Narayanaswami Srinivasan, CHENNAI V. ACIT, CHENNAI

ITA 721/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8906 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJCIT
• Assessee Lawyers: K RAVI
• Keywords: Salary income; Revised return
• Section: 143(3); 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , # BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.721/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) MR. NARAYANASWAMI SRINIVASAN, 2/495, NATESAN COLONY, KOTTIVAKKAM, CHENNAI-600 041. VS ASSISTANT COMMISSIONER OF INCOME TAX, SALARY CIRCLE-VI, CHENNAI-34. PAN: AISPS5777J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K. RAVI, ADVOCATE /RESPONDENT BY : MR. SHIVA SRINIVAS,JCIT /DATE OF HEARING : 31 ST MAY, 2016 /DATE OF PRONOUNCEMENT : 2 ND AUGUST, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 15, CHENNAI DATED 08.12.2015 IN ITA NO.66/CIT(A)-15 /14-15 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE A CT. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUND S IN HIS APPEAL, HOWEVER THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 54 OF THE I.T. ACT. 2 ITA NO.721/MDS/2016 II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD NOT CONSIDERED THE COST OF INTERIOR WORK EXPENSES AMOUNTING TO `2,81,800/- WHILE CALCULATING LONG TERM CAPITAL GAINS. 3. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LI MITATION BY 4 DAYS. AT THE TIME OF HEARING THE LEARNED COUN SEL FOR THE ASSESSEE PLEADED THAT THE ASSESSEE HAD HANDED OVER THE PARTICULARS FOR FILING THE APPEAL TO HIS ACCOUNTANT BUT DUE TO HIS OVER SIGHT THE DELAY HAS OCCURRED. HE THEREFORE PLEADED THAT THE DELAY IN FILING THE APPEAL BY 4 DAYS MAY B E CONDONED. THE LEARNED D.R OPPOSED TO THE SUBMISSION OF THE LEARNED A.R AND REQUESTED THAT THE APPEAL MAY NOT B E ENTERTAINED. HOWEVER AFTER HEARING BOTH THE PARTIES WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE SHOULD NOT BE PENALIZED BECAUSE HE WAS NOT AT FAULT, THEREFORE IN THE INTEREST WE HEREBY CONDONE THE DELAY AND PROCEED TO HEAR THE APPEAL ON MERIT. 4. BRIEF FACTS OF THE CASE ARE THAT THAT THE ASSESS EE IS AN INDIVIDUAL EARNING INCOME FROM SALARY FILED HIS RET URN OF 3 ITA NO.721/MDS/2016 INCOME ON 30.07.2011 FOR THE ASSESSMENT YEAR 2011-1 2. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY. I N THE COURSE OF SCRUTINY ASSESSMENT, IT WAS OBSERVED BY T HE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAD PUR CHASED ALONG WITH HIS WIFE DR.(MRS). R.JAYANTHI A PROPERTY VIZ. PLOT NO.104, IN SWAMINATHA NAGAR LAYOUT, KOTTIVAKKAM, CH ENNAI- 41 ON 16.9.98 VIDE DOCUMENT NO.1233 FOR A VALUE OF ` 2,75,000/- FROM MR. P.G.SARANGAPANI REPRESENTED BY HIS POWER AGENT. DURING THE RELEVANT ASSESSMENT YEAR I .E. ON 29.07.2010, THE ASSESSEE SOLD HIS PROPERTY FOR `65, 00,000/- VIDE DOCUMENT NO.1494/2010 THEREBY EARNED LONG TERM CAPITAL GAIN. ON QUERY, THE ASSESSEE HAD EXPLAINE D THAT HE HAD DEPOSITED THE AMOUNT IN LONG TERM CAPITAL GAIN SCHEME ACCOUNT AND THEREAFTER PURCHASED A VACANT LAND FOR `82,68,750/-. IT WAS FURTHER EXPLAINED THAT SINCE T HE ASSESSEE IS ENTITLED TO THE BENEFIT OF SECTION 54F OF THE AC T BY VIRTUE OF PURCHASE OF RESIDENTIAL LAND FOR RS.82,68,750/- HE WILL NOT BE LIABLE FOR LONG TERM CAPITAL GAIN TAX. WHEN THE LEA RNED ASSESSING OFFICER POINTED OUT THAT THE ASSESSEE IS NOT ENTITLED FOR THE BENEFIT OF SECTION 54F OF THE ACT AS HE HAS NOT PURCHASED A RESIDENTIAL HOUSE, THE ASSESSEE CAME OU T WITH 4 ITA NO.721/MDS/2016 ANOTHER PROPOSITION STATING THAT HE HAD PURCHASED A RESIDENTIAL FLAT FROM MANTRI DEVELOPERS PVT.LTD.VI DE DOCUMENT NO.12845/11 DATED 5.12.2011 FOR `38,25,073/- (304.8 1 UDS SQ.FT OF LAND RS.3,62,125/- + COST OF CONSTRUCTION OF `29,20,048/- + INTERIOR `5,42,900/- ) . SINCE THE S OURCE FOR THE PURCHASE OF THE ABOVE FLAT WAS SHOWN AS LOAN `20,00 ,000/- AND PERSONAL SAVING OF RS.18,75,023/- THE LEARNED A SSESSING OFFICER REJECTED THE BENEFIT UNDER SECTION 54F OF T HE ACT TO THE ASSESSEE. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 5.2.2 I HAVE CONSIDERED THE FINDINGS GIVEN BY THE A O AND ALSO SUBMISSIONS MADE BY THE AR OF THE APPELLANT. THE APPELLANT HAD NEITHER DISCLOSED ANY INCOME UNDER TH E HEAD CAPITAL GAINS NOR GAVE ANY DETAILS REGARDING PURCHASE AND SALE OF PROPERTY. IT HAS BEEN SUBMITTE D THAT THE ACCOUNTANT DID NOT UPLOAD THE RELEVANT COLUMNS BY OVERSIGHT. THE APPELLANT DID NOT FILE ANY REVISED RETURN TO CORRECT THE ERRO R. THE DETAILS WERE FILED ONLY AFTER THE CASE WAS SELECTED FOR SCRUTINY. THE PROPERTY WAS SOLD BY THE APPELLANT ON 29.07.2010 FOR CONSIDERATION OF RS. 65,00,000/-. TH E NEW ASSET A VACANT PLOT WAS PURCHASED ON 24.03.2011 FOR CONSIDERATION OF RS. 82,68,750/-. THE ASSESSING OFFICER HAD WORKED OUT LONG TERM CAPITAL GAINS OF R S. 23,05,676/-. THE APPELLANT HAS SHOWN SOURCE OF PURCHASE OF FLAT IN THE NAME OF APPELLANT'S WIFE FR OM MANTRI DEVELOPERS PVT. LTD. AS HOUSING LOAN OF 5 ITA NO.721/MDS/2016 RS.20,00,000/- AND RS.18,25,073/- AS SAVINGS FOR WHICH ALSO NO PROOF WAS SUBMITTED. THE DEPOSITS IN CAPITAL GAINS SCHEME ACCOUNT WERE UTILIZED FOR PURCHASE OF A VACANT PLOT ONLY. SINCE THE APPELLANT HAD NOT SHOWN ANY LONG TERM CAPITAL GAINS AND ALSO NOT CLAIMED ANY DEDUCTION U/S 54 IN THE RETURN OF INCOME FILED, THE ACTION OF ASSESSING OFFICER IN CALCULATI NG THE LONG TERM CAPITAL GAINS IS CORRECT AND UPHELD. THE APPELLANT HAS PURCHASED A VACANT PLOT ON WHICH DEDUCTION U/S. 54 IS NOT AVAILABLE AS NO CONSTRUCTION WAS MADE. NO DEDUCTION U/S. 54 IS AVAILABLE ON PURCHASE OF FLAT AS THE PAYMENTS WERE NOT MADE FROM THE SALE CONSIDERATIONS AT ALL. THE ACTION OF THE ASSESSING OFFICER IN DENYING THE DEDUCTION U/S. 54 IS UPHELD. THE APPELLANT HAS RELIED UPON THE JUDGEMENT OF MADRAS HIGH COURT IN THE CASE OF CIT V/S NATRAJA N (227) 287 ITR 271 WHICH IS NOT APPLICABLE TO THE CA SE OF THE APPELLANT AS HE IS NOT ELIGIBLE FOR DEDUCTIO N U/S. 54 OF THE IT ACT. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO DENIED THE COST OF INTERIOR WORK BY OBSERVING AS UNDER: 5.3 GROUND OF APPEAL NO.13 IS AGAINST THE ACTION OF THE AO IN NOT CONSIDERING THE COST OF INTERIOR WORK EXPENSES AMOUNTING TO RS. 2,81,800/- WHILE CALCULATING LONG TERM CAPITAL GAINS. HOWEVER, IN TH E ABSENCE OF THE DETAILS THIS GROUND IS REJECTED. 7. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY SUBMITTED THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF SECTION 54 F OF THE ACT BECAUSE HE HAD P URCHASE A RESIDENTIAL FLAT WITHIN THE TIME LIMIT PRESCRIBE UN DER SECTION 54F OF THE ACT AND THEREFORE PRAYED FOR RELIEF, WHI LE AS ON THE 6 ITA NO.721/MDS/2016 OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM TH E FACTS OF THE CASE, IT IS APPARENT THAT THE ASSESSEE HAD EARN ED LONG TERM CAPITAL GAIN OF `40,40,527/- AS WORKED OUT BY THE LEARNED ASSESSING OFFICER IN HIS ASSESSMENT ORDER. FURTHER, IT IS EVIDENT THAT THE ASSESSEE HAS PURCHASED RESIDENTIAL FLAT FOR `38,25,073/- OUT OF HOUSING LOAN OF `20,00,000/- AN D SAVINGS OF `18,25,073/-. NO DOUBT, THE ASSESSEE CANNOT CLAI M THE BENEFIT OF SECTION 54F OF THE ACT AGAINST THE PURCH ASE OF THE FLAT OUT OF THE LOAN OBTAINED FROM THE BANK OR FOR THE RESIDENTIAL LAND PURCHASED BY HIM WHEREIN RESIDENTI AL HOUSE IS NOT CONSTRUCTED, HOWEVER, WE ARE OF THE CONSIDER ED VIEW THAT THE ASSESSEE WOULD BE ENTITLED TO CLAIM THE BE NEFIT OF SECTION 54F OF THE ACT WITH RESPECT TO THE PURCHASE OF THE FLAT OUT OF HIS PERSONAL SAVINGS OF ` 18,25,073/-. FURTH ER, IT SHOULD BE KEPT IN MIND THAT IN ANY NEW FLAT PROMOTED BY A BUILDER SOME EXPENSES HAVE TO BE INCURRED TO MAKE IT CONVEN IENTLY HABITABLE AND IN THE CASE OF THE ASSESSEE HE HAS S PENT 7 ITA NO.721/MDS/2016 `2,81,800/-. THE AMOUNT OF `2,81,800/- IS QUITE RE ASONABLE EXPENDITURE WHICH CANNOT BE BRUSHED ASIDE BY MERELY STATING THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE FOR HAVING INCURRED SUCH EXPENDITURE. FURTHER FROM THE FACTS OF THE CASE IT IS EVIDENT THAT THE ASSESSEE IN ALL EARNEST HAD DEPOSITED THE ENTIRE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACC OUNT AND THEREAFTER HAD PURCHASED A RESIDENTIAL LAND WITHDRA WING THE AMOUNT FROM THE SCHEME ACCOUNT WITH A BONAFIDE INTE NTION TO CONSTRUCT A RESIDENTIAL HOUSE. BUT SINCE HE COULD N OT CONSTRUCT THE HOUSE HE HAD PURCHASED THE FLAT INSTA NTLY OUT OF HIS OTHER RESOURCES. SECTION 54F IS A BENEFICIAL PR OVISION AND IT WAS BROUGHT IN WITH AN INTENTION TO PROMOTE RESI DENTIAL INFRASTRUCTURE FACILITY IN THE COUNTRY. KEEPING IN VIEW OF THE INTENTION OF THE PROVISIONS OF THE ACT AND THE FACT S AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE BENEFIT OF SECTION 54F OF THE ACT SHOULD BE GRA NTED TO THE ASSESSEE FOR `18,25,073/- IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS NOT PRODUCED EVIDENCE FOR INTERIOR WOR K EXPENDITURE OF RS.2,81,800/- . ACCORDINGLY, WE HER EBY DIRECT THE LEARNED ASSESSING OFFICER TO GRANT THE BENEFIT UNDER SECTION 54F OF THE ACT TO THE ASSESSEE FOR RS,18,25 ,073/-. 8 ITA NO.721/MDS/2016 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 2 ND AUGUST, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) ! # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER ! /CHENNAI, % /DATED 2 ND AUGUST, 2016 SOMU '( )( /COPY TO: 1. APPELLANT 2. RESPONDENT 3. * ( ) /CIT(A) 4. * /CIT 5. ( - /DR 6. /GF .