The ITO, 1(1), Indore V. Shri Sharad Bhargav, Indore

ITA 719/IND/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82656 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: TRIBHUVAN SACHDEVA
• Keywords: Capital asset
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER ITA NO.719/IND/2013 A.Y.2009-10 ITO, WARD-1(1), INDORE. VS. SHRI SHARAD BHARGAV, 131, PRIME CITY, ROYAL BUNGLOW, SUKHLIYA, INDORE. PAN: ACOPB 1204F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.A. VERMA, SR.D.R. ASSESSEE(S) BY : SHRI TRIBHUVAN SACHDEVA, A.R. /DATE OF HEARING : 08/09/2014 /DATE OF PRONOUNCEMENT: 12/09/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE EMANATING FR OM THE ORDER OF LEARNED CIT(A)-I INDORE DATED 16 TH SEPTEMBER, 2013 AND THE GROUNDS RAISED ARE REPRODUCED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) E RRED IN DIRECTING TO ALLOW EXEMPTION U/S.54F IN FULL WHEREAS THE ASSESSEE WAS ELIGIBLE FOR 50% EXEMPTION ONLY SINCE HIS OWNERSHIP IN THE HOUSE PROPERTY IS ONLY ON HALF PORTION. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF 50% OF THE CLAIM OF EXEMPT ION U/S.54F RELYING UPON THE DECISION OF THE JURISDICTIONAL HONBLE ITAT IN THE CASE OF SHRI RAJIV PATNI, 9 ITJ 772, BECAUSE THE SAID DECISION IS UNDER APPEAL BEFORE THE HONBLE HIGH COURT. ITA NO.719/IND/2013 ITO WARD-1(1) INDORE VS. SHRI SHARAD BHARGAV A.Y.2009-10 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S. 143(3) DATED 26.12.2011 WERE THAT THE A SSESSEE IN INDIVIDUAL CAPACITY HAS FILED A RETURN FOR A.Y. 2009-10 DECLAR ING AN INCOME OF RS.1,95,546/-, WHEREIN INFORMED THAT AN IMMOVABLE P ROPERTY AGRICULTURAL LAND WAS SOLD FOR A CONSIDERATION OF RS.9,77,250/-. THE COMPUTATION OF THE CAPITAL GAIN AS DISCLOSED BY THE ASSESSEE WAS REPRODUCED BELOW: SALE CONSIDERATION RS.9077250.00 LESS: COST OF INDEX RS. 379695.00 90470 X 582 = 109695.00 480 DALALI PAID = 270000.00 379695.00 RS.8697555.00 LESS:- DEDUCTION / EXEMPTION U/S.54 RS.8319393.00 PURCHASE AGRI LAND 1196353.00 GRAM ARJUN BADODA 3577470.00 PLOT A/M 115/JR. MIG. 3545570.00 & CONSTRUCTION 8319393.00 C.G. RS. 378162.00 3. THE A.O. HAS NOTED THAT THE ASSESSEE HAD CLAIMED EXEMPTION OF RS.35,45,570/- U/S.54F IN RESPECT OF PURCHASE AND C ONSTRUCTION OF A HOUSE PROPERTY. THE A.O. HAD PERUSED THE TITLE DEED OF TH E ABOVE PROPERTY AND CAME TO KNOW THAT THE SAME WAS PURCHASED ALONG WITH HIS BROTHER, VIZ., SRI MANISH BHARGAV. THE A.O. HAS OBJECTED THAT THE ENTIRE EXEMPTION U/S.54F SHOULD NOT BE ALLOWED TO THE ASSESSEE BECAU SE THE HOUSE PROPERTY IN QUESTION WAS NOT PURCHASED ALONE IN THE NAME OF THE ASSESSEE BUT IT WAS PURCHASED ALONG WITH HIS BROTHER. IN DEFENCE AS SESSEE HAS FURNISHED AN AFFIDAVIT OF HIS BROTHER SRI MANISH BHARGAV WHO HAS STATED ON OATH THAT THE INVESTMENT IN THE HOUSE WAS ENTIRELY MADE OUT OF THE SALE PROCEEDS OF THE AGRICULTURAL LAND AND NO INVESTMENT WAS MADE BY HIM. ITA NO.719/IND/2013 ITO WARD-1(1) INDORE VS. SHRI SHARAD BHARGAV A.Y.2009-10 - 3 - HOWEVER, THE A.O. WAS NOT CONVINCED AND AFTER PLACI NG RELIANCE ON THE FOLLOWING DECISIONS ALLOWED ONLY 50% OF THE CLAIM O F EXEMPTION U/S.54F AMOUNTING TO RS.17,72,785/-. CASE LAW RELIED UPON W ERE AS UNDER: FOR QUALIFYING FOR EXEMPTION U/S.54F IT IS NECESSARY TO HAVE THE INVEST MENT MADE IN RESIDENTIAL HOUSE IN THE NAME OF ASSESSEE ONLY, ASSESSEE HAVING PURCHASED THE NEW PROPERTY IN THE NAME OF SON, EXEMPTION WAS NOT AVAILABLE. RELIANCE IS ALSO PLACED IN THIS REGARD ON FOLLOWING JUDGEMENTS:- (I) ITO VS. PRAKASH TIMAJI DHANJODE (ITAT, NAGPUR) 81 TTJ 694 (II) RAM KISHAN VS. ITO 2007-TIOL-178-ITAT-DEL (III) JAI NARAYAN VS. ITO (P&H) 306 ITR 335 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY AFTER NARRATING THOSE FACTS, THE ASSESSEE HAS PLACE D RELIANCE ON THE CASE LAWS AS UNDER: I) ITO INDORE VS. RAJEEV PATNI INDORE ITAT BENCH (2007) 9 TTJ (TRIBUNAL) II) JAGPAL SINGH VS. ITO (2010) 186 TAXMAN 26 (DELHI ITAT, BENCH D DATED 23.02.2007) III) RAVINDRA KUMAR ARORA VS. ACIT (2012) 21 TAXMAN.COM 305 (DELHI ITAT BENCH F DATED 11.03.2011) IV) CIT VS. V. NATRAJAN (2007) 287 ITR 271 (MADRAS HIGH COURT) V) CIT VS. GURNAM SINGH (2008) 170 TAXMAN (P & H.) VI) KAMAL WAHAL, BADAR DURREZ AHMED & R.V. EASWAR, J.J. ITA 4/2013 11 TH JANUARY, 2013 (2013) 84CCH 024 DEL HC VII) RAVINDRA KUMAR ARORA (2012) 252 CTR (DEL) 392 4.1 LEARNED CIT(A) HAS HELD AS UNDER: 8. WHEN SUCH INVESTMENT IN RESIDENTIAL HOUSE IS MADE OUT OF PROCEEDS OF LAND SOLD BY APPELLANT AND EVEN IF HOUSE IS PURCHASED IN JOINT NAMES OF APPELLANT AND HIS BROTHER, APPELLANT WAS ENTITLED TO FULL EXEMPTION U/S.54F OF THE INCOME TAX ACT AS HELD IN RECENT DECISIONS IN CASES OF RAVINDRA KU MAR ARORA (2012) 342 ITR 38 (DELHI) AND KAMAL WAHAL (2013) 84 CCH 024 (DELHI) AND IT WAS ALSO HELD IN CASE OF RAJIV PATNI (2007) 9 ITJ 772 (ITAT, INDORE). 9. IN VIEW OF RATIO LAID DOWN IN AFORESAID DECISIONS, THE FACTS OF APPELLANT BEING SIMILAR, THE CLAM OF EXEMPTION U/S.54F OF RS.36,45,570/- IS ALLOWED TO APPELLANT. THE DISALLOWANCE OF 50% OUT OF THIS AMOUNT IS HEREBY DECIDED. ITA NO.719/IND/2013 ITO WARD-1(1) INDORE VS. SHRI SHARAD BHARGAV A.Y.2009-10 - 4 - 5. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEAR D BOTH THE SIDES. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., MR. R.A. VERMA HAS PLACED RELIANCE ON THE ORDER OF THE A.O., HOWEVER, ON THE OTHER HAND LEARNED AR, MR. TRIBHUVAN SACHDEVA HAS PLACED RELIA NCE ON THE ORDER OF THE CIT(A). AS FAR AS THE APPLICABILITY OF THE PROV ISIONS OF SECTION 54F OF IT ACT IS CONCERNED IT IS PROVIDED THAT IN THE CASE OF THE ASSESSEE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG T ERM CAPITAL ASSET AND THE ASSESSEE HAS WITHIN THE PERIOD OF THREE YEARS CONST RUCTED A RESIDENTIAL HOUSE AND THE COST OF THE SAID NEW ASSET RESIDENTI AL HOUSE IS NOT LESS THAN THE NET CONSIDERATION, THE WHOLE OF SUCH CAPIT AL GAIN SHALL NOT BE CHARGED U/S.45 OF IT ACT. FROM THE WORDINGS OF PROV ISIONS OF SECTION 54F IT IS EMERGING THAT THE NET CONSIDERATION IS TO BE UTILIZED TOWARDS PURCHASE/CONSTRUCTION OF RESIDENTIAL HOUSE. EVEN SO ME OF THE OTHER TRANSACTIONS OF SECTION 54F HAVE SUGGESTED THAT IN A SITUATION WHEN THE ENTIRE NET CONSIDERATION IS NOT UTILIZED TOWARDS TH E PURCHASE OF A QUALIFIED NEW ASSET THEN THE BALANCE NET CONSIDERATION IS REQ UIRED TO BE DEPOSITED IN A PARTICULAR MANNER SO AS TO BE UTILIZED IN VIEW OF THE SCHEME AS PRESCRIBED UNDER LAW. IT IS FURTHER PROVIDED THAT I F THE AMOUNT SO DEPOSITED, I.E., THE NET CONSIDERATION, UNDER THE P RESCRIBED SCHEME IS NOT UTILIZED WITHIN THE SPECIFIED PERIOD THEN SHALL BE CHARGED TO TAX U/S.45 OF IT ACT, THEREFORE, THE MAIN THRUST OF THIS PROVISIO N IS THAT THE NET CONSIDERATION IS REQUIRED TO BE UTILIZED TOWARDS PU RCHASE/CONSTRUCTION OF NEW ASSET. THIS IS NOT A CASE OF THE REVENUE THAT T HE NET CONSIDERATION IN QUESTION WAS NOT UTILIZED FOR CONSIDERATION OF RESI DENTIAL HOUSE BUT THE OBJECTION OF THE A.O. WAS THAT THE NEW ASSET WAS JO INTLY PURCHASED BY THE ASSESSEE ALONG WITH HIS BROTHER. THIS IS ALSO NOT T HE CASE OF THE REVENUE THAT THE CONSIDERATION SO RECEIPT ON SALE OF AGRICU LTURAL LAND WAS DIVERTED ITA NO.719/IND/2013 ITO WARD-1(1) INDORE VS. SHRI SHARAD BHARGAV A.Y.2009-10 - 5 - BY THE ASSESSEE FOR SOME OTHER INVESTMENT. IN OTHER WORDS, THE REVENUE IS NOT OBJECTING THAT THE ENTIRE CONSIDERATION WAS UTI LIZED TOWARDS CONSTRUCTION OF RESIDENTIAL HOUSE. WE, THEREFORE, H OLD THAT IN A SITUATION WHEN THERE IS NO RESTRICTION IN THE STATUTE THAT ON LY A PROPORTIONATE EXEMPTION SHALL BE GRANTED IF THE NEW ASSET IS NOT ENTIRELY PURCHASED IN THE NAME OF THE ASSESSEE; THEN IT IS NOT LEGALLY PE RMISSIBLE TO PROPORTIONATELY ALLOW THE EXEMPTION. 5.1 AS FAR AS THE CASE LAW RELIED UPON BY THE A.O. IS CONCERNED, WE HAVE EXAMINED THAT IN THE CASE OF PRAKASH TIMAJI DHANJODE (ITAT, NAGPUR) 81 TTJ 694 THE INVESTMENT WAS NOT MADE IN THE NAME OF THE ASSESSEE BUT THE INVESTMENT IN THE NEW ASSET WAS MA DE IN THE NAME OF HIS ADOPTED SON. SINCE, THE ENTIRE INVESTMENT WAS NOT A T ALL MADE IN THE NAME OF THE ASSESSEE THEREFORE AN ADVERSE VIEW WAS TAKEN . FACTS BEING DIFFERENT HENCE THE RELIANCE PLACED BY THE A.O. ON THIS PRECE DENT WAS MISPLACED. LIKEWISE, IN THE CASE OF JAI NARAYAN, 306 ITR 335 (P & H) THE AGRICULTURAL LAND WAS NOT PURCHASED IN THE NAME OF THE ASSESSEE BUT IN THE NAME OF THIRD PERSON, I.E., HIS SON AND GRANDSON. ON ACCOUNT OF THIS REASON, THE EXEMPTION U/S.54B WAS NOT GRANTED BY TH E HONBLE COURT. ON THE CONTRARY, IN THE CASE OF THIS ASSESSEE THE PURC HASE AND CONSTRUCTION OF THE RESIDENTIAL HOUSE WAS IN THE NAME OF THE ASSESS EE, ALTHOUGH JOINTLY WITH HIS BROTHER. WE, THEREFORE, HOLD THAT THIS CAS E LAW WAS NOT APPLICABLE ON THE FACTS OF THIS APPEAL. THE OTHER DECISIONS AR E ALSO MISMATCHING WITH THE FACTS OF THE PRESENT APPEAL; HENCE, NOT REQUIRE D TO BE DISCUSSED. 5.2 RATHER, THE DECISION OF RAVINDRA KUMAR ARORA, (2012) 252 CTR (DEL) 392 IS DIRECTLY ON THE ISSUE INVOLVED IN THIS CASE, WH EREIN THE NEW ITA NO.719/IND/2013 ITO WARD-1(1) INDORE VS. SHRI SHARAD BHARGAV A.Y.2009-10 - 6 - RESIDENTIAL PROPERTY WAS PURCHASED IN JOINT NAME OF THE ASSESSEE WITH HIS WIFE. THE ASSESSEE HAD INVESTED THE ENTIRE AMOUNT O F LONG TERM CAPITAL GAIN TOWARDS PURCHASE OF NEW RESIDENTIAL HOUSE. THE NAME OF THE WIFE WAS STATED TO BE ADDED ONLY FOR SHAGUN PURPOSES. THE HONBLE COURT HAS HELD THAT THE ASSESSEE WAS ENTITLED FOR FULL EX EMPTION OF INVESTMENT U/S. 54F OF IT ACT AND THE A.O. WAS NOT JUSTIFIED I N RESTRICTING THE EXEMPTION TO THE EXTENT OF 50% ONLY. THEREFORE BY P LACING RELIANCE ON THIS JUDGMENT, WE HEREBY AFFIRM THE FINDING OF LEAR NED CIT(A), RESULTANTLY, THE GROUNDS RAISED BY THE REVENUE ARE HEREBY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- (P.K. BANSAL) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED 12/09/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $%$&' # # ( / CONCERNED CIT 4. # # ( ( ) / THE CIT(A), INDORE 5. +,# &' , # # &' , ./ % / DR, ITAT, INDORE 6. ,01 2 / GUARD FILE. / BY ORDER, 3 33 3/ // /.# $4 .# $4 .# $4 .# $4 ( DY./ASSTT.REGISTRAR) ITAT, INDORE