALSO NOTICED BY THIS COURT. 9. IT THUS APPEARS TO US THAT THE PREDOMINANT JUDIC IAL VIEW, INCLUDING THAT OF THIS COURT, IS THAT FOR THE PURPO SES OF SECTION 54F, THE NEW RESIDENTIAL HOUSE NEED NOT BE PURCHASED BY THE ASSESSEE IN HIS OWN NAME NOR IS IT NECESSARY THAT IT SHOULD BE PURCHASED EXCLUSIVELY I N HIS NAME. IT IS MOREOVER TO BE NOTED THAT THE ASSESSEE IN THE PRESENT CASE HAS NOT PURCHASED THE NEW HOUSE IN THE NAME OF A STRANGER OR SOMEBODY WHO IS UNCONNECTED WITH H IM. HE HAS PURCHASED IT ONLY IN THE NAME OF HIS WIFE. THER E IS ALSO NO DISPUTE THAT THE ENTIRE INVESTMENT HAS COME OUT OF THE SALE PROCEEDS AND THAT THERE WAS NO CONTRIBUTION FR OM THE ASSESSEE'S WIFE. 10. HAVING REGARD TO THE RULE OF PURPOSIVE CONSTRUC TION AND THE OBJECT WHICH SECTION 54F SEEKS TO ACHIEVE AND RESPECTFULLY AGREEING WITH THE JUDGMENT OF THIS COU RT, WE ANSWER THE SUBSTANTIAL QUESTION OF LAW FRAMED BY US IN THE AFFIRMATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS ACCORDING DISMISSED WITH NO ORDER AS TO COSTS. 6. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS HIS S HARE TO THE EXTENT OF 1/4 TH IN THE HUF. THE OTHER MEMBERS OF HUF ARE NOT STRANGER. THEY ARE WIFE OF THE ASSESSEE AND TWO SO NS. MONEY HAS ONLY BEEN CONTRIBUTED BY THE ASSESSEE. THEREFORE, TO OUR MIND, THE FACTS AS AVAILABLE IN THE DECISION OF HONBLE D ELHI COURT CITED SUPRA, ARE SQUARELY APPLICABLE ON THIS CASE. WE AL LOW THE APPEAL OF THE ASSESSEE, AND DIRECT THE AO TO GRANT EXEMPTI ON UNDER SECTION 54F OF THE INCOME TAX ACT TO THE ASSESSEE. ITA NO.649/AHD/2016 6 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 20 TH FEBRUARY, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER