ITO, Ward-1, Nellore V. M/s. Sri Seelamsetty Suresh, Nellore

ITA 744/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66253 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: R V SESHAIAH NAIDU
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 743/HYD/2012 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER-WARD (1), ... APPELLANT NELLORE. VS. SRI SEELAMSETTY SREE RAMULU , RESPONDENT NELLORE. (PAN BGJPS8805H) ITA NO. 744/HYD/2012 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER-WARD (1), ... APPELLANT NELLORE. VS. SRI SEELAMSETTY SURESH , RESPONDENT NELLORE. (PAN BGJPS8805H) APPELLANT BY : SMT. NIVEDITA BISWAS RESPONDENT BY : SHRI R.V. SESHAIAH NAIDU DATE OF HEARING : 03/09/2012 DATE OF PRONOUNCEMENT : 07/09/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: BOTH THESE APPEALS FILED BY THE ASSESSEES ARE DIRE CTED AGAINST THE ORDERS OF CIT(A), GUNTUR, DATED 07/03/ 2012 FOR THE ASSESSMENT YEAR 2009-10. SINCE IDENTICAL ISSUE IS INVOLVED IN BOTH THE APPEALS, WE HAVE HEARD THESE A PPEALS TOGETHER AND, HENCE, A COMMON ORDER IS PASSED FOR T HE SAKE OF CONVENIENCE. ITA NOS. 743 & 744/HYD/12 M/S SRI SEELAMSETTY SREE RAMULU M/S SRI SEELAMSETTY SURESH 2 ITA NO. 743/HYD/12 SRI SEELAMSETTY SREE RAMULU 2. THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FR OM TRANSPORT CONTRACTS AND CAPITAL GAINS AND FILED E-R ETURN OF INCOME FOR AY 2009-10 ON 09/12/2011 ADMITTING TOTAL INCOME OF RS. 84,000/-. 3. THE ASSESSEE HAD SOLD SITE ON 09/02/2009 FOR RS. 61,25,000/- HAVING SHARE ALONG WITH HIS SON AND H AD RECEIVED SALE PROCEEDS OF RS. 30,62,500/-. THE ASSE SSEE HAD PURCHASED AN APARTMENT IN SAI RESIDENCY ON 30/01/20 10 FOR A CONSIDERATION OF RS. 19,20,000/-. THE ASSESSING O FFICER AFTER CONSIDERING THE DETAILS OF LONG TERM CAPITAL GAINS PRODUCED BY THE ASSESSEE WORKED OUT THE TOTAL LONG TERM CAPITAL GAINS AT RS. 16,63,675/- AND DETERMINED THE TOTAL INCOME AT RS. 17,47,680/-. 4. BEFORE THE CIT(A), THE AR OF THE ASSESSEE FILED COPIES OF THE BALANCE SHEET FOR THE ASSESSMENT YEAR 2009-1 0 AND 2011-12 AND COPY OF PURCHASE OF BUILDING FOR RS. 19,20,000/- ON 30/01/2010. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ADMITTED LONG TERM CAPITAL GAINS, INCOME ON SALE OF VACANT SITE AND CLAIMED EX EMPTION ON THE GROUND THAT HE HAD PURCHASED A HOUSE WITH TH E AMOUNT REALIZED ON SALE OF VACANT SITE. HE ALSO SUB MITTED THAT THE ASSESSING OFFICER HAD ALSO REJECTED THE CL AIM OF THE ASSESSEE TOWARDS IMPROVEMENTS MADE IN THE VACANT SI TE PURCHASED AND A SUM OF RS. 31,87,629/- SPENT IN THE NEXT ASSESSMENT YEAR. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER WHILE COMPUTING THE LONG TERM CAP ITAL GAINS TAKEN INTO ACCOUNT THE SUM OF RS. 8,93,970/- TOWARDS ITA NOS. 743 & 744/HYD/12 M/S SRI SEELAMSETTY SREE RAMULU M/S SRI SEELAMSETTY SURESH 3 PURCHASE OF HOUSE INSTEAD OF THE SUM OF RS. 31,87,6 29/- SPENT TOWARDS IMPROVEMENTS MADE IN THE NEXT ASSESSM ENT YEAR 2011-12. HE CONTENDED THAT THE ASSESSING OFFIC ER OUGHT TO HAVE SEEN THAT THE AMOUNT SPENT IN PURCHAS E OF THE HOUSE IS LIABLE TO BE EXEMPTED UNDER LONG TERM CAPI TAL GAINS, PARTICULARLY AFTER TAKING INTO ACCOUNT THE P ROVISIONS OF SECTION 54F OF THE ACT AND HENCE, THE DETERMINATION OF LONG TERM CAPITAL GAINS AT RS. 16,63,675/- IS NOT JUSTIF IED. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICE R IS NOT JUSTIFIED IN TAKING INTO ACCOUNT THE SUM OF RS. 8,9 3,970/- ONLY PAID INSTEAD OF TAKING FROM THE TOTAL AMOUNT P AID BEFORE 31/03/2011 AND HE OUGHT TO HAVE ALLOWED THE EXEMPTION U/S 54F. IT WAS SUBMITTED THAT THE ASSESS ING OFFICER OUGHT TO HAVE SEEN THAT THE ASSESSEE HAD SP ENT A SUM OF RS. 5,50,000/- DURING THE FY 1990-91 TOWARDS IMPROVEMENTS MADE IN THE VACANT SITE PURCHASED AND THE SAID AMOUNT SHOULD HAVE BEEN CONSIDERED AND HAD BEE N TAKEN INTO CONSIDERATION WHILE COMPUTING LONG TERM CAPITAL GAINS, AFTER CONSIDERING THE EVIDENCE AND STATEMENT S FILED. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) HELD THAT THE ASSESSEE HAD MADE INVESTMENTS OUT OF SALE PROCEEDS OF VACANT SITE AS PER THE PROVISIONS OF SECTION 54F, AND SUCH INVESTMENTS FAR EXCEEDED THE LTCG DER IVED, THERE WOULD NOT BE FURTHER INCOME TO BE BROUGHT TO TAX AND AS SUCH HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE IN THIS REGARD. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US RAI SING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN FACTS OR LAW OR BOTH . ITA NOS. 743 & 744/HYD/12 M/S SRI SEELAMSETTY SREE RAMULU M/S SRI SEELAMSETTY SURESH 4 2. THE CIT(A) IS NOT JUSTIFIED IN ALLOWING EXEMPTIO N U/S 54F ON THE BASIS OF AGREEMENT FOR PURCHASE WHICH IS AN UNREGISTERED DOCUMENT. 3. THE CIT(A) IS NOT JUSTIFIED IN ADMITTING THE FRE SH EVIDENCE IN RESPECT OF INVESTMENT ON IMPROVEMENTS, WHICH WAS NOT FURNISHED BEFORE THE ASSESSING OFFICE R AT THE TIME OF ASSESSMENT PROCEEDINGS, WHICH IS IN VIOLATION OF RULE 46A OF IT RULES, 1962. 4. THE CIT(A) IS NOT JUSTIFIED IN ALLOWING EXEMPTIO N U/S 54F TO THE TUNE OF RS. 31,87,629/- TOWARDS PURCHASE OF APARTMENT AND IMPROVEMENTS AS AGAINST THE EVIDENTIA L INVESTMENT OF RS. 8,93,000/-. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. THE GRIEVANCE OF THE REVENUE IS THAT THE ASSESSEE HAS NOT PRODUCED THE DETAILS BEFORE THE AS SESSING OFFICER BUT BEFORE THE CIT(A) HAD CLEARLY SHOWN THE INVESTMENTS MADE ON 30/01/2010 AND ALSO THE TOTAL INVESTMENTS MADE ON 31/03/2011. THE ASSESSEE HAS DEMONSTRATED BEFORE THE CIT(A) THAT IT HAD INVESTED AN AMOUNT OF RS. 31,87,629/- AGAINST LTCG OF RS. 23,59 ,140/- AND, THEREFORE, THE CIT(A) HELD THAT NO FURTHER INC OME IS TO BE BROUGHT TO TAX AND HAD DIRECTED THE ASSESSING OF FICER TO DELETE THE ADDITION. THE LEARNED COUNSEL SHRI SESHA IAH NADU FILED BEFORE US FLAT & CONSTRUCTION LEDGER ACCOUNT, ADVANCE FOR FLAT LEGER ACCOUNT, CAPITAL LEDGER ACCOUNT, AN D BALANCE SHEET PERTAINING TO THE PERIOD FROM 01/04/2010 TO 31/03/2011 OF SRI SEELAM SHETTY SRIRAMULU, THE ASSE SSEE HEREIN. 8. WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE INVESTMENTS MADE ON 30/01/2010 AND ALSO THE TOTAL INVESTMENTS AS OF 31/03/2011 AFTER GOING THROUGH THE LEDGER ACCOUNT IN THE CASE OF FLAT AND CONSTRUC TION AND ITA NOS. 743 & 744/HYD/12 M/S SRI SEELAMSETTY SREE RAMULU M/S SRI SEELAMSETTY SURESH 5 THE LEDGER ACCOUNT FOR ADVANCE OF THE FLAT AS WELL AS THE SALE DEED AND THE IMPROVEMENTS MADE ON VACANT SITE FOR A RRIVING AT THE LONG TERM CAPITAL GAINS IN THE CASE OF THE A SSESSEE. ITA NO. 744/HYD/12 SRI SEELAMSETTY SURESH 9. THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FR OM TRANSPORT CONTRACTS AND CAPITAL GAINS AND FILED E-R ETURN OF INCOME FOR AY 2009-10 ON 23/03/2011 ADMITTING TOTAL INCOME OF RS. 11,76,790/-. 10. THE ASSESSEE HAD SOLD SITE ON 09/02/2009 FOR RS . 61,25,000/- HAVING SHARE ALONG WITH HIS FATHER AN D HAD RECEIVED SALE PROCEEDS OF RS. 30,62,500/-. THE ASSE SSEE HAD PURCHASED A BUILDING ON 15/12/2008 FOR A CONSIDERAT ION OF RS. 5,65,000/-. THE ASSESSING OFFICER AFTER CONSIDE RING THE DETAILS OF LONG TERM CAPITAL GAINS PRODUCED BY THE ASSESSEE WORKED OUT THE TOTAL LONG TERM CAPITAL GAINS AT RS. 22,60,020/- AND DETERMINED THE TOTAL INCOME AT RS. 32,21,280/-. 11. BEFORE THE CIT(A), THE AR OF THE ASSESSEE FILED COPIES OF THE BALANCE SHEET FOR THE ASSESSMENT YEAR 2009-1 0 AND 2011-12 AND COPY OF PURCHASE OF BUILDING FOR RS. 5, 65,000/- ON 15/12/2008. THE AR OF THE ASSESSEE SUBMITTED THA T THE ASSESSEE HAD ADMITTED LONG TERM CAPITAL GAINS, INCO ME ON SALE OF VACANT SITE AND CLAIMED EXEMPTION ON THE GR OUND THAT HE HAD PURCHASED A HOUSE WITH THE AMOUNT REALI ZED ON SALE OF VACANT SITE. HE ALSO SUBMITTED THAT THE ASS ESSING OFFICER HAD ALSO REJECTED THE CLAIM OF THE ASSESSEE TOWARDS IMPROVEMENTS MADE IN THE VACANT SITE PURCHASED AND A SUM OF RS. 5,60,000/- SPENT IN THE NEXT ASSESSMENT YEAR . IT WAS ITA NOS. 743 & 744/HYD/12 M/S SRI SEELAMSETTY SREE RAMULU M/S SRI SEELAMSETTY SURESH 6 FURTHER SUBMITTED THAT THE ASSESSING OFFICER WHILE COMPUTING THE LONG TERM CAPITAL GAINS TAKEN INTO ACCOUNT THE SUM OF RS. 5,81,000/- TOWARDS PURCHASE OF HOUSE INSTEAD OF THE SUM OF RS. 12,72,850/- SPENT TOWARDS IMPROVEMENTS M ADE IN THE NEXT ASSESSMENT YEAR 2011-12. HE CONTENDED T HAT THE ASSESSING OFFICER OUGHT TO HAVE SEEN THAT THE AMOUN T SPENT IN PURCHASE OF THE HOUSE IS LIABLE TO BE EXEMPTED U NDER LONG TERM CAPITAL GAINS, PARTICULARLY AFTER TAKING INTO ACCOUNT THE PROVISIONS OF SECTION 54F OF THE ACT AND HENCE, THE DETERMINATION OF LONG TERM CAPITAL GAINS AT RS. 22, 50,020/- IS NOT JUSTIFIED. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN TAKING INTO A CCOUNT THE SUM OF RS. 5,81,000/- ONLY PAID INSTEAD OF TAKING F ROM THE TOTAL AMOUNT PAID BEFORE 31/03/2011 AND HE OUGHT TO HAVE ALLOWED THE EXEMPTION U/S 54F. IT WAS SUBMITTED THA T THE ASSESSING OFFICER OUGHT TO HAVE SEEN THAT THE ASSES SEE HAD SPENT A SUM OF RS. 5,50,000/- DURING THE FY 1990-91 TOWARDS IMPROVEMENTS MADE IN THE VACANT SITE PURCHA SED AND THE SAID AMOUNT SHOULD HAVE BEEN CONSIDERED AND HAD BEEN TAKEN INTO CONSIDERATION WHILE COMPUTING LONG TERM CAPITAL GAINS, AFTER CONSIDERING THE EVIDENCE AND S TATEMENTS FILED. 12. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE CIT(A) HELD THAT THE ASSESSEE HAD MADE INVESTMENTS OUT OF SALE PROCEEDS OF VACANT SITE AS PER THE PROVISIONS OF SECTION 54F, AND SUCH INVESTMENTS FAR EXCEEDED THE LTCG DER IVED, THERE WOULD NOT BE FURTHER INCOME TO BE BROUGHT TO TAX AND AS SUCH HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE IN THIS REGARD. ITA NOS. 743 & 744/HYD/12 M/S SRI SEELAMSETTY SREE RAMULU M/S SRI SEELAMSETTY SURESH 7 13. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US R AISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A), GUNTUR ERRED IN FACTS OR LAW OR BOTH. 2. THE ASSESSEE HAS NOT PRODUCED THE SALE DEED DATE D 31/03/2011 BEFORE THE ASSESSING OFFICER. WHETHER TH E LEARNED CIT(A) IS CORRECT IN ADMITTING THE SAME AS FRESH EVIDENCE BY VIOLATING THE RULE 46A OF THE INC OME- TAX RULES. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) IS JUSTIFIED IN ALLOWING EXEMPTI ON U/S 54F ON THE BASIS OF AGREEMENT FOR PURCHASE. 14. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. THE GRIEVANCE OF THE REVENUE IS THAT THE ASSESSEE HAS NOT PRODUCED THE DETAILS BEFORE THE AS SESSING OFFICER BUT BEFORE THE CIT(A) HAD CLEARLY SHOWN THE INVESTMENTS MADE ON 15/12/2008 AND ALSO THE TOTAL INVESTMENTS MADE ON 31/03/2011. THE ASSESSEE HAS DEMONSTRATED BEFORE THE CIT(A) THAT IT HAD INVESTED AN AMOUNT OF RS. 25,24,071/- AGAINST LTCG OF RS. 27,95 ,650/- AND, THEREFORE, THE CIT(A) HELD THAT NO FURTHER INC OME IS TO BE BROUGHT TO TAX AND HAD DIRECTED THE ASSESSING OF FICER TO DELETE THE ADDITION. IN THE CASE OF THE FATHER OF T HE ASSESSEE, WHO IS 50% CO-OWNER, WE HAVE DECIDED TH E ISSUE VIDE PARA 7 (SUPRA). FOLLOWING THE CONCLUSIONS DR AWN THEREIN, WE REMIT THE ISSUE TO THE FILE OF THE ASSE SSING OFFICER TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW AFTER PROVIDING AN OPPORTUNITY OF HEARING TO THE AS SESSEE. ITA NOS. 743 & 744/HYD/12 M/S SRI SEELAMSETTY SREE RAMULU M/S SRI SEELAMSETTY SURESH 8 15. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 07/09/2012. SD/- SD/- ( CHANDRA POOJARI) (ASHAVIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 7 TH SEPTEMBER, 2012. KV COPY TO:- 1) ITO, WARD-1, 24-2-438, GNT ROAD, DARGAMITTA, NELLORE. 2) M/S SRI SEELAMSETTY SREE RAMULU, F.NO. 204, KAC AVENUE, POPPULA STREET, NELLORE. 3) M/S SRI SEELAMSETTY SURESH, P.NO. 104, RS RESIDENCY, POPPULA STREET, NELLORE. 4) THE CIT (A), GUNTUR 5) CIT, GUNTUR 6) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.