Dr Anjanaiah , Tumkur V. The Assistant Commissioner of Income Tax Range-2(3)(1), Bangalore

ITA 676/BANG/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8920 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRATIBHA
• Keywords: Gift; Period of limitation; Valuation report; TDS; Capital Gains
• Section: 54F; 234B

Judgement Text

ITA NOS.676 & 677(B)/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : B, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND SMT.BEENA PILLAI, JUDICIAL MEMBER ITA NO.676(BANG)/2017 (ASSESSMENT YEAR : 2012 - 13) DR. ANJANAIAH, MARUTI HOSPITAL, MARALUR RING ROAD MARALUR, TUMKUR PANNO.ACJPA1504A APPELLANT VS THE ASST. C OMMISSIONER OF INCOME TAX, RANGE - 2(3)(1), BANGALORE RESPONDENT AND ITA NO.677(BANG)/2017 (ASSESSMENT YEAR : 2012 - 13) DR.M.A.VENKATESH MURTHY, MARTUTI HOSPITAL, MARALUR RING RO AD , MARALUR, TUMKUR PAN NO.ABLPV0955B APPELLANT VS THE ASST. COMMISSIONER OF INCOME TAX, RANGE - 2(3)(1), BANGALORE RESPONDENT APPELLANT BY : S MT. PRATIBHA, A DVOCATE REVENUE BY : SHRI R.N.SIDDAPPAJI, ADDL. CIT DATE OF HEARING : 26 - 08 - 2019 DATE OF PRONOUNCEMENT : 20 - 092019 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : P RESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 06/01/17 PASSED BY LD. CIT (A) - 7, BANGALORE FOR ASSESSMENT YEAR 2012 - 13 ON FOLLOWING GROUNDS OF APPEAL: ITA NOS.676 & 677(B)/2017 2 ITA NO. 676/B/2017 (ASSESSMENT YEAR : 2012 - 13) 1. THE LEARNED COMMISSIONER OF INCOME - TAX (A) OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE APPELLANT AND DIRECTED THE ASSESSING AUTHORITY TO ACCEPT THE LONG TERM CAPITAL GAINS AS COMPUTED BY THE APPELLANT AS CORRECT AND COMPLETE. 2. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE REFRAINED FROM UPHOLDING THE CAPITAL GAINS AS COMPUTED BY THE LEARNED ASSESSING AUTHORITY. 3. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE APPORTIONMENT OF THE LAND SOLD BETWEEN THE APPELLANT AND HIS SON WAS CORRECT AND TH E VALUE ATTRIBUTED WAS ALSO CORRECT AND ACCORDINGLY NO REVISION WAS REQUIRED IN THE ESTIMATION FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS IN THE HANDS OF THE APPELLANT. 4. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE APPEL LANT WAS ENTITLED TO THE BENEFIT U/S.54F OF THE ACT AS CLAIMED BY HIM IN FULL . 5. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE MERE FACT THAT THE NURSING HOME WAS CONSTRUCTED IN ADDITION TO THE RESIDENTIAL HOUSE, THE LAND PURCHASED CANNOT LOOSE THE CHARACTER OF APPURTENANT LAND TO THE HOUSE TO AVAIL THE BENEFIT UNDER SEC TION 54F OF THE ACT. 6. WITHOUT PREJUDICE, THE CAPITAL GAINS AS COMPUTED BY THE ASSESSING AUTHORITY IS EXCESSIVE, ARBITRARY AND UNREASONABLE AND LIABLE TO BE DELETED IN TOTO. 7. THE L D.COMMISSIONER(A) ERRED IN CONFIRMING THE INTEREST U/S 234A, 234B AND 234 C OF THE ACT. 8. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. I TA NO. 677/B/2017 ( ASSESSMENT YEAR : 2012 - 13) 1. THE LEARNED COMMISSIONER OF INCOME - TAX (A) OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE APPELLANT AND DIRECTED THE ITA NOS.676 & 677(B)/2017 3 ASSESSING AUTHORITY TO ACCEPT THE LONG TERM CAPITAL GAINS AS COMPUTED BY THE APPELLANT AS CORRECT AND COMPLETE. 2. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE REFRAINED FROM UPHOLDING THE CAPITAL GAINS AS COMPUTED BY THE LEARNED ASSESSING AUTHORITY. 3. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE APPORTIONMENT OF THE LAND SOLD BETWEEN THE APPELLANT AND HIS SON WAS CORRECT AND TH E VALUE ATTRIBUTED WAS ALSO CORRECT AND ACCORDINGLY NO REVISION WAS REQUIRED IN THE ESTIMATION FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS IN THE HANDS OF THE APPELLANT. 4. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE APPEL LANT WAS ENTITLED TO THE BENEFIT U/S.54F OF THE ACT AS CLAIMED BY HIM IN FULL . 5. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE MERE FACT THAT THE NURSING HOME WAS CONSTRUCTED IN ADDITION TO THE RESIDENTIAL HOUSE, THE LAND PURCHASED CANNOT LOOSE THE CHARACTER OF APPURTENANT LAND TO THE HOUSE TO AVAIL THE BENEFIT UNDER SEC TION 54F OF THE ACT. 6. WITHOUT PREJUDICE, THE CAPITAL GAINS AS COMPUTED BY THE ASSESSING AUTHORITY IS EXCESSIVE, ARBITRARY AND UNREASONABLE AND LIABLE TO BE DELETED IN TOTO. 7. THE LD.COMMISSIONER( A) ERRED IN CONFIRMING THE INTEREST U/S 234A, 234B AND 234C OF THE ACT. 8. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 2. ITA NO. 676/B/2017 BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE IS A D OCTOR BY PROFESSION AND PARTNER IN M/S M ARUTI N URSING HOME. HE FILED RETURN OF INCOME FOR YEAR UNDER CONSIDERATIO N , DECLARING TOTAL INCOME OF RS.23,44, 770/ - . THE CASE WAS SELECTED FOR SCRUTI NY AND NOTICE UNDER SECTION 143 ( 2) WAS ITA NOS.676 & 677(B)/2017 4 ISSUED TO ASSESSEE . I N RESPONSE TO STATUTORY NOTICES REPRESENTATIVE OF AS SESSEE APPEARED BEFORE LD. AO AND FILED DETAILS AS CALLED FOR. ON VERIFICATION OF DETAILS FILED BY ASSESSEE, LD.AO NOTICED THAT ASSESSEE IN COMPUTATION OF TOTAL INCOME, SHOWED NIL CAPITAL GAIN, THOUGH, AS PER RECORDS WITH REVENUE DEPARTMENT, IT WAS NOTICED THAT ASSESSEE WAS JOINT OWNER OF COMMERCIAL PROPERTY, WHICH WAS SOLD DURING THE YEAR. LD.AO OBSERVED THAT ASSESSEE ALONG WITH HIS SON BE ING CO - OWNER OF PROPERTY AT NO.67, 3 RD MAIN R OAD, SESHADRIPURAM, BANGALORE, SOLD THE PROPERTY (ORIGINAL ASSET) ON 29/04/11 FOR CONSIDERATION OF RS.4,85,00,000/ - VIDE REGISTERED DEED NO. BKI 12 2/2011 - 12 TO DR.VISHNU AND DR.ARUNDHATI VISHNU 3 . LD. AO OBSERVE D THAT OUT OF TOTAL AREA OF 598 5 FT. AN D AREA OF 456 0 FT. PERTAINS TO ASSESSEE AND BALANCE WAS GIFTED BY SON BEING VENKATESH MU R THY V IDE GIFT DEED DATED 31/01/02 BEARING REGISTRATION NO. 4217/2001 - 02. LD. AO OBSERVED THAT ASSESSEE TOOK BUILDING VALUE AS PER VALUATION REPORT , AND VALUE OF LAND A S PER THE SALE DEED. ASSESSEE BEFORE A SSESSING O FFICER CONTENDED THAT SALE CONSIDERATION WAS AS PER SALE DEED FOR BUILDINGS AND LAND AND THUS VALUATION REPORT HAS BEEN RELIED ONLY TO KNOW VALUE OF BUILDING. LD. AO REJECTED ASSESSEES CONTENTION AND HELD T HAT AS ASSESSEE WAS RELYING ON VALUATION REPORT FOR BUILDING , LAND ALSO SHOULD BE CONSIDERED AS PER VALUATION REPORT , SINCE THEY WE RE SOLD TOGETHER. 3.1 LD. AO FURTHER OBSERVED THAT PROPERTY WAS GIVEN ON LEASE TO FIRM NAMELY M/S SREE M ARUTI NURSING HOME, IN WHICH ASSESSEE AND HIS SON ARE PARTNERS. IT WAS OBSERVED THAT FIRM INVESTED FUNDS IN CONSTRUCTION OF BUILDING, WHICH WAS USED AS NURSING HOME, AND, ITA NOS.676 & 677(B)/2017 5 AS PER VALUATION REPORT BUILDING CONSTRUCTED BY THIS FIRM WAS VALUED AT RS.33,34, 579/ - . SU BSEQUENT TO SALE , ASSESSEE INVESTED FUND REALI Z ED FROM SALE TO ACQUIRE PIECE OF LAND AT TUMKUR, JOINTLY WITH HIS SON AND CONSTRUCTED RESIDENTIAL HOUSE AND NURSING HOME. ASSESSEE CLA IMED EXEMPTION UNDER SECTION 5 4F OF THE A CT , AS CAPITAL GAIN ARISING ON SA LE OF PROPERTY WAS INVESTED IN ACQUISITION OF LAND AND CONSTRUCTION OF RESIDENTIAL HOUSE AND NURSING HOME AT TUMKUR. LD. AO PERSONALLY INSPECTED PREMISES OF ASSESSEE AT TUMKUR AND FOUND THAT ASSESSEE CONSTRUCTED COMMERCIAL BUILDING THAT IS HOSPITAL ALONG W ITH RESIDENTIAL HOUSE AND THEREFORE DEDUCTION UNDER SECTION 5 4F OF THE A CT WAS RESTRICTED TO PROPORTIONATE AMOUNT UTILIZ ED FOR CONSTRU CTION OF RESIDENTIAL HOUSE AND REMAINING AMOUNT WAS ADDED BACK TO INCOME OF ASSESSEE AS LONG TERM CAPITAL GAIN. 4. AGGRIEV ED BY ADDITION MADE BY LD. AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). 5. LD.CIT (A) IS RECORDED THAT OUT OF TOTAL AREA OF 2543.25 SQUARE METER, ASSESSEE USED ONLY 586.96 SQUARE METER FOR RESIDENTIAL PURPOSES AND REMAINING HAS BEEN USED FOR COMMERCIAL PURPOSES OF RUNNING HOSPITAL. LD. CIT (A) WAS OF THE OPINION THAT EXEMPTION UNDER SECTION 54F WOULD BE AVAILABLE TO ASSESSEE , IF ENTIRE SALE CONSIDERATION IS INVESTED IN PURCHASE OF ONE RESIDENTIAL HOUSE PROPERTY WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER, OR, IN CONSTRUCTION OF RESIDENTIAL HOUSE PROPERTY WITHIN A PERIOD OF THREE YEARS AFTER DATE OF TRANSFER. LD. CIT (A) THUS UPHELD THE DISALLOWANCE MADE BY LD. A O. ITA NOS.676 & 677(B)/2017 6 6. AGGRIEVED BY ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. THE CONTENTION OF LD.AR IS THAT , EXEMPTION UNDER SECTION 54F OF THE ACT IS TO BE GRANTED ON TOTAL LAND AND PORTION OF BUILDING USED FOR RESIDENTIAL PURPOSES AS AGAINST, EXEMPTION UNDER SECTION 54F RESTRICTED BY LD.AO ON PROPORTIONATE AREA OF LAND USED FOR RESIDENTIAL PURPOSES. LD. COUNSEL SUBMITTED THAT THIS IS THE ONLY ISSUE THAT HAS BEEN RAISED BY ASSESSEE IN BOT H APPEAL S . IT HAS BEEN ARGUED THAT SALE CONSIDERATION WAS INVESTED IN RESIDENTIAL PROPERTY AT TUMKUR , WHICH WAS VERIFIED BY LD. A O AND AS LONG AS RESIDENTIAL HOUSE WAS CONSTRUCTED FOR WHICH SITE IS ABSOLUTELY NECESSARY , IT COULD NOT BE SAID THAT INVESTMENT IN COST OF SITE IN WHICH RESIDENTIAL BUILDING STANDS IS NOT ELIGIBLE FOR EXEMPTION CLAIMED. 7. ON THE CONTRARY , LD.SENIOR DR PLA CING RELIANCE UPON OBSERVATION RECORDED BY AUTHORITIES BELOW SUBMITTED THAT SECTION 54F MANDATES GRANTING OF EXEMPTION TO ASSESSEE ON CONSTRUCTION OF RESIDENTIAL HOUSE AND NOT FOR ANY COMMERCIAL PURPOSES. HE FURTHER SUBMITTED THAT ASSESSEE CONSTRUCTED HO SPITAL FOR COMMERCIAL PURPOSES ON MAJOR PORTION OF THE LAND AND ONLY A SMALL AREA OF 586.96 SQUARE METER WAS USED FOR RESIDENTIAL PURPO SES. HE THUS SUBMITTED THAT LD. AO WAS ABSOLUTELY RIGHT IN RESTRICTING DEDUCTION UNDER SECTION 5 4F ON PROPORTIONATE BASIS OF LAND UTILI Z ED FOR RESIDENTIAL PURPOSES ONLY. 8. WE HAVE PERUSED SUBMISSIO NS ADVANCED BY BOTH SIDES IN LIGHT OF THE RECORDS PLACED BEFORE US. ITA NOS.676 & 677(B)/2017 7 LD. AR PLACED RELIANCE ON DECISION OF MUMBAI T RIBUNAL IN CASE OF IT O VS SMT.JAYA DEEPAK BHAVNANI IN ITA NO. 6444/M UM /2016 , VIDE ORDER DATED 26/09/18 , IN SUPPORT OF HER CONTENTION. UPON PERUSAL OF SAID DECISION, WE ARE OF THE OPINION THAT , FACTS THEREIN ARE DIFFERENT WITH THAT IN THE PRESENT CASE , AND HENCE IS OF NO ASSISTANCE TO ASSESSEE. 8.1 ADMITTEDLY, ASSESSE E CONSTRUCTED COMMERCIAL PROPERTY BEING NURSING HOME, ON THE LAND PURCHASED FROM SALE PROCEEDS, AND RESIDENTIAL HOUSE , WHICH HAS BEEN CLAIMED AS EXEMPTION UNDER SECTION 54F. SECTION 54F IS VERY CLEAR IN RESPECT OF EXEMPTION BEING AVAILABLE TO ASSESSEE , IN RESPECT OF EITHER PURCHASE OF RESIDENTIAL PROPERTY OR CONSTRUCTION OF RESIDENTIAL PROPERTY WITHIN THE PERIOD OF LIMITATION PRESCRIBED THEREIN. WE THEREFORE , DO NOT FIND ANY FORCE IN ARGUMENT ADVANCED BY LD.AR REGARDING GRANTING OF EXEMPTION UNDER SECTION 54F IN RESPECT OF ENTIRE LAND ON WHICH CONSTRUCTION IN RESPECT OF RESIDENTIAL HOUSE AS WELL AS C OMMERC IAL BUILDING BEING NURSING HOME HAVE BEEN DONE. HOWEVER, IT IS OBSERVED THAT LD.AO WHILE COMPUTING CAPITAL GAIN , ALLOWED RS.33 , 41 , 839/ - AS COST OF LAND APPURTENANT TO RESIDENTIAL HOUSE FOR WHICH THERE IS NO BASIS. LD .CIT(A) MENTIONS LAND ON WHICH RESIDENTIAL HOUSE CONSTRUCTED AMOUNTS TO RS.586.96 SQ.MTS, OUT OF TOTAL LAND 2543.25SQ.MTS. BOTH LD. AO AND LD. CIT(A) FAILED TO COMPUTE VACANT LAND THAT MAY BE ANNEXED TO RESIDENTIAL HOUSE. WE THEREFORE, DIRECT LD.AO TO CONSIDER ALL THESE ASPECTS FOR PURPOSE OF COMPUTING EXEMPTION U/S 54F A ND CAPITAL GAINS PAYABLE BY ASSESSEE. NEEDLESS TO SAY THAT ASSESSEE IS ELIGIBLE FOR BENEFI T OF INDEXATION IN C OMPUTING CAPITAL GAINS. ITA NOS.676 & 677(B)/2017 8 ACCORDINGLY , GROUNDS RAISED BY ASSESSEE TANDS ALLOWED FOR STATISTICAL PURPOSES. 9. ITA NO. 677/B/2017 I T HAS BEEN SUBMITTED THAT ASSESSEE HEREIN IS SON OF DR.ANJANAIAH AND C O - OWNER OF ENTIRE PROPERTY THAT HAS BEEN SUBJECT MATTER OF DISCUSSION IN ITA NO. 676/B/2017 DEALT WITH HEREINABOVE. THE GRIEVANCE OF ASSESSEE IN THE PRESENT APPEAL IS SAME AS DEALT WITH IN ITA NO. 676/B/2017. AS FACTUAL M ATRIX ARE IDENTICAL IN BOTH AP PEALS, VIEW TAKEN IN ITA NO. 676/B/2017 WOULD APPLY MUTATIS MUTANDIS TO PRESENT APPEAL ALSO. ACCORDINGLY , GROUNDS RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL S FILED BY ASSESSEE S STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 - 09 - 2019 . SD/ - SD/ - (A.K.GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DAT ED: 20 - 092019 *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASSTT.REGISTRAR