ACIT, New Delhi V. Sh. Vineet Kumar Kapila, Gurgaon

ITA 6868/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3799 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: SURESH CHAWLA
• Keywords: Capital asset; Corroborative evidences

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 6868 /DEL/201 5 A.Y. : 20 1 2 - 1 3 ACIT, CIRCLE 72(1), ROOM NO. 305, D-BLOCK, CIVIC CENTRE, NEW DELHI VS. SH. VINEET KUMAR KAPILA, TOWER B-3, FLAT-201, THE WORLD SPA WEST, SECTOR-30, GURGAON, HARYANA 122001 (PAN : AAJPK0545R) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : MS. ASHIMA NEB, SR. DR ASSESSEE BY : SH. SATYEN SETHI, ADV. & SH. SURESH CHAWLA, CA ORDER ORDER ORDER ORDER PER H.S. SIDHU, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-21, NEW DELHI DATED 16.10.2015 PERTAINING TO ASSESSMENT YEAR 2012-13 ON THE FOLLOW ING GROUNDS:- 1. WHETHER, THE LD. CIT(A), ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND ALSO IN LAW, HAS ERRED IN DELETING THE ADDITION OF RS. 1,44,14,836/- MADE BY THE AO ON ACCOUNT OF L ONG TERM CAPITAL GAIN. 2 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER VAR Y ANDY / OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEA L. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) WAS ISSUED AND SE RVED UPON THE ASSESSEE REQUIRING HIM TO FURNISH NECESSARY DETAILS AND DOCU MENTS ALONG WITH SUPPORTING EVIDENCE. IN RESPONSE THE ASSESSEE ATTEN DED HIMSELF AND SUBMITTED NECESSARY DETAILS AND DOCUMENTS IN SUPPOR T OF HIS RETURN-OF INCOME. ON 11/11/2011 THE ASSESSEE SOLD A PROPERTY FIAT NO. 1101, BLOCK:NO.5, UNIWORLD GARDEN, SEC-47, GURGAON, 'HARY ANA, RESULTING IN LONG TERM CAPITAL GAIN AMOUNTING TO RS.1,44,14,836/ - AGAINST WHICH THE ASSESSEE HAS CLAIMED DEDUCTION UNDER CHAPTER 54 TO THE EXTENT OF RS.1,44,14,836/-. DURING THE ASSESSMENT PROCEEDINGS THE AO ALSO NOTICED THAT THE ASSESSEE HAS ENTERED INTO AN 'APARTMENT BU YER AGREEMENT' WITH M/S STANDARD FARMS PVT. LTD. AND TATA HOUSING DEVEL OPMENT CO. LTD. ON 27/0812010. IN THIS REGARD ON CONSIDERATION OF FACT S AND SUBMISSION OF THE ASSESSEE, THE AO WAS OF THE VIEW THAT THE IMPUG NED ACQUISITION OF NEW PROPERTY BY THE ASSESSEE THROUGH 'APARTMENT BUY ER AGREEMENT', AMOUNTED TO PURCHASE OF NEW HOUSE AND THAT AS PER THE PROVISIONS OF SECTION 54 OF THE ACT THE PURCHASE SHOULD HAVE BEEN MADE BEFORE ONE YEAR OF THE SALE OF LONG TERM CAPITAL ASSET OR WIT HIN TWO YEARS OF THE SALE. ACCORDING TO THE AO, THE IMPUGNED PURCHASE O F NEW HOUSE WAS NOT MADE WITHIN THE PERIOD OF ONE YEAR BEFORE THE SALE OF ASSET AGAINST WHICH CLAIM U/S. 54 OF THE ACT HAS BEEN MADE BY THE ASSES SEE. ACCORDINGLY, THE 3 DEDUCTION U/S. 54 OF THE ACT WAS DISALLOWED AND ASS ESSMENT WAS COMPLETED AT TOTAL INCOME OF RS. 1,44,14,836/-. AGG RIEVED WITH THE ASSESSMENT ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER 16.10.2015 HAS ALLOWED THE DEDU CTION U/S. 54 OF THE ACT AND ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD. DR RELIED UPON THE O RDER PASSED BY THE AO AND REITERATED THE CONTENTIONS RAISED BY THE RE VENUE IN THE GROUNDS OF APPEAL. 5. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND REITERATED THE CONTENTI ONS MADE BEFORE THE LD. CIT(A). HE FURTHER STATED THAT SINCE THE LD. C IT(A) HAS PASSED A WELL REASONED ORDER, THE SAME DOES NOT NEED ANY INTERF ERENCE. HENCE, HE REQUESTED THAT THE APPEAL OF THE REVENUE MAY BE DIS MISSED. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES. WE FIND THAT LD. CIT(A) HAS DISCUSSED THE ISSUE IN DI SPUTE ELABORATELY AT PAGE NO. 8 TO 11 VIDE PARA NOS. 4 & 5 OF THE IMPUG NED ORDER. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING HEREWITH TH E RELEVANT FINDINGS OF THE LD. CIT(A) AS UNDER:- 4. OBSERVATIONS: 4 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSION OF THE APPELLANT AND ALSO THE CONTENTS OF THE ASSESSME NT ORDER AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECO RD. AFTER HAVING CAREFULLY CONSIDERED THE ENTIRE FACTS AND CI RCUMSTANCES OF THE CASE, MY CONCLUSIONS ON THE ISSUE RAISED IN THE GROUNDS OF APPEAL ARE AS UNDER:- AS DISCUSSED ABOVE IN THE INTRODUCTORY PARAGRAPH OF THIS APPEAL ORDER, THE ASSESSEE SOLD HIS PROPERTY AT GUR GAON ON 11/11/2011 FOR TOTAL SALE CONSIDERATION OF RS.2.47 CRORES SHOWING LTCG OF RS.1,44,14,836/- AGAINST WHICH ASS ESSEE CLAIMED EXEMPTION ULS 54 BY INVESTING LTCG TO ANOTH ER PROPERTY BEING DEVELOPED BY STANDARD FARMS PVT. LTD . AND TATA HOUSING CO. LTD. IN THIS REGARD, THE DETAILS O F TRANSACTIONS ARE GIVEN AS BELOW:- APPLICATION FOR BOOKING OF FLAT 27TH AUGUST, 2010 BUYER'S APARTMENT-AGREEMENT 2ND DECEMBER, 2010 SALE OF FLAT 11 TH NOVEMBER, 2011 COMPLETION OF THE FLAT BY THE BUILDER AUGUST, 2014 HANDING OVER THE POSSESSION OF THE FLAT 28TH AUGUS T, 2014 BASED ON THE ABOVE FACTS THE AO TREATED THE AGREEME NT BETWEEN THE ASSESSEE AND THE BUILDER AS AQREEMENT F OR PURCHASE OF FLAT AND ACCORDING TO HIM IT WAS NOT A CASE OF CONSTRUCTION OF FLAT. THE DATE OF FILING OF APPLICA TION WITH THE BUILDER, LE. 27/10/2010 WAS CONSIDERED AS DATE OF P URCHASE BY THE AO WHEREAS THE ACTUAL DATE OF AGREEMENT WAS 02/12/2010 WHEN THE 'BUYER BUILDER AGREEMENT' WAS S IGNED BY THE APPELLANT. CONSIDERING THE DATE I.E. 27/10/2 010 AS THE 5 DATE OF PURCHASE, THE AO CONCLUDED THAT THE PURCHAS E OF NEW FLAT WAS MADE PRIOR TO ONE YEAR FROM THE DATE OF SA LE OF THE LONG TERM CAPITAL ASSET. AS SUCH, CLAIM OF ASSESSEE FOR DEDUCTION U/S. 54 OF THE ACT WAS REJECTED BY THE AO TREATING IT THE CASE OF PURCHASE OF RESIDENTIAL PROPERTY RATHER THAN CONSTRUCTION HOUSE. IN THIS REGARD, THE AO RELIE D ON CIRCULAR NO. 471 & 672 CONCLUDING THAT THE ACQUISITION OF FL AT FROM THE PRIVATE BUILDER CANNOT BE TREATED AT PART WITH THAT OF FLAT FROM DDA AND OTHER INSTITUTIONS AND, THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE. IN THIS REGARD, REFERENCE IS MADE TO PROVISION OF SEC.54 OF THE LT. ACT ACCORDING TO WHICH AN INDI VIDUAL CAN CLAIM EXEMPTION U/S. 54 ONLY IF THE PURCHASE IS MAD E WITHIN A PERIOD OF ONE YEAR OR TWO YEAR AFTER THE DATE OF SU CH TRANSFER AND IN CASE OF CONSTRUCTION, IF IT HAS BEEN DONE WI THIN A PERIOD OF THREE YEARS AFTER TRANSFER OF CAPITAL ASSET IN Q UESTION. AS PER PROVISIONS OF SEC. 54, FOR CLAIMING DEDUCTION I N THE CASE OF CONSTRUCTION, THE CONSTRUCTION HAS TO BE COMPLETED WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF CAPITAL ASSETS I.E. 10/11/2014 IN THIS CASE AND THAT ASSESS EE HAS RECEIVED POSSESSION OF THE FLAT WELL BEFORE A PERIO D OF THREE YEARS I.E. 28/08/2014 AND, THEREFORE, IT WAS STRON GLY PLEADED THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/ S 54. IT IS ALSO ARGUED THAT THE AMOUNT PAID TO THE BUILDER TOW ARDS PURCHASE OF FLAT IS TO BE CONSIDERED AS CONSTRUCTI ON OF THE FLAT 6 AND NOT PURCHASE OF THE HOUSE. AS SUCH, COST OF FLA T WAS DUE TO BE PAID OVER A PERIOD OF THREE YEARS FROM THE DA TE OF SIGNING OF 'BUILDER BUYER AGREEMENT' AND THE POSSES SION WAS ALSO TO BE HANDED OVER BEFORE THREE YEARS FROM DATE OF TRANSFER OF CAPITAL ASSET. BASED ON THE ABOVE ARGUM ENT THE APPELLANT HAS CONTENDED THAT SINCE HE GOT THE HOUSE CONSTRUCTED BY ENTERING INTO, 'BUILDER BUYER AGREEM ENT', THE PERIOD OF THREE YEARS IS AVAILABLE TO THE ASSESSEE FOR COMPLETION OF SUCH CONSTRUCTION FROM THE DATE OF TR ANSFER OF CAPITAL. ASSET. IN THE CASE IN HAND, THE ASSESSEE H AS BOOKED NEW. FLAT WITH A. BUILDER AND PAYMENTS WERE TO BE M ADE IN INSTALLMENTS AND THE POSSESSION WAS TO BE HANDED OV ER AFTER CONSTRUCTION AND IT WAS PLEADED THAT THIS CASE WAS THAT OF CONSTRUCTION OF NEW RESIDENTIAL HOUSE AND NOT PURCH ASE. ACCORDING TO THE ASSESSEE THIS POSITION HAS BEEN CLARIFIED BY THE CBDT IN CIRCULAR NO.672 DATED 16/1 2/1993 IN WHICH. IT WAS CLARIFIED THAT ACQUISITION OF FLAT TH ROUGH ALLOTMENT BY DDA WAS TO BE TREATED AS CONSTRUCTION OF FLAT WO ULD APPLY TO COOPERATIVE SOCIETIES AND OTHER INSTITUTIONS. TH E MOST, IMPORTANT POINT OF CONSIDERATION IS WHETHER PURCHAS E OF FLAT FROM THE PRIVATE BUILDERS WOULD FALL IN THE CATEGOR IES OF OTHER INSTITUTIONS AS HAS BEEN HELD BY VARIOUS COURTS IN FOLLOWING JUDGMENTS AS CITED AND RELIED UPON THE ASSESSEE AS UNDER:- 7 1. KISHORE H. GALAIYAVS. INCOME TAX OFFICER, WARD 8(2)(3) [2012] 24 TAXMANN.COM 11 (MUMBAI) 2. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 25(3) VS. SMT. SUNDER KAUR SUJAN SINGH GADH [2005]3 SOT 206 (MUMBAI) 3. SRI VED PRAKASH RAKHRA VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6(1), BANGALORE (ITAT) 4. MRS. JYOTI ARUN KOTHARI VITO, (TS-737-ITAT- 2014(MUM.) 5. CIT V SMT. BRINDA KUMERI (2001) 114 TAXMANN 266 (DEL.) 6. CIT V KULDEEP SINGH (2014) 49 TAXMANN.COM 167 (DEL.) 7. FARIDA A DUNGURPURWALA VITO (2014) 52 TEXMENN.COM 227 (MUM. TRIBUNAL) IN