SHRI Shri Gurvinder Singh Sasan, L/H of late Shri Jagdish Singh Sasan, Nagpur V. THE ITO-WARD-2(2), Nagpur

ITA 7/NAG/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9644 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITESH KUMAR
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SH. G.D.AGRAWAL, HONBLE PRESIDENT AND SH. MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.07/NAG/2014 (ASSESSMENT YEAR: 2007-08) SH. GURVINDER SINGH SASAN, L/H OF LATE SH. JAGDISH SINGH SASAN, C/OKASJMIR BAR & RESTAURANT, GADDOGUDAM CHOWK, NAGPUR440001. PANAEYPS3694G VS ITO, WARD2(2), 3ED FLOOR, AYAKAR BHAWAN, NAGPUR (APPELLANT) (RESPONDENT) APPELLANT BY SH.K.P.DEWANI, ADV. RESPONDENT BY SH. JITESH KUMAR DATE OF HEARING 07.03.2018 DATE OF PRONOUNCEMENT 07.03.2018 O R D E R PER BENCH THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF LD.CIT(A)-1, NAGPUR VIDE ORDER NO.CIT(A)-1/399/2009-10 DATED 22.10.2013 . THE ASSESSMENT WAS FRAMED BY INCOME TAX OFFICER, WARD-2(2), NAGPUR U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) FOR A.Y. 2006 -07 VIDE HIS ORDER DATED 31.12.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE AGAINS T THE ORDER OF LD.CIT(A) CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE CLAIM OF EXEMPTION U/S 54F OF THE ACT IN RESPECT OF INVESTMENT IN RESIDENTIAL HOUSE OUT OF THE SALE PROCEEDS OF THE PLOT OF LAND. FOR THIS, THE ASSESSEE HAS RA ISED THE FOLLOWING GROUNDS:- 2. THE LEARNED A.O. OUGHT TO HAVE ALLOWED EXEMPTIO N U/S 54/54F IN RESPECT OF INVESTMENT IN RESIDENTIAL HOUSE. ITA NO.07/NAG/2014 PAGE | 2 3. THE LEARNED CIT(A) ERRED IN NOT GRANTING EXEMPTI ON UNDER SECTION 54/54F OF I.T.ACT 1961 IN RESPECT OF INVESTMENT IN RESIDENTIAL HOUSE. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE DURIN G THE YEAR UNDER CONSIDERATION SOLD ONE IMMOVABLE PROPERTY DESCRIBED AS PLOT NO.492, KHASRA NO.136, MOUZA NARI, WARD NO.57, CITY SURVEY NO.295, NAGPUR FOR RS.25 LACS WHICH WAS PURCHASED BY HIM ON 26.06.2000. THE AO R EQUIRED THE ASSESSEE AS TO EXPLAIN AS TO WHY CAPITAL LONG TERM CAPITAL ON T HIS TRANSACTION IS NOT DECLARED IN THE RETURN OF INCOME. THE ASSESSEE REP LIED THAT HE HAS PURCHASED ONE LEASED PROPERTY FROM NAGPUR IMPROVEMENT TRUST ( IN SHORT NIT) VIE LEASE AGREEMENT DATED 26.06.2000 FOR A SUM OF RS.22,10,00 0/-. THE ASSESSEE SUBMITTED THAT HE HAS MADE INVESTMENT FOR PURCHASE OF PLOT IN AUCTION ON 14.09.2007, WHEREIN AT THE TIME OF AUCTION ON A SUM OF RS.5,22,500/- WAS PAID ON THE SAME DATE. FURTHER, A SUM OF RS.5,22,500/- WAS PAID ON 14.11.2007 AND FURTHER A SUM OF RS.11,05,000/- WAS PAID ON 17. 12.2007. IN VIEW OF THE ABOVE, LD. COUNSEL FOR THE ASSESSEE BEFORE THE AO C LAIMED THAT LONG TERM CAPITAL GAIN ARISING IN THE CASE OF THE ASSESSEE HA S BEEN INVESTED WITHIN A PERIOD OF ONE YEAR FROM THE DATE OF CAPITAL GAIN AR ISING AND CLAIMED THE EXEMPTION U/S 54F OF THE ACT. THE ASSESSEE CLAIMED THAT IT HAS CONSTRUCTED THE HOUSE BEFORE SEPTEMBER 2012 BUT THE AO STATED T HAT THE ASSESSEE HAS NOT COMPLIED WITH THE CONDITIONS OF SECTION 54 OF THE A CT AND THEREBY HE COMPUTED LONG TERM CAPITAL GAIN AT RS.18,13,900/- AND ADDED TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED THE ASSESSEE PREFERRED APP EAL BEFORE LD.CIT(A). ITA NO.07/NAG/2014 PAGE | 3 4. LD.CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSE RVING IN PAR 10.7 AS UNDER:- 10.7. AS PER THE LAYOUT PLAN / MAP APPROVED BY THE CORPORATION FILED DURING THE APPELLATE PROCEEDINGS, IT IS SEEN THAT T HE APPELLANT TRANSFERRED THE RESIDENTIAL HOUSE ON 13.12.2006, WHEREAS THE SA NCTION FOR CONSTRUCTION OF HOUSE FROM THE OFFICE OF THE MUNICIPAL CORPORATI ON OF NAGPUR IS OBTAINED ON 17.3.2011. FURTHER THAT NOTHING HAS BEEN ADDUCED ON RECORD BY THE APPELLANT AS REGARDS TO THE FACT WHETHER CONSTRUCTI ON HAS ACTUALLY BE COMMENCED OR DONE ON THE SAID PIECE OF PLOT CLAIMED TO HAVE BEEN TAKEN ON LEASE FROM NIT, VIDE AGREEMENT DATED 21ST AUGUST, 2 010, FOR A TOTAL CONSIDERATION OF RS. 22,10,000/-. THUS, THE APPELLA NT' EVEN AFTER PASSAGE OF ALMOST SEVEN YEARS, COULD NOT DEMONSTRATE WITH A NY CONCRETE EVIDENCE AS TO SHOW WHETHER THE NET CONSIDERATION REALISED F ROM THE SALE OF RESIDENTIAL HOUSE HAS BEEN UTILISED AS PER THE SCHE ME PROVIDED U/S 54 / 54F OF THE ACT. THEREFORE, THE AO IS JUSTIFIED IN D ENYING THE CLAIM OF THE APPELLANT AND THE ACTION OF THE AO IS CONFIRMED. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE FIR ST OF ALL NARRATED THE ACTUAL FACTS THAT IT HAS MADE INVESTMENT IN PURCHASE OF PL OT IN AUCTION FROM NIT AND MADE TOTAL INVESTMENT OF RS.22.10 LACS UPTO 17.12.2 007. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO RECEIPTS ISSUED BY N IT WHICH ARE ENCLOSED AT PAGES 51 TO 53 OF ASSESSEES PAPER BOOK. LD. COUNSE L FOR THE ASSESSEE ALSO DREW OUR ATTENTION TO PAGE NO.47 TO 50 OF ASSESSEE S PAPER BOOK WHEREIN THE ASSESSEE AFTER HAVING PAID THE AMOUNT PURSUANT TO A UCTION OF NIT FOR PURCHASE OF PLOT REQUESTED OF GRANT OF LEASE DEED SO THAT TH E ASSESSEE CAN SUBMIT BUILDING PLAN FOR APPROVAL WITH LOCAL AUTHORITIES. THE NIT DELAYED THE PROCESS OF LEASE DEED INSPITE OF THE FACT THAT THE FULL PAY MENT HAS BEEN MADE BUT ITA NO.07/NAG/2014 PAGE | 4 EVENTUALLY GRANTED THE LEASE DEED ONLY ON 21.08.201 0. THE ASSESSEE SUBSEQUENTLY MADE AN APPLICATION FOR SANCTION OF BU ILDING PLAN BEFORE NAGPUR MUNICIPAL CORPORATION (IN SHORT NMC) AND NMC AFTE R FULL VERIFICATION OF DOCUMENTS AND AFTER TAKING DUE TIME FOR GRANT OF A PPROVAL, SANCTIONED THE BUILDING PLANNING ONLY ON 17.03.2011. THE APPROVAL OF THE NMC IS ENCLOSED AT PAGES 56 TO 58 OF THE ASSESSEES PAPER BOOK. THE A SSESSEE ALSO DREW OUR ATTENTION TO THE ELECTRICITY BILLS IN RESPECT OF CO NSTRUCTION OF RESIDENTIAL HOUSE TO SHOW THE CONSUMPTION OF ELECTRICITY FOR THIS RESIDE NTIAL HOUSE IS BEING PAID FOR THE MONTH OF SEPTEMBER 2012. THE RELEVANT BILL IS ENCLOSED AT PAGE 59 TO 61 OF THE ASSESSEES PAPER BOOK. FROM THE ABOVE FACTUAL POSITION AND EVIDENCES, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE H AS INVESTED THE ENTIRE SALE PROCEEDS IN ACQUISITION OF RESIDENTIAL HOUSE AND WH ICH CANNOT BE DISPUTED ON THE BASIS OF EVIDENCES ON RECORD. IT WAS CONTENDED BY LD. COUNSEL FOR THE ASSESSEE THAT THESE EVIDENCES WERE FILED BEFORE THE AO AND LD.CIT(A) EXCEPT THE ELECTRICITY BILLS AND TAX RECEIPTS. WE FIND THAT I N SIMILAR CIRCUMSTANCES, THE MUMBAI TRIBUNAL IN THE CASE OF SH. HANSMUKH N.GALA IN ITA NO.7512/MUM/2013 VIDE ORDER DATED 19.08.2015 FOR A.Y. 2010-11 ON ID ENTICAL FACTS CONSIDERED THE ISSUE FOLLOWING THE DECISION O F HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS KULDEEP SINGH 270 CTR 561 (DEL.) AND ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING IN PARA 7 TO 8 AS UNDER:- 7. IT IS ACCEPTED POSITION AND IT IS NOT DISPUTED BY THE REVENUE THAT RS.37,86,273/- HAD BEEN INVESTED BY THE ASSESSEE FO R PURCHASE OF THE PROPERTY AT GURGAON. HOWEVER, LEGAL TITLE IN THE SA ID PROPERTY WAS NOT PASSED OR TRANSFERRED TO THE ASSESSEE WITHIN A PERI OD OF TWO YEARS FROM ITA NO.07/NAG/2014 PAGE | 5 THE DATE OF SALE OF THE FIRST PROPERTY ON 3RD JUNE, 2005. THE SECOND PROPERTY IT IS APPARENT WAS STILL UNDER CONSTRUCTIO N THOUGH THE BUILDER HAD ENTERED INTO AND EXECUTED THE FLAT BUYERS AGREEMENT WITH THE ASSESSEE DATED 9TH FEBRUARY, 2006. THE SAID AGREEMENT MENTIO NS THE APARTMENT NUMBER AND GIVES SPECIFIC DETAIL OF THE PROPERTY. T HE PAYMENTS WERE LINKED TO STAGE OF CONSTRUCTION AND THAT AMOUNT OF RS.2,90,46,250/- WAS PAYABLE WITHIN 27 MONTHS OF BOOKING I.E. ON OR BEFO RE 12TH FEBRUARY, 2008 AND THE TOTAL COST OF FLAT/APARTMENT WAS RS. 3,13,0 9,375/-. THUS, THE CONSIDERATION BEING PAID BY THE RESPONDENT ASSESSEE WAS NEARLY 9 TIMES INCOME BY WAY OF CAPITAL GAINS WHICH WAS EARNED BY THE ASSESSEE. 8. THE WORD PURCHASE CAN BE GIVEN BOTH RESTRICTIVE AND WIDER MEANING. A RESTRICTIVE MEANING WOULD MEAN TRANSACTI ONS BY WHICH LEGAL TITLE IS FINALLY TRANSFERRED, LIKE EXECUTION OF THE SALE DEED OR ANY OTHER DOCUMENT OF TITLE PURCHASE CAN ALSO REFER TO PAYM ENT OF CONSIDERATION OR PART CONSIDERATION ALONG WITH TRANSFER OF POSSESSIO N UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. SUPREME COURT W AY BACK IN 1979 IN CIT ANDHRA PRADESH VS. T.N. ARAVINDA REDDY (1979) 4 SCC 721, HOWEVER, GAVE IT A WIDER MEANING AND IT WAS HELD THAT THE PA YMENT MADE FOR EXECUTION OF RELEASE DEED BY THE BROTHER THEREBY JO INT OWNERSHIP BECAME SEPARATE OWNERSHIP FOR PRICE PAID WOULD BE COVERED BY THE WORD PURCHASE . IT WAS OBSERVED THAT THE WORD PURCHASE USED IN SECTION 54 OF THE ACT SHOULD BE INTERPRETED PRAGMATICALLY IN A PRACTICAL MANNER AND LEGALISM SHALL NOT BE ALLOWED TO PLAY AND CREATE CO NFUSION OR LINGUISTIC DISTORTION. THE ARGUMENT THAT PURCHASE PRIMARILY MEANT ACQUISITION FOR MONEY PAID AND NOT ADJUSTMENT, WAS REJECTED OBSERVI NG THAT IT NEED NOT BE RESTRICTED TO CONVEYANCE OF LAND FOR A PRICE CONSIS TING WHOLLY OR PARTLY OF MONEYS WORTH. THE WORD PURCHASE , IT WAS OBSERVED WAS OF A PLURAL SEMANTIC SHADES AND WOULD INCLUDE BUYING FOR A PRIC E OR EQUIVALENT OF PRICE BY PAYMENT OF KIND OR ADJUSTMENT OF OLD DEBT OR OTHER MONETARY CONSIDERATIONS. IT WAS OBSERVED THAT IF YOU SELL A HOUSE AND MAKE PROFIT, PAY CAESAR (STATE) BUT IF YOU BUY A HOUSE OR BUILD ANOTHER AND THEREBY ITA NO.07/NAG/2014 PAGE | 6 SATISFY THE CONDITIONS OF SECTION 54, YOU WERE EXEM PT. THE PURPOSE WAS PLAIN; THE SYMMETRY WAS SIMPLE; THE LANGUAGE WAS PL AIN. 6. WE FIND FROM THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE THAT THE ASSESSEE HAS COMPLETED THE CONSTRUCTION OF HOUSE AS THE EVIDENCE CLEARLY PROVE THE SAME. WE FIND THAT THE ASSESSEE BONAFIDE MADE INVESTMENT IN PURCHASE OF PLOT PURCHASE THROUGH AUCTION FROM NIT AND PAID INS TALMENTS ACCORDINGLY. THE ASSESSEE APPLIED FOR LEASE DEED AND AFTER GRANTING OF LEASE DEED OF NIT, THE ASSESSEE APPLIED FOR APPROVAL OF BUILDING PLAN. AF TER APPROVAL OF BUILDING PLAN, THE ASSESSEE CONSTRUCTED THE HOUSE AND START RESIDI NG IN THE SAME WHICH IS PROVED BY DOCUMENTARY EVIDENCE. WE FIND THAT THE A SSESSEE HAS DULY INVESTED THE AMOUNT IN ACQUISITION OF NEW PROPERTY AND THE D ELAY IN COMPLETION OF CONSTRUCTION BEYOND THE CONTROL OF THE ASSESSEE AS THE STATUTORY PERMISSIONS WERE OBTAINED FROM THE GOVERNMENT AUTHORITIES, WHO DELAYED THE PROCESS. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE BEN EFICIAL PROVISION SHOULD BE INTERPRETED IN FAVOUR OF THE ASSESSEE AND SEEING TH E BONAFIDE OF THE ASSESSEE, WE DIRECT THE AO TO ALLOW THE CLAIM OF DEDUCTION U/ S 54 OF THE ACT TO THE ASSESSEE. ACCORDINGLY, WE DIRECT THE AO. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH MARCH, 2018. SD/ SD/ (G.D.AGRAWAL) (MAHAVIR SINGH) HONBLE PRESIDENT JUDICIAL MEMBER DATED:07 TH MARCH, 2018 *AMIT KUMAR* ITA NO.07/NAG/2014 PAGE | 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), NAGPUR 4. THE CIT, NAGPUR 5. THE DR, BENCH, ITAT, NAGPUR BY ORD ER ASSISTANT REGISTRAR ITAT, NAGPUR BENCH, NAGPUR