Shri.Venkatesan MAruthai , Bangalore V. Income Tax Officer Ward-5(3)(3), BAngalore

ITA 787/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2332 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR SHANKAR PRASAD
• Assessee Lawyers: SHEETHAL
• Keywords: Capital asset; Benefit of exemption
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C, SMC BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.7 87/BANG/2018 (ASST. YEAR 2011-12) SHRI VENKATESHAN MARUTHAI, #266, 1 ST MAIN ROAD, KRISHNINPALYA, BEHIND NGEF, NEXT TO HDFC ATM, BENGALURU. . APPELLANT PAN AJKPM 6034F VS. THE INCOME-TAX OFFICER, WARD-5(3)(3), BENGALURU. . APPELLANT APPELLANT BY : SMT. SHEETHAL, ADVOCATE RESPONDENT BY : DR. SHANKAR PRASAD, ADDL. CIT DATE OF HEARING : 12-07-2018 DATE OF PRONOUNCEMENT : 07-09-2018 O R D E R PER SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) INTER ALIA ON FOLLOWING GROUNDS:- 1. ON FACT OF THE CIRCUMSTANCES OF THE CASE, ORDER OF THE CIT APPEAL DATED 18/09/2017, IS NOT MAINTAINABLE IN LAW . 2. ON FACT OF THE CIRCUMSTANCES OF THE CASE, CIT AP PEAL OUGHT TO HAVE APPRECIATED CLAIM OF THE ASSESSEE AND DISAL LOWED THE ITA NO.787/B/17 2 ORDER OF THE ASSESSING AUTHORITY, BUT SAME IS CONFI RMED BY THE CIT APPEAL IS NOT CORRECT AND CONFIRMED ADDITIONS I S LIABLE TO BE DELETED 3. ON THE FACT OF THE CIRCUMSTANCES OF THE CASE, TH E ASSESSEE AUTHORITY DISALLOID THE CLAIM OF THE APPELLANT RS 1 9,39,560/-, IS AGAINST THE LAW AND LIABLE TO BE DELETED 4. CONFIRMING THE ACT OF THE ASSESSING AUTHORITY AN D LEVIED TAX AND THE INTEREST IS ORBITORY AND LIABLE TO BE DELET ED. 5. FOR SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING AND IT IS PRAYS THAT KINDLY MAY ALLOW THE A PPEAL IN THE INTEREST OF JUSTICE AND EQUITY. 2. THOUGH VARIOUS GROUNDS ARE RAISED BUT ALL AR E RELATED TO DENIAL OF DEDUCTION U/S 54 OF THE ACT. 3. THE FACTS IN BRIEF DRAWN OUT FROM THE RECO RDS ARE THAT THE ASSESSEE HAS SOLD HIS CAPITAL ASSET AND SALES PROCE EDS WERE INVESTED IN PURCHASING RESIDENTIAL SITES AND ENTRUSTED THE W ORK OF CONSTRUCTION TO CONTRACTOR SHRI MUTHU SELVAN. DUE TO NON GRANT OF NECESSARY PLAN APPROVAL FROM BBMP, CONSTRUCTION COULD NOT BE COMPL ETED WITHIN A SPECIFIED PERIOD. THE AO HAS DENIED THE EXEMPTION U/S 54F OF THE ACT ON THE GROUND THAT THE RESIDENTIAL HOUSE WAS NO T ACQUIRED WITHIN THE PRESCRIBED PERIOD. ITA NO.787/B/17 3 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE ENTIRE SALE CONSIDERATION WAS U TILIZED FOR PURCHASE OF RESIDENTIAL SITE AND THE CONSTRUCTION COULD NOT BE COMPLETED ON ACCOUNT OF NON GRANT OF NECESSARY APPROVAL BY THE B BMP, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54 OF TH E ACT. THE CIT(A) RE-EXAMINED THE CLAIM OF THE ASSESSEE BUT WAS NOT C ONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND HE CONFIRMED THE DI SALLOWANCE. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND R EITERATED ITS CONTENTION AND ALSO PLACED RELIANCE UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF PUSHPA DEVI TIBREWALA VS. ITO IN ITA NO.1763/HYD/2011. 5. THE LD DR ON THE OTHER HAND HAS CONTENDED THAT ASSESSEE HAS SOLD ITS CAPITAL ASSET I.E RESIDENTIAL HOUSE IN T HE YEAR 2010-11 BUT APPLIED FOR APPROVAL FROM BBMP ON 16/8/2017, THE REFORE EVEN THE APPROVAL WAS SOUGHT AFTER THE EXPIRY OF THE PRESCRI BED PERIOD. MOREOVER, TILL DATE ASSESSEE WAS NOT ABLE TO CONSTR UCT THE RESIDENTIAL HOUSE. THE REQUIREMENT OF LAW IS TO ACQUIRE RESIDE NTIAL HOUSE OR TO CONSTRUCT A RESIDENTIAL HOUSE OUT OF THE SALE PROCE EDS RECEIVED FROM SALE OF ITS CAPITAL ASSET WITHIN A PRESCRIBED PERIO D BUT THE ASSESSEE COULD NOT ACQUIRE THE RESIDENTIAL HOUSE WITH IN PRE SCRIBED TIME LIMIT. THE ASSESSEE HAS SIMPLY PURCHASED A PLOT FOR CONSTR UCTION OF RESIDENTIAL HOUSE OUT OF SALE PROCEEDS, WHEREAS T HE REQUIREMENT OF LAW IS TO ACQUIRE OR CONSTRUCT A RESIDENTIAL HOUSE . THEREFORE, THE REQUISITE CONDITIONS HAS NOT BEEN FULFILLED AND THE CIT(A) HAS RIGHTLY DENIED THE BENEFIT OF EXEMPTION U/S 54 OF THE ACT. ITA NO.787/B/17 4 6. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES, I FIND THAT RESIDENTIAL HOUSE WAS SOLD IN THE YEAR 2 010-11 FOR SALE CONSIDERATION OF 55 LAKHS. THE ASSESSEE HAS PURCHAS ED A RESIDENTIAL SITE OUT OF SALE PROCEEDS AND HAD ENTRUSTED THE C IVIL WORK FOR CONSTRUCTION OF RESIDENTIAL HOUSE TO ONE MR. MUTHU SELVAN FOR RS.16 LAKHS AND PAID AN AMOUNT OF RS.5 LAKHS. THE BUILD ING PLAN WAS SUBMITTED TO THE BBMP FOR APPROVAL AND THE APPROV AL WAS NOT GRANTED. AS PER DOCUMENT FILED, IT APPEARS THAT TH E PLAN FOR APPROVAL WAS SUBMITTED ON 16/8/2017, WHEREAS THE RESIDENTIAL HOUSE WAS SOLD IN THE YEAR 2010-11. AS PER SEC. 54 OF THE ACT, RE SIDENTIAL HOUSE HAS TO BE PURCHASED WITHIN A PERIOD OF 2 YEARS OR CONST RUCT THE HOUSE WITHIN 3 YEARS FROM THE DATE OF THE SALE OF THE PRO PERTY. IN THE INSTANT CASE, THE ASSESSEE HAS SIMPLY PURCHASED RESIDENTIAL SITE BUT THE CONSTRUCTION COULD NOT BE STARTED ON THE RESIDENTIA L SITE FOR WANT OF PROPER APPROVAL FROM THE BBMP. THE REQUIREMENT OF LAW IS TO PURCHASE OR CONSTRUCT RESIDENTIAL HOUSE AND NOT THE RESIDENTIAL SITE WITHIN A SPECIFIED PERIOD. I HAVE ALSO CAREFULLY EX AMINED THE JUDGMENT REFERRED BY THE ASSESSEE IN THE CASE OF PUSHPA DEVI TIBREWALA (SUPRA) AND I FIND THAT THE FACTS OF THE CASE ARE DISTINGUI SHABLE THEREFORE NO INFERENCE CAN BE DRAWN IN FAVOUR OF THE ASSESSEE. SINCE THE ASSESSEE HAS NOT FULFILLED THE REQUISITE CONDITIONS FOR CLAI MING THE EXEMPTION U/S 54 OF THE ACT, I FIND NO INFIRMITY IN THAT ORDE R OF THE CIT(A), WHO HAS RIGHTLY DENIED THE EXEMPTION. THE RELEVANT OBS ERVATIONS OF THE CIT(A) IS ALSO EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE. ITA NO.787/B/17 5 DURING THE APPELLATE PROCEEDINGS THE APPELLANT SUB MITTED THAT THE LAND ON WHICH SAID PROPERTY IS CONSTRUCTED WAS PURCHASED BY THE ASSESSEE VIDE SALE DEED DATED 20-. 01-2006 FOR A SALE CONSIDERATION OF RS. 4,84,250/- HE INCUR RED AN ADDITIONAL CHARGE OF RS. 43,755/- TOWARDS REGISTRAT ION AND STAMP DUTY THE APPELLANT CONSTRUCTED A RESIDENTIAL HOUSE MEASURING 1498 SQ FT (732 SQ FT GROUNDS FLOOR AND 7 64 SQ.FT FIRST FLOOR) DURING FINANCIAL YEAR 2006-07 AND 2007 -08 THE SOURCE FOR THE SAME IS HOUSING LOAN AVAILED FROM ID BI AMOUNTING TO RS.19,00,000/- PLUS TOP UP LOAN OF RS.3,80,000/- AND A FURTHER TOP UP OF RS.6,63,615/- THUS THE TOTAL LOAN AMOUNT TAKEN RS.29,43,615/-. FURTHER SUB MITTED THAT THE SAID RESIDENTIAL HOUSE WAS SOLD IN THE YEA R 2010-11 FOR TOTAL SALE CONSIDERATION OF RS.55,00,000/- AND THE TAXABLE CAPITAL GA15JG RS.17,44,711/OFFERED FOR TAX AND CLAIMED EXEMPTION U/S 54. WITH REGARD TO EXEMPTION CLAIMED U/S.54, THE APPELLANT SUBMITTED THAT HE HAD ACQUIRE D A RESIDENTIAL SITE AT A TOTAL COST INCLUSIVE OF STAM P DUTY AND REGISTRATION CHARGES AMOUNTING TO RS.19,39,560/- AN D HAD ENTRUSTED CIVIL WORK FOR CONSTRUCTION OF A RESIDENT IAL HOUSE TO ONE MR. SELVAM FOR AGREED SUM OF RS. 16,00,0001- AND HAD PAID MOBILIZATION ADVANCE AMOUNT OF RS. 5,00,00 0/- BY WAY OF CHEQUE NO. 950213 DATED THAT HE ENTERED INTO AN AGREEMENT OF SALE IN THE MONTH OF SEPTEMBER, 2010 A ND STATED THE PROCESS OF PLAN APPROVAL SIMULTANEOUSLY WITH ENTRUSTING THE CONSTRUCTION OF HOUSE WITH THE HELP OF CIVIL CONTRACTOR. ON COMPLETION OF REGISTRATION OF LAND O N 14.10.2010 IMMEDIATELY ENTERED ORAL CONTRACT AND ITA NO.787/B/17 6 ENTRUSTED THE CIVIL CONSTRUCTION WORK. SINCE THE AP PELLANT WAS EMPLOYED AT PONDICHERRY HE HAS BEEN ASKED TO BU Y A STAMP PAPER FOR REDUCING THE ORAL CONTRACT INTO WRITING/EXECUTING THE CONTRACTOR AGREEMENT, THAN A STAMP PAPER WAS PURCHASED AT PONDICHERRY, THE PAYMENT OF MOBILIZATION ADVANCE PAID AND OTHER TERM AND CONDIT IONS IRE REDUCED/ENTERED ON THE SAID STAMP PAPER AS REQUIRED/ADVISED BY THE APPELLANTS LAWYER AND A CHE QUE ISSUED IN FAVOUR OF THE CONTRACTOR/OR AS ADVISED BY THE CONTRACTOR TO EXECUTE THE LEVELING/PILLAR DIGGING W ORK AT THE SITE. SINCE BUILDING PLAN APPROVAL WAS NOT ACCORDED BY THE BBMP THE CONSTRUCTING ACTIVITY WAS NOT CARRIED OUT AT THE SAID RESIDENTIAL SITE. THOUGH THE APPELLANT SUBMITT ED THE INTENTION WAS TO CONSTRUCT A HOUSE BECAUSE OF FACT THAT THE LAND PURCHASED WAS IN B KATHA LAND AND THEREFORE NO T APPROVED FOR CONSTRUCTION OF RESIDENTIAL HOUSE WHIC H IS BEYOND HIS CONTROL. HOWEVER, THE CONDITION FOR CLAI MING DEDUCTION U/S 54 AS PER THE PROVISIONS OF SECTION I S THAT THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PUR CHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA. THUS, THE PROVISION CLEARLY SAYS THAT THE RESIDENTIAL HOUSE H AS TO BE CONSTRUCTED WITHIN THE THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY DENIED THE CLAIM OF DEDUCTION U/S.54 OF THE INCOME TAX ACT 1961 MADE BY THE APPELLANT WHICH IS HEREBY UPHELD. ITA NO.787/B/17 7 SINCE, I FIND NO INFIRMITY IN THE ORDER OF THE CIT( A), I CONFIRM THE SAME. 7. IN THE RESULT, THE ORDER OF THE CIT(A) IS CONFI RMED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2018 . SD/- (SUNIL KUMAR YADAV) JUDICIAL MEM BER BANGALORE DATED : 7/9/2018 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRET ARY, ITAT, BANGALORE ITA NO.787/B/17 8 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. 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 RE GISTRAR 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. ..