ACIT, New Delhi V. Sh. Sudershan Aggarwal, New Delhi

ITA 6663/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4144 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 08-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Assessee Lawyers: RAJAN MALIK
• Keywords: Capital asset; Period of limitation; Wrong claim
• Section: 54F; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA A. PILLAI , JM ITA NO. 6663/DEL/2014 : ASSTT. YEAR : 2009 - 10 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 30(1 ) , NEW DELHI - 110002 VS SH. SUDERSHAN AGGARWAL, E - 245, GREATER KAILASH - I, NEW DELHI - 1100 48 (APPELLANT) (RESPONDENT) PAN NO. A A EPA6492Q ASSESSEE BY : SH. RAJAN MALIK, ADV. REVENUE BY : SH . KAUSHLENDRA TIWARI, SR. DR DATE OF HEARING : 27 .12 .201 7 DATE OF PRONOUNCE MENT : 12 .01 .201 8 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 04 .09.2014 OF LD. CIT(A) - X XII I , NE W DELHI 2 . THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER: WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION U/S 54F OF THE I.T. ACT, 1961 UPTO THE EXTENDED DATE OF FILING THE RETURN U/S 139(4) OF THE I.T. ACT, 1961 IGNORING THE DECISION OF THE APEX COURT IN THE CASE OF PRAKASH NATH & ANR. VS CIT (2004) 266 ITR (SC) WHEREIN THE LEGISLATURE HELD THAT THE DUE DATE OF FILING OF THE RETURN IS GOVERN ED BY SECTION 139(1) AND NOT BY 139(4) O F THE I.T. ACT, 1961. 3 . FROM THE ABOVE GROUNDS, IT IS CLEAR THAT THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DEDUCTION U/S 54F INCOME ITA NO . 6663 /DE L/201 4 SUDERSHAN AGGARWAL 2 TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DIRECTED TO BE ALLOWED BY THE LD. CIT(A). 4. FACTS OF THE CASE I N BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 26.09.2009 DECLARING AN INCOME OF RS.52,20,420/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON THE SAME INCOME. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO WHILE FRAMING THE ASSESSMENT DID NOT ALLOW THE CLAIM OF THE ASSESSEE U/S 54F OF THE ACT FOR THE REASON THAT THE FACTORY BUILDING AT MANESAR , SOLD BY THE ASSESSEE WAS DEPRECIABLE ASSET AND AS SUCH, SAME HAD BEEN TREATED AS SHORT TERM CAPITAL ASSET AND NOT LONG TERM CAPITAL ASSET, ACCORDIN GLY, THE CLAIM OF THE ASSESSEE U/S 54F OF THE ACT WAS PATENTLY WRONG CLAIM AND THE SAME WAS NOT ALLOWABLE. 5 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT SEPARATE TREATMENT HAD TO BE ACCORDED WITH REGARD TO SALE OF LAND AND SALE OF FACTORY BUILDING . I N S UPPORT OF THE ABOVE CONTENTION, T HE ASSESSEE FURNISHED VOLUMINOUS DOCUMENTARY EVIDENCE S WHICH WERE FORWARDED TO THE AO BY THE LD. CIT(A) AND SPECIFIC DIRECTIONS WERE ISSUED TO COMMENT ON THE CLAIM OF THE ASSESSEE THA T THE SALE CONSIDERATION OF FACTORY BUILDING AND LAND FOR RS.3 CRORES REQUIRED TO BE BIFURCATED AS LONG TERM ITA NO . 6663 /DE L/201 4 SUDERSHAN AGGARWAL 3 CAPITAL GAIN IN THE CASE OF LAND AND SHORT TERM CAPITAL GAIN IN THE CASE OF FACTORY BUILDING. THE AO WAS ALSO DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 54F OF THE ACT WITH REGARD TO INVESTMENT IN NEW RESIDENTIAL PROPERTY OUT OF THE SALE CONSIDERATION OF LAND. THE AO WAS ALSO ASKED TO VERIFY THE DATES OF PAYMENT MADE BY THE ASSESSEE FOR PURCHASE OF NEW PROPERTY AND TO SPECIFICALL Y COMMENT AS TO WHETHER THE CLAIM OF THE ASSESSEE WITH REGARD TO DEDUCTION U/S 54F OF THE ACT WAS IN ORDER. IN HIS REMAND REPORT, THE AO ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE LAND ON WHICH THE FACTORY BUILDING STOOD WAS A LONG TERM CAPITAL ASSET, SIN CE, THE INDUSTRIAL PLOT MEASURING 1012.50 SQ MTRS. AT IMT, M ANESAR WAS ALLOTTED TO THE ASSESSEE ON 12.01.2014. THE AO ALSO MENTIONED THAT THE GOVERNMENT APPROVED VALUER IN HIS REPORT HAD ESTIMATED THE VALUE OF LAND AS ON THE DATE OF SALE AT RS.1,73,17,300/ - OUT OF THE TOTAL SALE CONSIDERATION OF RS.3 CRORES AND THE VALUE OF THE FACTORY BUILDING , ACCORDINGLY HAD BEEN ESTIMATED AT RS.1,26,82,700/ - WHICH WAS HIGHER THAN THE BOOK VALUE OF THE FACTORY BUILDING AT RS.1,17,75,000/ - . THE AO IN HIS REMAND REPORT ACC EPTED THE VALUATION OF LAND AND FACTORY BUILDING AS CARRIED OUT BY THE GOVERNMENT APPROVED VALUER. THE LD. CIT(A) DIRECTED THE AO TO TAKE THE CORRECT VALUE OF LAND AS ON THE DATE OF SALE AT RS.1,73,17,300/ - FOR THE ITA NO . 6663 /DE L/201 4 SUDERSHAN AGGARWAL 4 PURPOSE OF CALCULATING LONG TERM CAPITAL GAIN AND THE FACTORY BUILDING AT RS.1,26,82,700/ - FOR THE PURPOSE OF CALCULATION OF SHORT TERM CAPITAL GAIN. AS REGARDS TO THE EXEMPTION U/S 54F OF THE ACT, THE LD. CIT(A) HELD THAT CAPITAL GAIN ARISING TO THE ASSESSEE FROM SALE OF LAND WAS TREATED AS LONG TERM CA PITAL GAIN, IT NATURALLY FOLLOWED THAT THE ASSESSEE WOULD ALSO BECOME ENTITLED TO DEDUCTION U/S 54F OF THE ACT ON HIS ELIGIBLE INVESTMENT IN RESIDENTIAL PROPERTY. HE ALSO POINTED OUT THAT THE AO HAS ACCEPTED THE SAME IN HIS REMAND REPORT DATED 15.0 1.2014. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE MADE THE TOTAL PAYMENT OF RS.1,69,98,000/ - IN RESPECT OF A FLAT AT LA LAGUNE, ABW SUNCITY, GURGAON FROM 16.10.2006 TO 17.12.2008 WHICH THE AO TREATED AS THE CONSTRUCTION OF A HO USE AND NOT PURCHASE OF READYMADE FLAT AND ALLOWED THE BENEFIT OF SECTION 54F OF THE ACT TO THE ASSESSEE ONLY WITH REGARDS TO THE PAYMENT MADE AFTER THE SALE OF FACTORY ON 10.07.2008 TILL THE DUE DATE OF FILING OF RETURN U/S 139(1 ) OF THE ACT I.E. 30.09.2009 AND WORKED OUT THE TOTAL PAYMENT AT RS.1,00,35,500/ - AND ALLOWED THE BENEFIT OF DEDUCTION U/S 54F OF THE ACT ONLY TO THAT EXTENT. THE LD. CIT(A) WAS OF THE VIEW THAT THE AO HAD TAKEN A CORRECT STAND WITH REGARD TO THE TREATMENT OF THE BOOKING OF THE RESI DENTIAL FLA T AND THE ASSESSEE S INVESTMENT THEREIN AS CONSTRUCTION, RATHER THAN PURCHASE , HOWEVER, HIS DECISION TO ITA NO . 6663 /DE L/201 4 SUDERSHAN AGGARWAL 5 ALLOW DEDUCTION U/S 54F OF THE ACT ONLY ON THOSE PAYMENTS WHICH WERE MADE AFTER THE DATE OF SALE OF FACTORY LAND OR BUILDING I.E. ON 10.07.2008 TILL THE DATE OF FILING THE REGULAR RETURN WAS NOT ACCEPTED, RATHER T HE LD. CIT(A) ACCEPTED THIS PLEA OF THE ASSESSEE THAT HE WAS ENTITLED TO EXEMPTION OF THE ENTIRE INVESTMENT UPTO DATE OF FILING OF RETURN U/S 139(4) OF THE ACT. HE, THEREFORE, DIRECTED THE AO TO ALLOW THE BENEFIT U/S 54F OF THE ACT ON THE AMOUNT OF RS.50,57,940/ - ALSO WHICH WAS THE AMOUNT INVESTED BY THE ASSESSEE IN THE RESIDENTIAL FLAT BETWEEN 01.10.2009 TO 31.03.2011 I.E. THE TIME ALLOWABLE TO FILE THE RETURN OF INCOME U/S 139(4) OF THE ACT . THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS JAGRITI AGARWAL (2011) 339 ITR 610 (P&H) JAGTAR SINGH CHAWLA VS ACIT (2013) 215 TAXMAN 154 KISHORE H. GALAIYA VS ITO (2012) 137 ITD 229 (MUM) 6 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR SUPPORTED THE ORD ER OF THE AO AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO ALLOW THE EXEMPTION U/S 54F OF THE ACT , UP TO THE EXTENDED PERIOD OF FILING OF RETURN OF INCOME U/S 139(4) OF THE ACT. THE RELIANCE WAS PLACED ON THE DECISION OF THE HON BLE APEX ITA NO . 6663 /DE L/201 4 SUDERSHAN AGGARWAL 6 COURT IN THE CASE OF PRAKASH NATH KHANNA & ANOTHER VS CIT (2004) 266 ITR 1. 7 . IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND FURTHER SUBMITTED THAT THE CASE RELIED BY THE LD. DR WAS RELATED TO THE PENALTY AND NOT TO THE DEDUCTION U/S 54F OF THE ACT. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) CATEGORICALLY STATED IN THE IMPUGNED ORDER THAT TH E ITAT DELHI BENCH D , NEW DELHI IN THE CASE OF JAGTAR SINGH CHAWLA VS ACIT FOLLOWED THE JUDGMENT OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF FATIMA BAI VS ITO AND THE HON BLE GUWAHATI HIGH COURT IN THE CASE OF CIT VS RAJESH KUMAR JALAN AND THE OR DERS OF THE CO - ORDINATE BENCH OF THE ITAT DELHI IN THE CASE OF ABDUL BASHER SIDDIQUI VS ITO IN ITA NO. 3628/DEL/2009 AND HELD THAT THE ASSESSEE WAS ENTITLED TO EXEMPTION OF THE ENTIRE INVESTMENT UPTO THE DATE OF FILING OF RETURN U/S 139(4) OF THE ACT. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE CASE RELIED BY THE LD. DR RELATES TO T HE SCOPE AND AMBIT OF SECTION 27 6CC OF THE ACT AND THE PENALTY PROCEE DINGS U/S 271(1)(A) OF THE ACT AND NOT TO THE DEDUCTION U/S 54F OF THE ACT. HOWEVER, THE JUDGMENT OF THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS JAGRITI AGARWAL (SUPRA) RELATES TO THE DEDUCTION U/S 54F OF THE ACT WHEREIN IT HAS BEEN HELD AS UNDER: ITA NO . 6663 /DE L/201 4 SUDERSHAN AGGARWAL 7 SUB - SECTION (4) OF SECTION 139 PROVIDES THE EXTENDED PERIOD OF LIMITATION AS AN 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 CONTEMPLATED UNDER SUB - SECTION (1) OF SECTION 139. THEREFORE, SUB - SECTION (4) HAD TO BE READ ALONG WITH SUB - SECTION (1). THEREFORE, THE DUE DATE FOR FURNISHING THE RETURN O F 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. 9 . IN THE PRESENT CASE, THE DUE DATE FOR FILING THE RETURN U/S 139(4) OF THE ACT WAS 31.03.2011. THEREFORE, THE A SSESSEE WAS ENTITLED TO EXEMPTION OF THE INVESTMENT UPTO THE DATE OF FILING OF THE RETURN U/S 139(4) OF THE ACT I.E. ON 31.03.2011 AND NOT UPTO 30.09.2009 CONSIDERED BY THE AO. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH TH E FINDINGS OF THE LD. CIT(A). 10 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 12 /01/2018 ) SD/ - SD/ - ( BEENA A. PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE D: 12 /01/2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR