Sri. R. Balaji Singh, Bangalore V. ITO, Bangalore

ITA 734/BANG/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9469 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.734/BANG/2015 ASSESSMENT YEAR : 2011-12 SRI R BALAJI SINGH, M/S SUMUKA ART CREATIONS, NO.2, 1 ST FLOOR, KANAKAPURA ROAD, YELACHANAHALLI, BENGALURU-560 078. PAN APFPS 9831 P VS. THE INCOME-TAX OFFICER, WARD-9(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI NARENDRA SHARMA, ADVOCATE RESPONDNET BY : SHRI R.N SIDDAPPAJI, ADDL. CIT DATE OF HEARING : 03.07.2019 DATE OF PRONOUNCEMENT : 03.07.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 17-04-2015 PASSED BY LD CIT(A)-4, BANGALORE AND IT RELATES TO THE ASSESSMENT YEAR 2011-12. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING REJECTION FOR C LAIM OF DEDUCTION U/S 54F OF THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE SOLD SOME PROPERTY OTHER THAN HOUSE PROPERTY LOCATE D AT B M KAVAL VILLAGE AND DECLARED LONG TERM CAPITAL GAIN OF RS.5 2.37 LAKHS. THE ITA NO.734/BANG/2015 PAGE 2 OF 5 ASSESSEE CONSTRUCTED A RESIDENTIAL HOUSE PROPERTY O N A PLOT OF LAND BELONGING TO HIS FATHER. ACCORDINGLY THE ASSESSEE CLAIMED EXEMPTION U/S 54F OF THE ACT TO THE TUNE OF RS.40.8 7 LAKHS. THE AO NOTICED THAT THE PLOT OF LAND DID NOT BELONG TO THE ASSESSEE. WHEN ASKED ABOUT THE SAME, THE ASSESSEE PRODUCED A FAMILY SETTLEMENT DEED, AS PER WHICH THE ASSESSEE HEREIN G OT THE PLOT OF LAND ON WHICH THE HOUSE PROPERTY WAS CONSTRUCTED. THE AO NOTICED THAT THE FATHER OF THE ASSESSEE EXPIRED ONLY 25-08- 2012. FURTHER THE FAMILY SETTLEMENT DEED WAS EXECUTED ON 04-09-20 12, JUST PRIOR TO THE FILING OF RETURN OF INCOME OF THE YEAR UNDER CONSIDERATION AND IT WAS NOT REGISTERED. THE AO ALSO TOOK THE VIEW T HAT THE ASSESSEE SHOULD BE OWNER OF THE LAND ON WHICH THE BUILDING W AS CONSTRUCTED IN ORDER TO CLAIM EXEMPTION U/S 54F OF THE ACT. SI NCE THE FATHER OF THE ASSESSEE WAS ALIVE AT THE TIME WHEN CONSTRUCTIO N TOOK PLACE AND SINCE THE PLOT OF LAND WAS OWNED BY HIM, THE AO TOO K THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 54F OF THE ACT. ACCORDINGLY HE REJECTED THE CLAIM OF THE ASSESSEE. THE LD CIT(A) ALSO UPHELD THE SAME BY OBSERVING THAT THE ASSESSEE SHOULD BE OWNER OF THE PROPERTY FOR CLAIMING DEDUCTION U/S 54 F OF THE ACT. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL. 3. WE NOTICE THAT THE TAX AUTHORITIES APPEAR TO HAVE TAKEN THE VIEW THAT THE LAND SHOULD ALSO BE OWNED BY THE ASSE SSEE. THE LD D.R ALSO REITERATED THAT THE PROPERTY WAS OWNED BY THE FATHER OF THE ASSESSEE AND THE SAME HAS BEEN CLAIMED TO HAVE BEEN TRANSFERRED TO THE ASSESSEE THROUGH AN UNREGISTERED FAMILY SETT LEMENT DEED. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE IS NOT E LIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. HOWEVER, THE LD A.R SUBMITTED THAT ITA NO.734/BANG/2015 PAGE 3 OF 5 THERE IS NO CONDITION PRESCRIBED IN SEC.54F OF THE ACT THAT THE PLOT OF LAND SHOULD BE OWNED BY THE ASSESSEE. HE SUBMIT TED THAT THE LAND AND THE SUPER STRUCTURE ARE TWO DIFFERENT ASSE TS. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54F OF THE ACT ONLY IN RE SPECT OF THE COST OF SUPER STRUCTURE ONLY. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS INHERITED THE LAND SUBSEQUENTLY AND NOW IT STANDS I N THE NAME OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTIONS, THE L D A.R PLACED HIS RELIANCE ON THE DECISION RENDERED BY JAIPUR BENCH O F ITAT IN THE CASE OF SHRI GANESH CHAWLA (ITA NO.452/JP/2017 DATE D 25-01- 2018), WHEREIN IT WAS HELD THAT, WHERE AN ASSESSEE CONSTRUCTS A RESIDENTIAL HOUSE PROPERTY ON THE LAND OWNED BY HIS MOTHER, THEN THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54F IN R ESPECT OF INVESTMENT MADE IN CONSTRUCTION OF PROPERTY. 4. WE FIND MERIT IN THE CONTENTIONS OF THE ASSES SEE. AS SUBMITTED BY LD A.R, THE PROVISIONS OF SEC.54F DO NOT PRESCRI BE ANY CONDITION THAT THE INVESTMENT MADE SHOULD BE FOR BOTH LAND AN D BUILDING. UNDER GENERAL LAW ALSO, NO PROHIBITION IS THERE TO CONSTRUCT BUILDING ON A LAND BELONGING TO ANOTHER BY GETTING DUE PERMISSION OR LICENSE. IT IS PERTINENT TO NOTE THAT THE PROVI SIONS OF SEC.24, BEFORE ITS AMENDMENT BY FINANCE ACT, 2000 W.E.F. 1. 4.2001, PROVIDED FOR DEDUCTION OF GROUND RENT FROM THE HO USE PROPERTY INCOME, WHERE THE PROPERTY IS SUBJECT TO GROUND REN T, MEANING THEREBY, THE INCOME TAX ACT ALSO HAS RECOGNISED THE FACT THAT THE LAND MAY STAND IN SOME OTHER PERSONS NAME. HENCE THE TAX AUTHORITIES ARE NOT CORRECT IN LAW IN HOLDING THAT THE LAND SHOULD ALSO BELONG TO THE ASSESSEE FOR THE PURPOSE OF CLAI MING DEDUCTION U/S 54F OF THE ACT. ITA NO.734/BANG/2015 PAGE 4 OF 5 5. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS C LAIMED DEDUCTION U/S 54F OF THE ACT IN RESPECT OF INVESTMENT MADE IN CONSTRUCTION OF RESIDENTIAL HOUSE. WE NOTICE THAT THERE WAS NO OCC ASION FOR THE AO TO EXAMINE THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE., SINCE HE HAS REJECTED THE CLAIM OF THE ASSESSEE FOR THE REASONS DISCUSSED ABOVE. ACCORDINGLY, WE ARE OF THE VIEW T HAT THE QUANTUM OF DEDUCTION U/S 54F AND SATISFACTION OF OTHER COND ITIONS FOR CLAIMING THE SAME NEED TO BE EXAMINED AT THE END OF THE AO. ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF TH E AO FOR EXAMINING THE CLAIM OF THE ASSESSEE, AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JULY, 2019. SD/ - (PAVAN KUMAR GADALE) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 31 ST JULY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.734/BANG/2015 PAGE 5 OF 5 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DICTATION NOTE ENCLOSED DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED