CDK.Sai Narain, CHENNAI V. ACIT, CHENNAI

ITA 656/CHNY/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6433 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-01-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 17-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANAT KUMAR RAHA
• Assessee Lawyers: T VASUDEVAN
• Keywords: Capital Gains
• Section: 143(3); 143(1); 147; 148; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , ! ' # , $ #% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.656/CHNY/2017 & '& /ASSESSMENT YEAR: 2010-11 SHRI CDK SAI NARAIN, NO.10, CORPORATION SCHOOL ROAD, LAKE AREA, NUNGAMBAKKAM, CHENNAI 600 034. VS. ASST. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-21, CHENNAI. [PAN: AACPD 4849G] ( () /APPELLANT) ( *+() /RESPONDENT) () , - / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE *+() , - /RESPONDENT BY : SHRI SANAT KUMAR RAHA, JCIT . , /$ /DATE OF HEARING : 16.01.2019 01' , /$ / DATE OF PRONOUNCEMENT : 18.02.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -9, CHENNAI (HEREIN AFTER CALLED AS CIT(A)) DATED 20.12.2016 FOR THE ASSESSMENT YEAR (AY) 2010-11. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER OF THE COMMISSIONER OF LNCOME-TAX(APP EALS) DISMISSING THE APPEAL IS CONTRARY TO LAW, ERRONEOUS AND UNSUST AINABLE ON THE FACTS OF THE CASE. ITA NO.656/CHNY/2017 (AY: 2010-11) :- 2 -: I NOTICE U/S.148 AND ASSESSMENT BAD IN LAW: 2. THE CIT(A) OUGHT TO HAVE SEEN THAT THE ISSUE OF NOTICE U/S.148 FOR REOPENING IS BAD IN LAW AND HENCE THE ASSESSMENT FR AMED UNDER SEC.1 47 R.W.S.143(3) IS LIABLE TO ANNULLED. 3. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSE E HAVING FILED THE RETURN OF INCOME ON 08.11.10, THE OFFICER WITHOUT A CTING ON THE VALID RETURN AND IN THE ABSENCE OF ANY FRESH MATERIAL NOR REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, THE REOPENING B Y ISSUE OF NOTICE U/S.148 AND CONSEQUENTIAL ORDER OF ASSESSMEN T ARE NOT IN ACCORDANCE WILH LAW. 4. THE CIT(A), EVEN OTHERWISE, FAILED TO APPRECIATE THAT THE ASSESSMENT COMPLETED ON 28.9.15 WAS BARRED BY LIMIT ATION, AS THE ASSESSMENT OUGHT TO HAVE BEEN COMPLETED BY 31.3.15 AND HENCE IS VOID IN LOW. II CLAIM OF EXEMPTION U/S.54F: 5. THE CIT(A) ERRED IN CONFIRMING THE DENIAL OF EXE MPTION UNDER SEC.54 OF THE ACT. 6. THE C1T(A) FAILED TO APPRECIATE THAT THE ASSESSE E HAD SOLD THE RESIDENTIAL HOUSE ON 8.4.09 AND REINVESTED THE ENTI RE SALE CONSIDERATION ON THE NEW PROPERTY, A RESIDENTIAL HO USE, WITHIN THE STATUTORY PERIOD AND HENCE THE ASSESSEE WAS ENTITLE D TO THE EXEMPTION U/S.54 OF THE ACT. 7. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE REINVESTMENT OF THE SALE CONSIDERATION IN A NEW PROPERTY WITHIN THE STA TUTORY PERIOD WAS THE SOLE CRITERION FOR EXEMPTION AND NOT THE COMPLE TION OF CONSTRUCTION AND HENCE THE DENIAL OF EXEMPTION WAS ARBITRARY AND UNSUSTAINABLE ON THE FACTS OF THE CASE. 8. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ASSESSEE HAD COMPUTED CAPITAL GAINS AT RS.6805680 ON THE SALE OF PROPERTY, WHEREAS HE HAD INVESTED RS.4.07 CRORES IN THE NEW P ROPERTY WITHIN THE STATUTORY PERIOD OF THREE YEARS FROM THE DATE O F SALE AND HENCE CONFIRMING THE DENIAL OF THE CLAIM FOR EXEMPTION U/ S.54 IS UNJUSTIFIED AND UNTENABLE IN LAW. 9. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT WHI LE THE ASSESEE HAD PAID A TOKEN ADVANCE OF RS.20 IAKHS FOR BOOKING THE PROPERTY ON 12.3.08 AND ALMOST THE ENTIRE AMOUNT FOR THE NEW PR OPERTY WAS PAID WITHIN THE STATUTORY TIME FOR REINVESTMENT AND HENC E THE DENIAL OF EXEMPTION WAS UNJUST AND UNTENABLE IN LAW. 10. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT TH E ASSESSEE HAD PAID AMOUNTS FOR THE NEW PROPERTY IN ASST. YEAR 2009-10 OF RS.2.62 CRORES ITA NO.656/CHNY/2017 (AY: 2010-11) :- 3 -: AND IN ASST. YEAR 2010-11 OF RS.68 IAKHS AND THAT T HESE ARE TO BE RECKONED FOR THE PURPOSE OF REINVESTMENT AS PER SEC .54 OF THE ACT. 11. THE CIT(A), IN ANY EVENT, OUGHT TO HAVE CONSIDE RED THE CONTENTIONS OF THE ASSESSEE IN THE PROPER PERSPECTI VE AND HELD THAT THE NOTICE U/S.148 AND ASSESSMENT WERE BAD IN LAW A ND THUS ALLOWED THE EXEMPTION UNDER SEC.54F OF THE ACT. 12. THE CIT(A), IN ANY VIEW OF THE MATTER, OUGHT TO HAVE SEEN THAT SEC.54 IS A BENEFICIAL LEGISLATION AND THAT THE ASS ESSEE HAVING DULY COMPLIED WITH THE PROVISIONS OF THE ACT BY REINVEST ING THE ENTIRE SALE PROCEEDS. THE EXEMPTION UNDER SEC.54 OUGHT TO BE AL LOWED AS CLAIMED BY THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL AND DERIVES INCOME UNDER HEAD SALARY. THE RETURN OF INCOME FOR THE AY 2010-11 W AS FILED ON 08.11.2010 DISCLOSING TOTAL INCOME OF RS. 1,09,11,933/-. THE SAID RETURN OF INCOME WAS ACCEPTED U/S. 143(1) OF THE INCOME TAX ACT, 196 1 (FOR SHORT THE ACT). SUBSEQUENTLY, THE ASSESSING OFFICER (AO) IS SUED A NOTICE U/S. 148 OF THE ACT ON 20.07.2015 ON RECEIVING INFORMATION T HAT THE APPELLANT SOLD THE PROPERTY ON 08.04.2009 FOR A CONSIDERATION OF R S. 1,20,90,000/- IN RESPECT OF WHICH NO CAPITAL GAINS WERE OFFERED TO T AX. AGAINST THE SAID NOTICE, THE ASSESSMENT WAS COMPLETED BY THE ASST. C IT, NON CORPORATE CIRCLE-21, CHENNAI VIDE ORDER DATED 28.09.2015 PASS ED U/S. 143(3) R/W. S. 147 OF THE ACT AT TOTAL INCOME OF RS. 1,77,17,61 0/-. WHILE DOING SO, THE AO HAS BROUGHT TO TAX THE LTCG ON SALE OF PROPERTY AND ALSO DENIED THE CLAIM FOR DEDUCTION U/S. 54 OF THE ACT ON THE GROUN D THAT THE AGREEMENT OF SALE FOR PURCHASE OF NEW HOUSE WAS ENTERED ON 19.03 .2008 ON WHICH DATE ONLY ADVANCE OF RS. 20 LAKHS WAS PAID. ACCORD ING TO THE AO, THE ITA NO.656/CHNY/2017 (AY: 2010-11) :- 4 -: DATE OF AGREEMENT OF SALE TO PURCHASE A NEW HOUSE W AS MADE BEYOND THE PERIOD OF ONE YEAR PRIOR TO SALE OF ORIGINAL AS SET AS ON 08.04.2009. THEREFORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTIO N U/S. 54 OF THE ACT. ACCORDINGLY, HE DENIED THE EXEMPTION U/S. 54 OF THE ACT. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER DISMISSED THE APPEAL. BEING AGG RIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APP EAL. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE SOLITARY ISSUE IN THE PRESENT APPEAL IS WHETHER THE APPELLANT WAS ENTITLED TO EXEMPTION U/S. 54 OF THE ACT OR NOT ? INDISPUTEDLY, THE ORIGINAL ASSET WAS SOLD ON 08.04.2009. THE APPELLA NT ENTERED INTO AGREEMENT ON SALE TO PURCHASE A NEW HOUSE ON 09.03. 2008, WHICH IS BEYOND THE PERIOD OF ONE YEAR PRIOR TO THE DATE OF SALE OF THE ORIGINAL ASSET. THIS NEW ASSET WAS FINALLY REGISTERED IN FA VOUR OF THE ASSESSEE ON 27.03.2014. THE CONSIDERATION FOR THE PURCHASE OF NEW HOUSE WAS PAID FROM 17.03.2008 TO 24.03.2014 AGGREGATING TO RS. 4, 07,72,768/-. THE AO AS WELL AS THE LD. CIT(A) DENIED THE EXEMPTION O N THE GROUND THAT THE APPELLANT HAD NOT ACQUIRED THE TITLE OF THE NEW HOU SE ON OR BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME FOR THE AS SESSMENT YEAR UNDER CONSIDERATION. IN OUR VIEW, THIS VIEW CANNOT BE UP HELD. TAKING INTO CONSIDERATION, THE SPIRIT OF THE PROVISIONS OF S. 5 4 OF THE ACT THE WORD ITA NO.656/CHNY/2017 (AY: 2010-11) :- 5 -: TRANSFER USED BEFORE THE WORD PURCHASE IN S. 54 (2) OF THE ACT, IT SEEMS THAT THE WORD PURCHASE IS NOT USED IN THE SENSE O F LEGAL TRANSFER AND THEREFORE, HOLDING LEGAL TITLE WITHIN THE PRESCRIBE D PERIOD IS NOT A CONDITION PRECEDENT FOR ALLOWANCE U/S. 54 OF THE ACT. RELIAN CE IN THIS REGARD BE PLACED ON THE DECISION OF HONBLE HIGH COURT OF BOM BAY IN THE CASE OF CIT VS. DR. LAXHMI CHAND NARPAL NAGDA [1995] 211 IT R 804 (BOM) . FURTHER, UTILIZATION OF THE SALE PROCEEDS IN THE CO NSTRUCTION OR PURCHASE OF NEW HOUSE WITHIN THE PRESCRIBED PERIOD WOULD BE SUF FICE TO CLAIM EXEMPTION U/S. 54 OF THE ACT IRRESPECTIVE OF FACT T HAT NEITHER THE SALE TRANSACTION WAS CONCLUDED NOR REGISTRATION HAD TAKE N PLACE WITHIN THE PRESCRIBED PERIOD. RELIANCE IN THIS REGARD ALSO CA N BE MADE TO THE DECISION OF KARNATAKA IN THE CASE OF CIT V. SHAKUNTALA DEVI [2016] 389 ITR 366 (KAR.) . IN THE PRESENT CASE, IN THE ORDER OF LD. CIT(A), THE DETAILS AS TO THE DATE OF PAYMENT TOWARDS PURCHASE OF NEW H OUSE WERE FURNISHED BEFORE THE LD. CIT(A). BUT, THESE DETAIL S WERE NOT FILED BEFORE THE ASSESSING AUTHORITY AND THEREFORE, WE REMIT BAC K THE ISSUE TO THE FILE OF AO WITH A DIRECTION TO ALLOW THE EXEMPTION U/S. 54 OF THE ACT TO THE EXTENT OF THE INVESTMENT MADE BEFORE THE DUE DATE F OR FILING THE RETURN OF INCOME AFTER DUE VERIFICATION. ITA NO.656/CHNY/2017 (AY: 2010-11) :- 6 -: 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 18 TH DAY OF FEBRUARY, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! ' # ) (INTURI RAMA RAO) $ /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 18 TH FEBRUARY, 2019. EDN, SR. P.S , */34 54'/ /COPY TO: 1. () /APPELLANT 4. . 6/ /CIT 2. *+() /RESPONDENT 5. 47 */ /DR 3. . 6/ ( )/CIT(A) 6. 8& 9 /GF