ABOVE CASES THE COMPETENT COURTS HAVE HELD THAT THE FLATS CONSTRUCTED BY THE PRIVATE DEVELOPER S ARE ALSO COVERED BY CIRCULAR NO.471 & 672 AND, THEREFOR E, ENTITLED FOR DEDUCTION U/S. 54. THE MOOT QUESTION I S WHETHER THE AGREEMENT WITH BUILDER TO PURCHASE A F LAT THAT IS GOING TO BE CONSTRUCTED, IS THE CASE OF PUR CHASE OR CONSTRUCTION. IN THIS REGARD HON'BLE HIGH COURT OF MUMBAI IN THE CASE OF HILLA J.B. VADIA 216 ITR 376 HELD THAT IT IS A CASE CONSTRUCTION. FURTHER, ON IDENTIC AL 8 QUESTION, I.E. WHETHER THE BOOKING OF FLAT WITH THE BUILDER IS TO BE CONSIDERED A CASE OF PURCHASE OR CONSTRUCTION WAS CONSIDERED BY MUMBAI BENCH OF TRIBUNAL IN THE CASE OF ACIT VS. SARDAR KAUR SUJAN SINGH AND IT WAS HELD TO BE A CASE OF CONSTRUCTION. IN RECENT JUDGMENT IN THE CASE OF CIT VS BINDRA KUMAR (2001) 114 TAXMAN 266 HON'BLE HIGH COURT OF DELHI [JURISDICTIONAL HIGH COURT] HAS HELD THAT THE PURCHASE OF PROPERTY IN MULTI STOREY BUILDING AMOUN TS TO CONSTRUCTION OF BUILDING WITHIN THE MEANING OF SEC. 54(1) FOR THE PURPOSE OF CLAIMING OF EXEMPTION. I HAVE CAREFULLY CONSIDERED RIVAL CONTENTIONS, FACT S OF THE CASE AND PROVISIONS OF INCOME TAX LAWS AND A LSO VARIOUS CIRCULARS ISSUED BY CBDT FROM TIME TO TIME AND JUDGEMENTS DELIVERED BY COMPETENT COURTS ON THIS I SSUE AND I AM OF THE VIEW THAT BOOKING OF FLAT WITH THE BUILDER HAS TO BE TREATED AS CONSTRUCTION OF FLAT B Y THE ASSESSEE AND HENCE PERIOD OF THREE YEARS WOULD APPL Y FOR CONSTRUCTION OF NEW HOUSE FROM THE DATE OF TRAN SFER OF LONG TERM CAPITAL ASSET. AS SUCH EXEMPTION U/S 5 4 BY THE ASSESSEE IS ALLOWABLE. IN THE PRESENT CASE FLAT BOOKED WITH THE BUILDER BY THE APPELLANT HAS TO BE CONSIDERED AS A CASE OF CONSTRUCTION OF FLAT AND TH E DEDUCTION CLAIMED BY THE APPELLANT U/S 54, IS TO BE ALLOWED. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 7. AFTER PERUSING THE AFORESAID FINDING AS WELL AS THE CASE LAWS AND CBDT CIRCULAR DISCUSSED THEREIN, WE ARE OF THE VI EW THAT BOOKING OF FLAT WITH THE BUILDER HAS TO BE TREATED AS CONSTRUCTION OF FLAT BY THE ASSESSEE AND HENCE PERIOD OF THREE YEARS WOULD APPLY FOR CON STRUCTION OF NEW 9 HOUSE FROM THE DATE OF TRANSFER OF LONG TERM CAPITA L ASSET. THEREFORE, THE LD. CIT(A) HAS RIGHTLY ALLOWED THE EXEMPTION U/S. 5 4 OF THE ACT, BECAUSE IN THE PRESENT CASE ALSO THE FLAT BOOKED WITH THE BUILDER BY THE ASSESSE HAS TO BE CONSIDERED AS A CASE OF CONSTRUCTION OF FLAT AND THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 54 OF THE ACT WAS RIGH TLY ALLOWED, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND REJECT THE GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED ON 07/02/2018. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - [PRASHANT MAHARISHI] [PRASHANT MAHARISHI] [PRASHANT MAHARISHI] [PRASHANT MAHARISHI] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 07/02/2018 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES