The Income Tax Officer, Amritsar. V. Sh Daljit Singh, Amritsar.

ITA 69/ASR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7764 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL DHAWANLD
• Assessee Lawyers: SALIL KAPOOR LD
• Keywords: Capital asset; Cost of acquisition
• Section: 54F; 133(6); 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO.69(ASR)/2017 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD-4(1), AMRITSAR. VS. SH. DALJIT SINGH, HOUSE NO.199, GALI NO.2, TEHSILPURA, AMRITSAR, (PUNJAB) PAN:BDEPS-6359C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAHUL DHAWAN (LD. DR ) RESPONDENT BY: SH. SALIL KAPOOR (LD. AD V) DATE OF HEARING:18.09.2017 DATE OF PRONOUNCEMENT:24.10. 2017 ORDER PER N. K. CHOUDHRY: THE INSTANT APPEAL FILED BY THE REVENUE DEPARTMENT, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 27.10.2016 PASSED B Y THE LD. CIT(A)-2, AMRITSAR IN APPEAL NO.49/2015-16, U/S 250(6 ) OF THE I.T. ACT. 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL: 1. WHETHER THE LD. CIT(A)-II, AMRITSAR IS RIGH T IN DELETING THE ADDITION OF RS.51,05,000/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF UNUTILIZED CAPITAL GAIN IN SPITE OF THE FACT THAT THE ASSESSEE HAS NOT THE FUNDS AMOUNTING TO RS.75,00,00 0/- AVAILABLE IN THE SHAPE OF DEPOSITS IN ACCOUNT NO.30 122464553 MAINTAINED WITH SBI, SECTOR 42-C, CHANDIGARH. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL OF APPEAL ON OR BEFORE THE APPEAL IS HEARD A ND DISPOSED OFF. I TA NO.69(ASR)/2017 A SST. YEAR: 2007-08 2 3. IT IS PRAYED THAT THE ORDER OF THE COMMISSI ONER OF INCOME - TAX (APPEALS) BE SET ASIDE AND THAT OF THE AO BE RE STORED ON MERITS. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: ON THE BASIS OF AIR INFORMATION, THE NOTICE U/S 133(6) OF THE I.T. ACT WAS ISSUED ON 25.02.2014, WHICH WAS REPLIE D BY THE ASSESSEE ON 05.03.2014 BY STATING THAT HE HAS SOLD SHARE OF HIS LAND FOR RS.4 CRORES AND OUT OF WHICH RS.3.25 CRORES WERE INVESTED FOR PURCHASE OF CAPITAL GAIN BOND OF NATIONAL HIGHWAY AUTHORITY OF INDIA. THE ASSESSEE ALSO FILED A COPY OF RET URN FOR ASST. YEAR: 2007-08. SINCE, THE AIR INFORMATION RELATE S TO THE ASSESSEE IN INDIVIDUAL CAPACITY AND ACCORDINGLY, REASONS U/S. 147 WERE RECORDED AND THEREAFTER STATUTORY NOTICE U/S 148 W AS ISSUED AND SERVED UPON THE ASSESSEE AND ASSESSING OFFICER WHILE CONSIDERING THE REPLY FILED BY THE ASSESSEE WHILE ALLOWIN G EXEMPTION TO THE TUNE OF RS.3,25,00,000/- ON ACCOUNT O F PURCHASE OF CAPITAL GAIN BOND OF NATIONAL HIGHWAY AUTHO RITY OF INDIA, ADDED THE BALANCE AMOUNT OF RS.75,00,000/- BEI NG LONG TERM CAPITAL GAIN BY HOLDING THAT THE ASSESSEE FAILED TO FILE ANY DOCUMENTARY EVIDENCE REGARDING UTILIZATION OF RS.75,00 ,000/- FOR THE PURPOSE OF RESIDENTIAL HOUSE FOR RS.47 LACS AND BALAN CE FOR THE RENOVATION OF THE SAID HOUSE AND ALSO FAILED TO FI LE ANY BILLS OF RENOVATION. IT WAS FURTHER OBSERVED BY THE ASSESSING OFF ICER, ALTHOUGH, IT WAS NOTICED THAT THE ASSESSEE HAS MADE PAYMEN TS I TA NO.69(ASR)/2017 A SST. YEAR: 2007-08 3 BY WAY OF DRAFTS DATED 27.02.2007, 04.06.2007 & 9 TH JULY, 2007 TO DIFFERENT PERSONS, HOWEVER, NO SUCH AMOUNT WAS DEBIT ED IN THE ASSESSEES SAVING ACCOUNT NO.3012264553 AND SB A/C NO.30201799409 WITH CAPITAL GAIN SCHEME. THEREFORE, L ONG TERM CAPITAL GAIN OF RS.75,00,000/- REMAINED UNUTILIZED AN D IS LIABLE TO TAX. 4. IN THE FIRST APPEAL, THE LD. CIT(A) DELETED THE AD DITION OF RS.51,05,000/- OUT OF THE LONG TERM CAPITAL GAIN ASSESSED AT RS.75,00,000/- BY THE ASSESSING OFFICER BY HOLDING AS UNDE R: DURING THE ASSESSMENT PROCEEDINGS THE AO FURTHER O BSERVED THAT AGAINST PURCHASE PRICE OF RESIDENTIAL HOUSE, THE AS SESSEE HAD MADE PAYMENTS BY WAY OF DRAFTS DATED 27-02- 2007, 04-06- 2007 AND 09- 07-2007 OF AMOUNTS OF 766,667/-, RS.766,667/-, RS.6 66,666/-, RS833,333/-, RS.833,333/-, RS.33,334/- AND RS.50,00 0/- IN THE NAMES OF RAJNEESH, KIRAN, SHIVANI, KIRAN, RAJNEESH, SHIVANI, SHIVANI RESPECTIVELY AS MENTIONED IN THE ASSESSMENT ORDER. BUT NO SUCH AMOUNTS WERE DEBITED IN ASSESSEES SAVING BANK ACCO UNT NO.30122464553 AND S B A/C NO.30201799409 WITH CAPI TAL GAIN SCHEME. THEREFORE, THE AO HELD THAT THE LONG TERM C APITAL GAIN OF RS.75,00,000/- REMAINED UNUTILIZED AND WAS LIABLE T O TAX. THEREFORE, THE AO DID NOT ALLOW THE EXEMPTION U/S 54F IN RESPE CT OF THE SAID PURCHASE OF RESIDENTIAL HOUSE AND RENOVATION THEREO F WHILE COMPUTING THE LONG TERM CAPITAL GAIN. THE OBJECTION OF THE AO WAS THAT THE SAID INVESTMEN TS IN RESIDENTIAL HOUSE WERE NOT MADE OUT OF THE AMOUNT R ECEIVED BY HIM FROM THE SALE OF THE ANCESTRAL LAND OF THE ASSESSEE . IN THIS REGARD THE APPELLANT RELIED UPON THE DECISION OF HONBLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF CIT VS. KAPIL KUMAR AGRAWAL (2 016) 382 ITR 56 (P&H), THE HONBLE COURT ON THE ISSUE UNDER CONSIDE RATION AND HELD AS UNDER: IN ORDER TO AVAIL OF THE BENEFIT UNDER SECTION 54 F OF THE INCOME TAX ACT, 1961, THE ASSESSEE IS REQUIRED TO EITHER P URCHASE A RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFOR E OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TAKES PLACE OR CON STRUCT A RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS AF TER THAT DATE. SECTION 54F OF THE ACT NOWHERE ENVISAGES THAT THE S ALE I TA NO.69(ASR)/2017 A SST. YEAR: 2007-08 4 CONSIDERATION OBTAINED BY THE ASSESSEE FROM THE ORI GINAL CAPITAL ASSET IN MANDATORILY REQUIRED TO BE UTILIZED FOR TH E PURCHASE OR CONSTRUCTION OF A HOUSE PROPERTY. NO CONSTRUCTION O F A HOUSE PROPERTY. NO PROVISION HAS BEEN MADE BY THE STATUTE THAT IN ORDER TO AVAIL OF THE BENEFIT OF SECTION 54F OF THE ACT, THE ASSESSEE HAS TO UTILIZE THE AMOUNT RECEIVED BY HIM ON SALE OF ORIGINAL CAPITAL ASSET FOR THE PURPOSES OF MEETING THE COST OF THE NEW ASSET............ IN VIEW OF THE AFORESAID DECISION OF THE HONBLE PU NJAB 8S HARYANA HIGH COURT IN THE CASE OF CIT VS KAPIL KUMA R AGRAWAL (2016) 382 ITR 56 (P&H) IT IS HELD THAT THE APPELLANT WAS ELIGIBLE FOR EXEMPTION U/S 54F IN RESPECT OF THE PRICE OF THE RE SIDENTIAL HOUSE AMOUNTING TO RS 47,00,000/- PAID BY WAY OF DEMAND D RAFTS DATED 27- 02-2007, 04-06-2007 AND 09-07- 2007 OF AMOUNTS OF 7 66,667/-, RS 766,667/-, RS.666,666/-, RS.833,333/-, RS.833,333/- , RS.333,334/- AND RS.500,000/- IN THE NAMES OF RAJNEESH, KIRAN, S HIVANI, KIRAN, RAJNEESH, SHIVANI, SHIVANI RESPECTIVELY AS MENTIONE D IN THE ASSESSMENT ORDER TOTALING TO RS.47,00,000/- PLUS ST AMP DUTY OF RS. 4,05,000/-. THE ADDITION OF RS.51,05,000/- OUT OF THE LONG TERM CAPITAL GAIN ASSESSED AT RS.75,00,000/- IS ACCORDINGLY DELE TED. THE CIT(A), HOWEVER, CONFIRMED THE ADDITION OF RS.23, 95,000/- OUT OF CAPITAL GAIN ASSESSED AT RS.75,00,000/- BY THE ASSESSI NG OFFICER. 5. THE REVENUE DEPARTMENT PREFERRED THE INSTANT APPEAL ONLY ON THE SOLE GROUND BY RAISING THE QUESTION AS TO WHETHER T HE LD. CIT(A)- II, AMRITSAR IS RIGHT IN DELETING THE ADDITION OF RS. 51,05,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNUTILIZED C APITAL GAIN IN SPITE OF THE FACT THAT THE ASSESSEE HAS NOT UTILIZE D THE FUNDS AMOUNTING TO RS.75,00,000/- AVAILABLE IN THE SHAPE OF DEPOSITS IN ACCOUNT NO.30122464553 MAINTAINED WITH SBI, SECTOR 42-C, CHANDIGARH. I TA NO.69(ASR)/2017 A SST. YEAR: 2007-08 5 6. ON THE OTHER HAND, THE LD. AR SH. SALIL KAPOOR RELI ED UPON THE ORDER PASSED BY THE CIT(A) AND SUBMITTED THAT T HE ORDER PASSED BY THE CIT(A) IS BASED UPON THE DECISION REN DERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KA PIL KUMAR AGARWAL (2016) 382 ITR 56 (P&H) AND FURTHER SUBMITT ED THAT BENEFIT U/S 54 OF THE I.T. ACT CAN BE AVAILED EITHE R BY PURCHASING THE RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR O R TWO YEARS AFTER THE DATE ON WHICH TRANSFER TAKES PLACE OR CON STRUCTED RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS AF TER THAT DATE. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTAN CES OF THE CASE, AS WE REALIZED FROM THE ORDER PASSED BY T HE CIT(A) THAT THE LD. CIT(A) THOROUGHLY CONSIDERED THE INSTANT CA SE IN ITS RIGHTS PRESPECTIVE, THE OBSERVATION OF THE HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF CIT VS. KAPIL KUMAR AGARWAL (S UPRA) WHICH HAVE BEEN REPRODUCED HEREIN BELOW FOR THE SAKE OF C ONVENIENCE AND BREVITY. 13. THE COMBINED READING OF THE AFORESAID PROVISIONS SH OWS THAT IN ORDER TO AVAIL OF THE BENEFIT UNDER SECTION 54F OF THE ACT, THE ASSESSEE IS REQUIRED TO EITHER PURCHASE A RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHIC H TRANSFER TAKES PLACE OR CONSTRUCT A RESIDENTIAL HOUSE WITHIN A PER IOD OF THREE YEARS AFTER THAT DATE. IN SUCH CASES, THE CAPITAL GAINS S HALL BE COMPUTED AS PER CLAUSE (A) AND (B) OF SUB-SECTION (1). IN CASE, THE ASSESSEE IS NOT ABLE TO APPROPRIATE THE SALE PROCEEDS OF LONG -TERM CAPITAL GAIN, THEN BEFORE FILING OF A RETURN UNDER SECTION 139(1) OF T HE ACT, HE IS REQUIRED TO DEPO*SIT THE SAME UNDER ANY CAPITAL GAIN ACCOUNT SCHEME WITH A BANK OR INSTITUTION SPECIFIED BY THE CENTRAL GOVERN MENT IN THE OFFICIAL GAZETTE. THE ASSESSEE HAS TO FILE PROOF OF SUCH DEP OSIT ALONG WITH RETURN FOR CLAIMING EXEMPTION UNDER SECTION 54F OF THE ACT. I TA NO.69(ASR)/2017 A SST. YEAR: 2007-08 6 THE ASSESSEE HAS TO PURCHASE OR CONSTRUCT A HOUSE P ROPERTY DURING THE PERIOD SPECIFIED UNDER SECTION 54F OF TH E ACT IN ORDER TO GET BENEFIT THEREUNDER. SECTION 54F OF THE ACT NOWH ERE ENVISAGES THAT THE SALE CONSIDERATION OBTAINED BY THE ASSESSEE FRO M THE ORIGINAL CAPITAL ASSET IS MANDATORILY REQUIRED TO BE UTILIZE D FOR THE PURCHASE OR CONSTRUCTION OF A HOUSE PROPERTY. NO PROVISION HAS BEEN MADE BY THE STATUTE THAT IN ORDER TO AVAIL OF THE BENEFIT OF SECTION 54F OF THE ACT, THE ASSESSEE HAS TO UTILISE THE AMOUNT RECEIVED BY HIM ON SALE OF ORIGINAL CAPITAL ASSET FOR THE PURPOSES OF MEETING THE COST OF THE NEW ASSET. ONCE THAT IS SO, THE ASSESSEE WAS ENTITLED F OR BENEFIT UNDER SECTION 54F OF THE ACT. COMING TO THE INSTANT CASE, IT IS NOT IN DISPUTE TH AT ASSESSEE HAS SOLD OF THE SHARE OF HIS LAND FOR RS .4 CRORES AND OUT OF WHICH RS.3.25 CRORES WAS INVESTED FOR PURCHA SE OF CAPITAL GAIN BONDS OF NATIONAL HIGHWAY AUTHORITY AND FOR TH E PURCHASE OF RESIDENTIAL HOUSE, THE ASSESSEE HAS PAID THE BELOW MENTIONED AMOUNT OF RS.40,70,000/- BY WAY DEMAND DRAFTS, DETA ILS OF WHICH ARE AS UNDER: DATE DRAFT NO. AMOUNT NAME 27/02/2007 817878 RS. 7,66,667/- RAJNEESH DHAWAN 27/02/2007 817875 RS. 7,66,667/- KIR AN 27/02/2007 817876 RS. 6,66,666/- SHIVANI 04/06/2007 818804 RS. 8,33,333/- KIR AN 04/06/2007 818803 RS. 8,33,333/- RAJNEESH 04/06/2007 818805 RS. 3,33,334/- SHIVANI 09/07/2007 819089 RS. 5,00,000/- SHIVANI IN ADDITION TO THE AFORESAID AMOUNT OF RS.47,00,000/- , THE ASSESSEE HAS ALSO PAID STAMP DUTY TO THE TUNE OF RS.4,05, 000/- TOTAL OF WHICH COMES TO RS.51,05,000/-. I TA NO.69(ASR)/2017 A SST. YEAR: 2007-08 7 IN OUR CONSIDERED OPINION ENTITLEMENT OF THE EXEMPTIO N U/S 54 ALSO RELATES TO THE COST OF ACQUISITION OF A NEW ASSET IN T HE NATURE OF THE HOUSE PROPERTY FOR THE PURPOSE OF ITS OWN RESIDENCE WITHIN THE SPECIFIED PERIOD AS THE SEC.54 MANDATES THAT THE ASSESSEE H AS TO PURCHASE HOUSE PROPERTY FOR THE PURPOSE OF HIS OWN RESIDE NCE WITHIN A PERIOD OF ONE YEAR BEFORE OR AFTER THE DATE ON WHICH THE TRANSFER OF PROPERTY TOOK PLACE OR HE SHOULD HAVE CONSTRUCTED A HOUSE PROPERTY WITHIN A PERIOD OF TWO YEARS AFTER THE DATE OF TRAN SFER. WHILE COMING TO THE INSTANT CASE, THE ASSESSEE SOLD HIS SHA RE OF HIS LAND FOR CONSIDERATION OF RS.4 CRORES AND OUT OF THE SAID AMOUNT INVESTED RS.3.25 IN THE CAPITAL GAIN BOND OF NATIONAL HIGHWAY AUTHORITY OF INDIA AND FURTHER INVESTED RS.51,05,000/ - FOR THE PURCHASE OF NEW RESIDENTIAL HOUSE AND ALTHOUGH IN RESPEC T OF BALANCE AMOUNT RS.23,95,000/-, IT WAS CLAIMED BY THE ASSESSEE THAT THE SAME HAS BEEN UTILIZED FOR THE RENOVATION OF THE NEW RESI DENTIAL HOUSE, HOWEVER, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCES, TH E AUTHORITIES BELOW DID NOT ACCEDE TO THE SUBMISSION OF THE ASSESSEE AND ADDED THE SAME AS CAPITAL GAIN. ON THE AFORESAID REASONS AND OBSERVATIONS, WE DO N OT HAVE ANY HESITATION TO HOLD THAT THE ORDER PASSED BY THE LD. CI T(A) DOES NOT SUFFER FROM ANY PERVERSITY, ILLEGALITY AND IMPROPRIET Y, BUT IN FACT THE I TA NO.69(ASR)/2017 A SST. YEAR: 2007-08 8 SAME IS BASED UPON LOGICAL REASONING. HENCE, THE SAME IS LIA BLE TO UPHELD. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE D EPARTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.10. 2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHR Y) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED:24.10.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER