Kethsial Justin, CHENNAI V. ITO Corporate Ward 2(1), CHENNAI

ITA 781/CHNY/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5057 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: AL EAGAMMAI

Judgement Text

, (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.781/CHNY/2018 / ASSESSMENT YEAR : 2012-2013. SMT. KETHSIAL JUSTIN, NO.1022, 6 TH AVENUE, ANNA NAGAR, CHENNAI 600 040. [PAN AHJPK 9090N] VS. INCOME TAX OFFICER, CORPORATE WARD 2(1) CHENNAI 600 034. ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MS. AL. EAGAMMAI, C.A. /RESPONDENT BY : MR. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 13-06-2018 ! /DATE OF PRONOUNCEMENT : 18-06-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ASSESSEE IN THIS APPEAL IS AGGRIEVED THAT DEDUC TION OF @30,03,000/- CLAIMED BY HER U/S.54F OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) WAS NOT ALLOWED. 2. FACTS APROPOS ARE THAT ASSESSEE, MANAGING DIRECTOR OF ONE M/S. EDEN LEATHER MANUFACTURING & EXPORTS PVT. LTD HAD FILED HER ITA NO. 781/CHNY/2018 :- 2 -: RETURN FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF @3,72,220/-. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, IT WAS NOTED BY THE LD. ASSESSING OFFICER THAT ASSESSEE HA D CLAIMED DEDUCTION U/S.54F OF THE ACT ON CAPITAL GAINS ARISING OUT OF THE SALE OF A PROPERTY. LD. ASSESSING OFFICER, REQUIRED THE ASSESSEE TO FUR NISH DETAILS REGARDING THE REINVESTMENT ON WHICH DEDUCTION U/S.5 4F OF THE ACT WAS CLAIMED. THEREUPON, IT WAS MENTIONED BY THE ASSESSE E THAT SUCH CLAIM WAS MADE ON AN ADDITIONAL CONSTRUCTION DONE TO AN EXISTING BUILDING. ASSESSEE ALSO FILED A CORPORATION TAX RECEIPT AS PR OOF FOR THE ADDITIONAL CONSTRUCTION. ADDITIONAL CONSTRUCTION WAS DONE IN PREMISES NO. 1002, NEW NO.98, I- BLOCK, 6 TH AVENUE, ANNA NAGAR WEST, CHENNAI 600 040 OWNED BY THE ASSESSEE. HOWEVER, LD. ASSESSING OFFI CER WAS OF THE OPINION THAT WHAT ASSESSEE CONSTRUCTED WAS ONLY AN EXTENSION OF AN EXISTING BUILDING AND BY VIRTUE OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE CIT VS V. PRADEEP KUMAR, 290 ITR 90, EXTENSION OF AN OLD EXISTING HOUSE WOULD NOT BE EQU IVALENT TO CONSTRUCTION OF A NEW RESIDENTIAL HOUSE. HE DENIED THE CLAIM MADE BY THE ASSESSEE U/S.54F OF THE ACT. 3. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ACCORDING TO THE ASSESSEE WHAT WAS CONSTRUCTED WAS A NEW FLOOR WHICH WAS AN I NDEPENDENT RESIDENCE BY ITSELF. CONTENTION OF THE LD. AUTHORIS ED REPRESENTATIVE ITA NO. 781/CHNY/2018 :- 3 -: WAS THAT THE NEW CONSTRUCTION WAS A SELF CONTAINE D RESIDENTIAL UNIT AND DEDUCTION U/S.54F OF THE ACT COULD NOT BE DENIE D. FURTHER, AS PER THE ASSESSEE, THERE WERE TWO SEPARATE CONNECTIONS F OR SEWERAGE WATER AND ELECTRICITY. RELIANCE WAS PLACED ON THE JUDGME NT OF HONBLE DELHI HIGH COURT IN THE CASE OF ADDL. CIT VS. VIDYA PRAKASH TALWAR, 132 ITR 661 AND THAT OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. A.R. MATHAVAN PILLAI, 219 ITR 696 . 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) SOUGHT A REMAND REPORT FROM THE LD. ASSESSING OFFICER ON THE SUBMIS SIONS MADE BY THE ASSESSEE. IN SUCH REMAND REPORT LD. ASSESSING OFFIC ER STATED AS UNDER:- (I) PROVIDING KITCHEN ON A FLOOR WOULD NOT MEAN THA T THE EXISTING ASSET IS CONVERTED INTO MORE THAN ONE DWELLING UNIT. (II) CONSTRUCTION OF FIRST FLOOR WAS ONLY AN EXTENS ION OF EXISTING RESIDENTIAL PROPERTY. (III) PROPERTY TAX RECEIPT CLEARLY INDICATED THAT T HERE WAS ONLY AN INCREASE IN AREA AND NO NEW SEPARATE UNIT CAME INTO EXISTENCE. (IV) INSPECTION REPORT OF CHENNAI METROPOLITAN WATE R SUPPLY & SEWAGE BOARD PRODUCED BY THE ASSESSEE DID ITA NO. 781/CHNY/2018 :- 4 -: NOT HAVE A SIGNATURE OR OFFICIAL SEAL. LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER GOIN G THROUGH THE REMAND REPORT OF THE LD. ASSESSING OFFICER HELD THA T ASSESSEE HAD DONE ONLY AN EXTENSION OF EXISTING RESIDENTIAL HOUS E AND THIS DID NOT TANTAMOUNT TO PURCHASE OF A NEW ASSET AS REQUIRED U /S.54F(1) OF THE ACT. LD. COMMISSIONER OF INCOME TAX (APPEALS) TH US CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER. . 5. NOW BEFORE US, THE LD. AUTHORISED REPRESEN TATIVE STRONGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT THERE WAS A SEPARATE STAIRCASE AND SEPARATE KITCHEN IN THE FI RST FLOOR WHICH WAS CONSTRUCTED BY THE ASSESSEE. AS PER THE LD. AUTHO RISED REPRESENTATIVE, IT WAS A SELF CONTAINED DWELLING UN IT, ELIGIBLE FOR DEDUCTION U/S.54F OF THE ACT. RELYING ON A LETTER DATED 12.03.2012 ISSUED BY AREA ENGINEER VIII, CHENNAI METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD, CHENNAI 600 040, LD. AUTHORISED REP RESENTATIVE SUBMITTED THAT EXISTENCE OF TWO DWELLING UNITS STOO D SUBSTANTIATED. FURTHER, AS PER THE LD. AUTHORISED REPRESENTATIVE, CHENNAI CORPORATION HAD REVISED ITS PROPERTY TAX ASSESSMENT INDICATING THE NEW BUILDING UNIT PUT UP BY THE ASSESSEE. ITA NO. 781/CHNY/2018 :- 5 -: 6. PER CONTRA, LD. DR STRONGLY SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT BY VIRTUE OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF V. PRADEEP KUMAR, (SUPRA) CLAIM OF THE ASSESSEE COULD NOT BE ALLOWED. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AN D PERUSED THE ORDERS OF THE AUTHORITIES BELOW. CLAIM OF THE ASS ESSEE IS THAT SHE HAD PUT UP A NEW DWELLING UNIT ON THE FIRST FLOOR OF HE R EXISTING RESIDENTIAL HOUSE AND THE COST INCURRED FOR CONSTRUCTING SUCH N EW DWELLING UNIT WAS ELIGIBLE FOR DEDUCTION U/S.54F OF THE ACT. AS AGAINST THIS, CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE IS THAT THE CONSTRUCTION WAS ONLY AN EXTENSION OF THE EXISTING BUILDING AND THERE WAS NO NEW DWELLING UNIT OR RESIDENTIAL HOUSE. ON A QUESTION FROM THE BENCH, LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THERE WAS SEPARATE STAIRCASE FOR THE CONSTRUCTION DONE IN THE FIRST FLOOR. LETTER DATED 12.03.2012 ISSUED BY AREA ENGINEER, VIII, CMW SS BOARD TO THE ASSESSEE IS REPRODUCED HEREUNDER:- LR. NO.CMWSSB/AREAVIII/DEPOT 95/UN PAID AMOUNT /201 2 DATED 12.3.2012 SIR, SUB: CMWSSB- AREA VIII- DEPOT 95- PREMISES NO.1022 STREET NAME 6 TH AVENUE, CMC NO.05/064/6197100. NOTICE FOR PAYMENT DUE TO CMWSSB BOARD REG. ITA NO. 781/CHNY/2018 :- 6 -: REF: SITE INSPECTION BY DEPOT ENGINEER 95 ON 12.03 .2012. 1. ON INSPECTION OF YOUR PREMISES IT IS NOTICED THA T (A) YOU HAVE PUT UP ADDITIONAL CONSTRUCTION IN YOUR PREMISES. (B) YOUR BUILDING IS NOT ASSESSED AFTER PAYING THE ADVANCE TAX. (C) YOU HAVE MADE CHANGE OF CATEGORY IN YOUR BUILD ING (D) YOU HAVE TO PAY UNPAID/UNDERPAID INFRASTRUCTURE DEVELOPMENT CHARGES. 2. ON ACCOUNT OF THE ABOVE, YOU ARE REQUIRED TO RE MIT THE FOLLOWING CHARGES TO CMWSSB BOARD. SL. NO DETAILS NO. OF EQUIVALENT DWELLINGS RATE PER DWELLING ( ) AMOUNT 1 SEWER CONNECTION CHARGES 2 NOS. 7500 15000 2 WATER CONNECTION CHARGES 2 NOS. 7500 15000 3 ADVANCE TAX (NO. OF HALF YEARS) 4 METER TESTING CHARGES 5 OTHER CHARGES, IF ANY TOTAL CONNECTION CHARGES 30,000 THE NUMBER OF DWELLING UNITS IS MENTIONED AS TWO, BOTH FOR SEWAGE CONNECTION AS WELL AS FOR WATER CONNECTION. NO DOU BT, LD. ASSESSING OFFICER HAS QUESTIONED THE AUTHENTICITY OF THE ABO VE LETTER, FOR WANT OF SEAL AND SIGNATURE. HOWEVER, IN OUR OPINION, THE L ETTER ABOVE PRODUCED COULD NOT HAVE BEEN DISBELIEVED SINCE IT WAS ISSUED ON A STANDARDIZED FORMAT AND CARRIED SPECIFIC REFERENC E NUMBER WITH FACTUM OF A SITE INSPECTION DONE BY THE DEPOT ENGIN EER. IN ANY CASE IT IS NOT DISPUTED BY THE LOWER AUTHORITIES THAT THE C ONSTRUCTION IN THE ITA NO. 781/CHNY/2018 :- 7 -: FIRST FLOOR HAD A SEPARATE KITCHEN IN IT. SEPARATE WATER CONNECTION, SEPARATE SEWAGE CONNECTION AND EXISTENCE OF A KITC HEN CLEARLY IN OUR OPINION INDICATE THAT WHAT WAS CONSTRUCTED BY THE A SSESSEE IN THE FIRST FLOOR WAS AN INDEPENDENT DWELLING UNIT. WE ALSO F IND THAT THERE WERE SEPARATE EB METERS FOR THE TWO UNITS AND EB CARDS EVIDENCING THIS HAS BEEN PLACED AT PAPER BOOK PAGE 9 TO 12. ASSESSEE H AD ALSO PLACED ON RECORD PHOTOS OF SEPARATE EB METERS. IN SUCH CIR CUMSTANCES, WE ARE OF THE OPINION THAT ASSESSEES CASE THAT IT HAD CON STRUCTED NEW RESIDENTIAL HOUSE IN THE UPPER FLOOR OF ITS EXISTI NG RESIDENCE IS ON A STRONG WICKET. 8. COMING TO THE JUDGMENT OF HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF V. PRADEEP KUMAR (SUPRA), THEIR LORDSHIPS HELD THAT BURDEN WAS ON THE ASSESSEE TO PROVE CONSTRUCTION O F A NEW RESIDENTIAL HOUSE. IN THE SAID CASE, THERE WAS NO TANGIBLE MAT ERIAL TO FORM A BELIEF THAT A RESIDENTIAL HOUSE WAS CONSTRUCTED. TH ERE WAS ONLY AN EXTENSION OF AN EXISTING BUILDING BY 382 SQ.FT. THA T TOO AFTER DEMOLISHING AN EXISTING ACC ROOFED OUTHOUSE. IN OU R OPINION, FACTS IN THE SAID CASE WERE ENTIRELY DIFFERENT THAT WHAT AR E AVAILABLE BEFORE US. HERE THE ASSESSEE HAD CONSTRUCTED N INDEPENDENT DW ELLING UNIT IN THE FLOOR. IN OUR OPINION, ASSESSEE WAS ELIGIBLE TO C LAIM DEDUCTION U/S.54F OF THE ACT ON THE COST OF SUCH NEW DWELLING UNIT. ORDERS OF THE LOWER ITA NO. 781/CHNY/2018 :- 8 -: AUTHORITIES ARE SET ASIDE. LD. ASSESSING OFFICER I S DIRECTED TO GIVE THE DEDUCTION SOUGHT BY THE ASSESSEE U/S.54F OF THE ACT . 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON MONDAY, THE 18TH DAY OF JUNE, 2 018, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 18 TH JUNE, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF