SHRI DINESH KUMAR VIJAY, KOTA V. INCOME TAX OFFICER, WARD-2-1, KOTA

ITA 685/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3588 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT DHK
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Source of fund; Cost of acquisition; Set aside
• Section: 143(3); 50C; 54; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 685/JP/2017 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 SHRI DINESH KUMAR VIJAY, 4-E-15, TALWANDI, KOTA. CUKE VS. INCOME TAX OFFICER, WARD 2(1), KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AATPV 3492 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM ROY (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/05/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 31/05/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A), KOTA DATED 08/12/2016 FOR THE A.Y. 2009-10. THE ONLY ISSUE INVOLVED IN THE APPEAL IS DENYING THE CLAIM OF DEDU CTION U/S 54 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETUR N OF INCOME ON 31/3/2010 DECLARING TOTAL INCOME OF RS. 4,62,854/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD A HOUSE PROPERTY N O.7-A-4, MAHAVEER ITA 685/JP/2017_ DINESH KUMAR VIJAY VS ITO 2 NAGAR EXTENSION, KOTA VIDE AGREEMENT TO SALE DATED 07.04.2008 TO SH. MATHURA LAI MALAV FOR RS.20 LACS. IN THE RETURN, TH E ASSESSEE DECLARED LONG TERM CAPITAL GAIN OF RS. 1,51,962/- AFTER CLAI MING DEDUCTION ON ACCOUNT OF INDEXED COST OF ACQUISITION AND DEDUCTIO N U/S 54 FOR INVESTMENT IN THE HOUSE PROPERTY. THE AO IN THE ASSE SSMENT MADE U/S 143(3) DATED 26.12.2011 MADE AN ADDITION OF RS.41,9 41 /- BY ADOPTING DEEMED SALES CONSIDERATION U/S 50C AT RS.20,86,951/ -. THE ORDER OF A.O. WAS SET ASIDE BY THE COMMISSIONER U/S 263 VIDE ORDER DATED 07.03.2013 TO EXAMINE WHETHER THE PROPERTY SOLD IS A LAND OR A HOUSE AND ACCORDINGLY WHETHER DEDUCTION U/S 54 OF RS.13 LACS I S ALLOWABLE TO THE ASSESSEE OR NOT. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS U/S 143(3)/263, THE ASSESSEE EXPLAINED THAT HE HAS SOLD A RESIDENTIAL HOUSE PURCHASED FROM RAJASTHAN HOUSING BOARD TO SH. MATHU RA LAI MALAV VIDE SALE AGREEMENT DATED 07.04.2008 WHO FURTHER SOLD T HIS HOUSE ON 02.06.2008 TO RAMESHWAR MALAV. THEREAFTER, SH. RAMESH WAR MALAV DEMOLISHED THE HOUSE AND ON THE BASIS OF POWER OF AT TORNEY DATED 07.04.2008 GIVEN BY THE ASSESSEE TO HIM, GOT THE SA LE DEED DATED 19.11.2010 REGISTERED IN HIS FAVOUR. THE A.O. HAS O BSERVED THAT IN THE SALE DEED DATED 19.11.2010, IT IS MENTIONED THAT TH E PROPERTY IS IN THE SHAPE OF VACANT PLOT WHICH IS IN THE POSSESSION AND OWNERSHIP OF THE ASSESSEE AND THEREFORE, ASSESSEE SOLD ONLY A PLOT A ND NOT A HOUSE AND ITA 685/JP/2017_ DINESH KUMAR VIJAY VS ITO 3 THUS, DEDUCTION U/S 54 IS NOT ALLOWABLE TO THE ASSES SEE. THE LD. CIT(A) HAS UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR HAS REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A). HE HA S FURTHER SUBMITTED AS UNDER: 1. IT IS SUBMITTED THAT SH. DHARAM PAL SINGH FILED AN APPLICATION TO RAJASTHAN HOUSING BOARD. KOTA FOR ALLOTMENT OF A HO USE AND IN PURSUANCE TO THE SAME, HOUSING BOARD VIDE LETTER DA TED 16.05.1995 (PB 6) RESERVED A HOUSE FOR HIM FOR WHIC H THE ESTIMATED COST WAS INTIMATED AT RS.3,80,000/-. THER EAFTER, VIDE LETTER DATED 26.09.1998 (PB 7), RAJASTHAN HOUSING B OARD INTIMATED SH. DHARAM PAL SINGH TO TAKE THE POSSESSI ON OF HOUSE NO.7-A- 4 BEFORE 14.10.1998. SINCE DHARAM PAL SINGH DID NOT COMPLY WITH THE CONDITION, ALLOTMENT WAS CANCELLED AND IT WAS TRANSFERRED IN FAVOUR OF THE ASSESSEE VIDE REGULARI ZATION ORDER DATED 06.06.2000 (PB 8). THEREAFTER, VIDE LETTER DA TED 24.06.2000 (PB 9) ASSESSEE WAS INTIMATED TO EXECUTE THE LEASE DEED IN RESPECT OF HOUSE NO.7-A-4. ALL THESE FACTS SHOW THA T WHAT IS ALLOTTED TO THE ASSESSEE BY RAJASTHAN HOUSING BOARD IS A HOUSE AND NOT A PLOT OF LAND. 2. THE LD. CIT(A) HAS REFERRED TO THE VARIOUS CLAUS ES OF THE PERPETUAL LEASE DEED EXECUTED BY RAJASTHAN HOUSING BOARD IN F AVOUR OF THE ASSESSEE ON 24.06.2000 (PB 13-21). THE LD. CIT(A) H AS HOWEVER NOT PROPERLY APPRECIATED THAT THE SAID LEASE DEED I S IN RESPECT OF HOUSE AND NOT FOR PLOT OF LAND. IN THE PREAMBLE OF THE LEASE DEED ITSELF IT IS MENTIONED THAT LESSEE HAS SEPARATELY A PPLIED TO THE ITA 685/JP/2017_ DINESH KUMAR VIJAY VS ITO 4 HOUSING BOARD FOR THE GRANT OF LAND BELONGING TO TH E LESSOR AND HE HAS APPLIED TO THE HOUSING BOARD FOR PURCHASE OF A DWELLING UNIT, DETAILS OF WHICH ARE GIVEN IN THE SCHEDULE II ATTAC HED TO THE LEASE DEED (PB 13). ALONG WITH THE LEASE DEED, SITE PLAN OF THE HOUSE AND THE ACTUAL MEASUREMENT OF THE VARIOUS ROOMS IN THE HOUSE IS ATTACHED (PB 19 & 21) DULY SIGNED BY RESIDENT ENGIN EER RAJASTHAN HOUSING BOARD WHICH CLEARLY PROVES THAT RAJASTHAN H OUSING BOARD ALLOTTED HOUSE TO THE ASSESSEE AND NOT THE PLOT. IN CLAUSE NO.3 & 6 OF THE LEASE DEED, IT IS CLEARLY MENTIONED THAT ASS ESSEE SHALL KEEP AND MAINTAIN THE HOUSE IN PROPERTY SANITARY CONDITI ON AND WOULD NOT SALE ANY PART OF IT WITHIN A PERIOD OF 7 YEARS FROM THE DATE OF ALLOTMENT EXCEPT WITH THE CONSENT OF THE LESSOR. TH E LEASE PREMIUM OF THE LAND UNDER/APPURTENANT TO THE RESIDE NTIAL HOUSE NO.7-A-4 IS DETERMINED AT RS.85,113/- AND THE YEARL Y RENT IS DETERMINED AT RS.2,128/- AS MENTIONED AT PG 2 OF TH E LEASE DEED (PB 14). THUS, THE PERPETUAL LEASE DEED IS OF THE L AND WITH THE HOUSE CONSTRUCTED THEREON AND NOT OF THE LAND ALONE . 3. IT IS FURTHER SUBMITTED THAT ASSESSEE OBTAINED A HOUSING LOAN FROM BANK OF RAJASTHAN ON THE IMPUGNED HOUSE. THE BANK O BTAINED A SEARCH REPORT OF THE PROPERTY FROM THE ADVOCATE WHO VIDE LETTER DATED 13.05.2005 (PB 23) HAS CERTIFIED THAT THE PRO PERTY UNDER CONSIDERATION IS A HOUSE AND NOT A PLOT. THE HOUSIN G COMMISSIONER VIDE LETTER DATED 19.07.2005 IN ITS NO OBJECTION CERTIFICATE (PB 24) HAS ALSO CERTIFIED THAT THE PRO PERTY UNDER CONSIDERATION IS A HOUSE AND NOT A LAND. 4. IN THE SALE AGREEMENT DATED 07.04.2008 (PB 27-29 ), IT IS SPECIFICALLY MENTIONED THAT PROPERTY UNDER CONSIDER ATION IS A HOUSE AND THE SAME IS SOLD BY THE ASSESSEE TO SH. MATHURA LAI MALAV AND POSSESSION OF THE ROOF AND THE LAND HAS BEEN GIVEN. IN THE SALE ITA 685/JP/2017_ DINESH KUMAR VIJAY VS ITO 5 DEED DATED 19.11.2010 (PB 35), IT IS SATED THAT THE EXISTING HOUSE ON THE PLOT NO.7-A-4 HAS BEEN DEMOLISHED FOR CONSTR UCTING A NEW HOUSE. IN THE RETURN FOR AY 2007-08 AND IN THE BALA NCE SHEET AS ON 31.03.2007, INCOME FROM HOUSE PROPERTY IN RESPEC T OF THIS HOUSE IS DECLARED (PB 51) AND THE SAME IS REFLECTED AS HOUSE (PB 53). 5. FROM ALL ABOVE EVIDENCES IT IS EVIDENT THAT THE ASSESSEE SOLD THE HOUSE AND NOT PLOT OF LAND ON 07.04.2008. THE VARIO US OBSERVATIONS MADE BY THE LD. CIT(A) IS BY OVERLOOKI NG THE MATERIAL ON RECORD AND BY MISINTERPRETING THE DOCUM ENTS RELIED BY HIM. HIS FURTHER OBSERVATION THAT ASSESSEE HAS NOT CONTROVERTED THE FINDINGS OF AO THAT CONSIDERATION RECEIVED WAS NOT REINVESTED IN THE HOUSE PROPERTY IS INCORRECT IN AS MUCH AS TH IS WAS AN ISSUE RAISED BY THE AO IN THE SHOW CAUSE NOTICE BUT AFTER CONSIDERING THE REPLY OF ASSESSEE HE HAS NOT GIVEN ANY ADVERSE FINDING ON THIS ISSUE. FURTHER, THERE IS NO REQUIREMENT IN LAW THAT THE SALE PROCEEDS OF THE CAPITAL ASSET ITSELF SHOULD BE USED FOR INVESTMENT IN THE RESIDENTIAL HOUSE. HONBLE ITAT, BOMBAY BENC H IN CASE OF ACIT VS. DR. P.S. PASRICHA (2008) 27 CCH 33 HELD TH AT THE REQUIREMENT OF SEC. 54 IS THAT THE ASSESSEE SHOULD ACQUIRE A RESIDENTIAL HOUSE WITHIN THE PERIOD OF ONE YEAR BEF ORE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE. NOWHER E, IT HAS BEEN MENTIONED THAT THE SAME FUNDS MUST BE UTILIZED FOR THE PURCHASE OF ANOTHER RESIDENTIAL HOUSE. THE REQUIREMENT OF TH E LAW IS THAT THE ASSESSEE SHOULD PURCHASE A RESIDENTIAL HOUSE WI THIN THE SPECIFIED PERIOD AND SOURCE OF FUNDS IS QUITE IRREL EVANT. THIS ORDER OF HONBLE ITAT IS UPHELD BY HONBLE BOMBAY HIGH CO URT VIDE ITS ORDER DATED 07.10.2009 IN ITA NO.1825 OF 2009. ITA 685/JP/2017_ DINESH KUMAR VIJAY VS ITO 6 IN VIEW OF ABOVE, IT IS EVIDENT THAT ASSESSEE HAS SOLD A RESIDENTIAL HOUSE AND HAS CORRECTLY CLAIMED DEDUCTION U/S 54 BY MAKING INVESTMENT IN ANOTHER RESIDENTIAL HOUSE. HENCE, THE AO BE DIRECTED TO ALLOW DEDUCTION U/S 54 TO THE ASSESSEE. 4. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 5. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE . IT IS NOT IN DISPUTE THAT THE RAJASTHAN HOUSING BOARD EXECUTED A LEASE DEED IN FAVOUR OF THE ASSESSEE ON 24/6/2000. THE SAID LEASE DEED WA S IN RESPECT OF A HOUSE AND NOT FOR PLOT OF LAND. IT HAS ALSO BEEN ME NTIONED IN THE LEASE DEED THAT THE ASSESSEE SHALL KEEP AND MAINTAIN THE HOUSE IN PROPERTY SANITARY CONDITION AND WOULD NOT SALE ANY PART OF IT WITHIN A PERIOD OF 7 YEARS FROM THE DATE OF ALLOTMENT EXCEPT WITH THE CON SENT OF THE LESSOR. THE ASSESSEE APPLIED FOR A HOUSING LOAN FROM THE BAN K OF RAJASTHAN AND THE BANK OBTAINED A SEARCH REPORT AND HAS STATED TH AT THE PROPERTY UNDER CONSIDERATION IS A HOUSE AND NOT A PLOT. IN THE SAL E AGREEMENT DATED 07/4/2008, IT HAS BEEN SPECIFICALLY MENTIONED THAT THE PROPERTY UNDER CONSIDERATION IS A HOUSE AND THE SAME IS SOLD BY TH E ASSESSEE TO SHRI MATHURA LAL MALAV AND POSSESSION OF THE ROOF AND TH E LAND HAS BEEN GIVEN. IN THE SALE DEED DATED 19/11/2010, IT IS STA TED THAT THE EXISTING HOUSE ON THE PLOT UNDER CONSIDERATION HAS BEEN DEMO LISHED FOR ITA 685/JP/2017_ DINESH KUMAR VIJAY VS ITO 7 CONSTRUCTION OF A NEW HOUSE. FROM THE ABOVE FACTS, I T IS CLEAR THAT THE ASSESSEE SOLD THE HOUSE AND NOT A PLOT OF LAND, THE REFORE, HE IS ENTITLED FOR EXEMPTION U/S 54 OF THE ACT. ACCORDINGLY, WE DIR ECT THE ASSESSING OFFICER TO ALLOW EXEMPTION U/S 54 OF THE ACT TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/2018. SD/- SD/- FOT; IKY JKO HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 ST MAY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI DINESH KUMAR VIJAY, KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 2(1), KOTA. 3. VK;DJ VK;QDR @ THE CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 685/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR