DCIT, Ghaziabad V. Smt. Neera Gupta, Ghaziabad

ITA 797/DEL/2011

• Counselvise Citation: 79720114 RSA 2011
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 797(DEL)/2011 ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF SMT. N EERA GUPTA, INCOME-TAX, CIRCLE-I, VS. R-8 /62, RAJ NAGAR, GHAZIABAD. GHAZIABAD. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI R.S. NEGI, SR. DR RESPONDENT BY : SHRI AKHILESH KUMAR, ADVOCATE DATE OF H EARING: 09.02.2012 DATE OF P RONOUNCEMENT: 17.02.2012 ORDER PER K.G. BANSAL : AM THE FACTS OF THE CASE IN BRIEF ARE THAT THE RE TURN WAS FILED ON 29.10.2007 DECLARING TOTAL INCOME OF RS. 27,67,910 /-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961 , ON 01.12.2009 AT TOTAL INCOME OF RS. 70,32,950/-. FROM THE ASSESSMENT OR DER, IT IS SEEN THAT THE INCOME HAS BEEN COMPUTED FROM PROPERTY, BUSINESS, OTHER SOURCES AND CAPITAL GAIN. THE ASSESSEE MOVED AN APPEAL BEFO RE CIT(APPEALS), GHAZIABAD, WHO ALLOWED THE APPEAL OF THE ASSESSEE . THE MAIN ISSUE IN THIS CASE IS IN RESPECT OF SUBSTANTIVE ASSESSM ENT OF CAPITAL GAIN IN RESPECT OF A PROPERTY SOLD BY THE ASSESSEE. THE AO IS O F THE VIEW THAT THE PROPERTY ITA NO. 797(DEL)/2011 2 IS RIGHTLY TAXABLE IN THE HANDS OF THE HUSBAND OF THE ASSESSEE, WHO HELD THE POWER OF ATTORNEY (POA FOR SHORT) IN RESPE CT OF THE PROPERTY. IT MAY BE MENTIONED HERE THAT THE ASSESSEE FILED ADDIT IONAL EVIDENCE BEFORE THE LD. CIT(APPEALS). ALTHOUGH THE REVENUE HAS TAKE N A GROUND IN THIS REGARD, WE SHALL SEE LATER THAT THIS GROUND HA S BECOME REDUNDANT. WITH THESE PRELIMINARY REMARKS, VARIOUS GROUNDS TAK EN BY THE REVENUE ARE DISCUSSED AND DECIDED HEREUNDER. 2. GROUND NO. 3 IS TO THE EFFECT THAT THE LD. CI T(APPEALS) ERRED IN TAXING LONG-TERM CAPITAL ( LTCG FOR SHORT) IN T HE HANDS OF THE ASSESSEE ON A SUBSTANTIVE BASIS WHILE IT SHOULD HAVE BEEN TAXED IN THE HANDS OF THE HUSBAND OF THE ASSESSEE ON THE BASIS OF GENERAL P OA GRANTED BY THE ORIGINAL OWNER AND THE CHEQUES WERE ALSO DRA WN IN HIS NAME. 2.1 THE ASSESSMENT ORDER AND THE IMPUGNED ORDER C ONTAIN DETAILED DISCUSSION IN THE MATTER. HOWEVER, WE NEED NOT GO INTO THE CONTROVERSY IN DETAIL. THE FACTS ARE THAT BASED UPON THE FINDING IN THE ASSESSMENT ORDER, THE ASSESSMENT OF SHRI SANJIV KUMAR GUPTA, THE HUSBAND, WAS REOPENED U/S 147. THIS ASSESSMENT WAS COMPLETED ON 12.1 0.2011. IT WAS SUBMITTED TO HIM THAT THE PROPERTY UNDER CONSIDERA TION, A PLOT OF LAND, WAS ITA NO. 797(DEL)/2011 3 PURCHASED BY SMT. NEERA GUPTA FROM HER OWN SOURCES . THE POA WAS GIVEN IN HIS FAVOUR SO AS TO ENABLE HER TO TR ANSFER THE PROPERTY AS AND WHEN SHE LIKED. THE SALE PROCEEDS WERE DEPOSI TED IN A JOINT ACCOUNT IN HIS AND HIS WIFES NAMES. THE TRANSACTION HAS BEEN SHOWN BY HER AND LTCG HAS BEEN COMPUTED THEREON. IN THE LIGHT OF THESE SUBMISSIONS, IT HAS BEEN HELD THAT THE LTCG HAS TO BE ASSESSED S UBSTANTIVELY IN THE CASE OF SMT. NEERA GUPTA AS PER THE ORDER OF THE LD. CIT(APPEALS). THUS, THE LTCG WAS EXCLUDED FROM HIS ASSESSMENT. IN SUCH A SITUATION, GROUND NO. 3 OF THE REVENUE IN THE CASE OF THE ASSESSEE HAS B ECOME COUNTER-PRODUCTIVE. OTHERWISE ALSO, THE FACTS MENTIONED IN THE CASE OF SHRI SANJIV KUMAR GUPTA HAVE NOT BEEN CONTROVERTED BY THE LD. SENIOR DR THAT ORIGINAL INVESTMENT WAS MADE BY THE ASSESSEE WHO HAS ALSO BEEN ULTIMATE BENEFICIARY OF THE SALE PROCEEDS. POA WAS GRANT ED IN FAVOUR OF SHRI SANJIV KUMAR GUPTA ONLY WITH A VIEW TO FACILITAT E SALE OF PROPERTY BY HER IN FUTURE. THESE FACTS ALSO LEAD TO A CONCLUSION THAT THE ASSESSEE WAS EFFECTIVELY THE OWNER OF THE PROPERTY. ACCORDING LY, IT IS HELD THAT LTCG IS RIGHTLY TAXABLE IN HER HAND. THUS, THIS GROU ND IS DISMISSED. 3. GROUND NO. 2 IS AGAINST DEDUCTION OF RS. 44,0 00/- GRANTED BY THE LD. CIT(APPEALS) IN COMPUTING THE LTCG. IN THIS CONN ECTION, THE LD. SENIOR ITA NO. 797(DEL)/2011 4 DR DREW OUR ATTENTION TO PAGE NO. 2 OF THE ASSES SMENT ORDER. IT IS MENTIONED THAT ALTHOUGH THE DEDUCTION IS CLAIMED, NO DOCUMENTARY EVIDENCE HAS BEEN FILED FOR SUBSTANTIATING THE P AYMENT OF COMMISSION. IN REGARD TO DEBIT OF RS. 44,000/- IN BANK ACCOUNT ON 08.03.2008 IN RESPECT OF CHEQUE NO. 451278, MAINTAINED WITH STATE BANK O F BIKANER & JAIPUR, IT IS MENTIONED THAT IT IS A JOINT ACCOUNT WITH HUSBAND. THE BANK ACCOUNT DOES NOT SHOW ANY NARRATION REGARDING PAYMENT OF BROKERAGE ETC. THE PAYMENT HAS BEEN MADE TWO MONTHS AFTER THE DATE OF ACTUAL SALE. THEREFORE, THE EVIDENCE PRODUCED IN THIS BEHALF HAS BEEN DISBELIEVED AND THE AMOUNT HAS BEEN DISALLOWED IN COMPUTING THE L TCG. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE FIND ING OF THE LD. CIT(APPEALS) AND EVIDENCE PLACED IN THE PAPER BOOK. THE EVI DENCE CONSISTS OF THE CONFIRMATION OF COMMISSION OF RS. 44,000/- VIDE CHEQUE NO. 451278 DATED 06.03.2007. THE CONFIRMATION CONTAINS TH E ADDRESS OF SHRI SURESH WADHWA, THE BROKER. THE BANK ACCOUNT OF THE ASSE SSEE SHOWS THAT THE AMOUNT HAS BEEN DEBITED TO THE JOINT ACCOUNT ON 08.03.2007. THE FINDINGS OF THE LD. CIT(APPEALS) ARE THAT THE DEBIT IN TH E BANK ACCOUNT AND THE CONFIRMATION FURNISHED BY SHRI SURESH WADHWA ARE RELATABLE TO EACH OTHER. HE IS ASSESSED TO TAX. HE IS ALSO A DEA LER IN PROPERTY. THEREFORE, IT HAS BEEN SUFFICIENTLY PROVED THAT THE BROKERAGE HA S BEEN PAID. IT HAS ALSO ITA NO. 797(DEL)/2011 5 BEEN MENTIONED THAT THE AO CAN PASS THIS INFORMA TION TO THE AO OF SHRI SURESH WADHWA. 3.1 HAVING CONSIDERED THE FACTS THAT THE AMOUNT HAS BEEN DEBITED IN THE BANK ACCOUNT AND SHRI WADHWA HAS CONFIRMED RECE IPT OF BROKERAGE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED HER BURDEN IN PROVING THE TRANSACTION. THEREFORE, THIS GROUND IS ALSO DISM ISSED. 4. GROUND NO. 4 IS THAT THE LD. CIT(APPEALS) ERRE D IN GRANTING DEDUCTION U/S 54F AS SHE WAS NOT THE OWNER A ND SELLER OF THE PROPERTY, AND SHE OWNED MORE THAN ONE HOUSE PROPERTY ON THE DATE OF SALE. THE FINDING OF THE AO, APART FROM LACK OF OWNERSHI P, IS THAT AS PER FIRST PROVISO TO SECTION 54(1), IF THE ASSESSEE OWNS MO RE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE O F TRANSFER OF THE ORIGINAL ASSET, THE DEDUCTION IS NOT ADMISSIBLE. ON THE O THER HAND, THE FINDINGS OF THE LD. CIT(APPEALS) ARE THAT THE ASSESSEE HAD OPENED A CAPITAL GAIN ACCOUNT IN WHICH DEPOSIT WAS MADE ON 26.07.2007. THE DEPOSIT IS IN TIME. THE ASSESSEE GOT ANOTHER HOUSE CONSTRUCTED BE FORE 29.12.2009. THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 54F. THE LD. SENIOR ITA NO. 797(DEL)/2011 6 DR RELIED ON THE FINDING OF THE AO WHILE THE LD. COUNSEL HAS RELIED ON THE FINDING OF THE LD. CIT(APPEALS). 4.1 WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. SECTION 54F DEALS WITH LTCG ARISING FROM A PROP ERTY NOT BEING A RESIDENTIAL HOUSE. IF THE ASSESSEE PURCHASES A RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TAKES PLACE, OR CONSTRUCTS A HOUSE WITHIN THR EE YEARS AFTER THAT DATE, THE CAPITAL GAINS ARE TO BE TREATED UNDER THIS PROVI SION. HOWEVER, THIS PROVISION DOES NOT APPLY IN CERTAIN CIRCUMSTANCES MENTIONED IN THE PROVISO. ONE OF THE CONDITIONS IS THAT THIS PROVISION WIL L NOT APPLY IF THE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET, THE N THE PROVISION IS NOT APPLICABLE. THIS PROVISO HAS COME INTO FORCE WI TH EFFECT FROM 01.04.2001 BY WAY OF INSERTION BY FINANCE ACT, 2000. IT AP PEARS THAT THE AO HAS APPLIED THE PROVISION CONTAINED IN THE EARLIER PROVISO, WHICH BARS THE APPLICATION OF THIS SECTION WHERE THE ASSESSEE O WNS ON THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET ANY RESIDENTIAL HOUSE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, OTHER THAN THE NEW ASSET. UNDER THE NEW PROVISION IF THE ASSESSEE OWNS ONE ITA NO. 797(DEL)/2011 7 RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, THE PROVISION IS APPLICABLE, BUT IF HE OWNS MORE THA N ONE RESIDENTIAL HOUSE, THE PROVISION IS NOT APPLICABLE. APART FROM THIS , THE LD. CIT(APPEALS) HAS GIVEN A FINDING THAT THE ASSESSEE HAS FULFILLED OTHER CONDITIONS. THEREFORE, IT IS HELD THAT THE ASSESSEE IS ENTITLED TO DED UCTION U/S 54F. 5. COMING TO VIOLATION OF PROVISION CONTAINED IN RULE 46A OF THE INCOME-TAX RULES, 1962, IT MAY BE ADDED THAT THE LD. CIT(APPEALS) HAS CALLED FOR THE REMAND REPORT AND TAKEN IT INTO ACCOUNT WHILE FRAMING THE IMPUGNED ORDER. THEREFORE, WE DO NOT FIND ANY SUB STANCE IN THIS GROUND. 6. IN THE RESULT, THE APPEAL IS DISMISSED. SD/- SD/- (RAJPAL YADAV) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER 17/02/2012. SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. MEERA GUPTA, GHAZIABNAD. 2. DEPUTY CIT, CIRCLE-1, GHAZIABAD. 3. CIT(A) 4. CIT, 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.