A.Kumaresa Pandian, CHENNAI V. DCIT Non Corporate Circle 10, CHENNAI

ITA 799/CHNY/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0051 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 07-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K RAVI
• Keywords: Benefit of exemption; Set aside; Capital Gains
• Section: 201; 13; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUNTA NT MEMBER I .T.A. NO. 799 /CHNY/20 18 ( ASSESSMENT YEAR S : 20 1 3 - 201 4 ) SHRI . A. KUMARESA PANDIAN, NO.B - 10, SRESHTA APARTMENTS, NO.473, KILPAUK GARDENS, CHENNAI 600 010. PAN : A BVPP 5735F VS. THE DEPUTY COMMISSIONER OF INCOME TAX, NON - CORPORATE CIRCLE 1 0, CHENNAI 600 034 TAMIL NADU ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K. RAVI, ADVOCATE /RESPONDENT BY : MR. SURESH PERIASAMY, JCIT / DATE OF HEARING : 0 2 . 0 3 .202 1 / DATE OF PRONOUNCEMEN T : 09. 03 .2021 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : TH E APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 12, CHENNAI IN I.T.A. NO. 41/CIT(A) - 12/2016 - 17 DATED 2 3 . 02 .201 8 PERTAIN ING TO ASSESSMENT YEAR 201 3 - 201 4 . I . T . A NO 799/CHNY/2018 - 2 - | P A GE 2. THE ASSESSEE IS A PARTNER IN A FIRM, I.E. M / S HOTEL VELA ALONG WITH HIS WIFE. BOTH, WIFE AND HUSBAND HAVE 50 : 50% OF SHARE EACH. ON 27 TH SEPTEMBER, 2012, THE F IRM HAS SOLD A PROPERTY FOR RS. 8.29 CR ORES AND CLAIMED I NDEX C OST OF ACQUISITION AND ARRI VED TO A LONG TERM CAPITAL GAIN OF RS.3,77,30,539/ - AND CLAIMED EXEMPTION U/S.54F OF THE INCOME TAX ACT, 1961. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE PROPERTY WAS SOLD BY A FIRM AND EXEMPTION U/S.54F OF THE INCOME TAX ACT , 1961 CANNOT BE ALLOWED TO A FIRM AS I T CAN ONLY BE ALLOWED TO AN INDIVIDUAL. ON THAT COUNT, THE ASSESSING OFFICER DISALLOWED THE ENTIRE CLAIM MADE BY THE ASSESSEE AND TAXED THE CAPITAL GAINS. 3. THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONCE THE FIRM HAD SOLD THE PROPERTY, IT HAS TO BE TAXED IN THE HANDS OF THE FIRM AND NOT IN THE HAN DS OF THE ASSESSEE AND SUBMITTED THAT THE CAPITAL GAINS TAXED BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE IS NOT IN ACCORDANCE WITH LAW. I . T . A NO 799/CHNY/2018 - 3 - | P A GE 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE WIFE HAS ALREADY FILE D THE RETURN OF INCOME, WHEREIN SHE HAS ALREADY OFFERED HER SHARE OF CAPITAL GAINS. HE FURTHER SUBMITTED THAT THE PARTNERSHIP DEED IS NOT REGISTERED AND THE FIRM HAS ALSO NOT FILED THE RETURN OF INCOME AND NOT OFFERED CAPITAL GAINS. THEREFORE, THE ASSESS ING OFFICER HA S JUSTIFIED IN TAXING THE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 7. AS PER THE ASSESSMENT ORDER, ON 27 TH S EPTEMBER, 2012 THE FIRM HAD SOLD THE PROPERTY. THE ASSESSEE WHO IS A MANAGING PARTNER OF THE FIRM FILED THE RETURN OF INCOME, WHEREIN HE HAS ADMITTED THE CAPITAL GAINS. NOW, THE COUNSEL FOR THE ASSESSEE SAYS THAT THE CAPITAL GAINS HAVE TO BE TAXED IN THE HANDS OF THE FIRM AND NOT IN THE HANDS OF THE ASSESSEE. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE WIFE, SMT. K. BHAVANI FILED HER RETURN OF INCOME AND OFFERED CAPITAL GAINS FOR TAXATION AND CLAIMED BENEFIT U/S.54F OF THE INCOME I . T . A NO 799/CHNY/2018 - 4 - | P A GE TAX ACT, 1961. TO SUPPORT HIS ARGUMENT, HE ALSO FILED THE RETURN OF INCOME FILED BY SMT. K. BHAVANI , PARTNER OF THE FIRM . 9. WE HAVE CONSIDERED THE ENTIRE FACTS OF THE CASE AND WE FIND THAT THE ASSESSEE AND HIS WIFE SMT. K. BHAVANI ARE PAR TNERS OF THE UN - REGISTERED FIRM. THE ASSESSEE HAS FILED A RETURN OF INCOME AND OFFERED CAPITAL GAINS, CLAIMED BENEFIT U/S.54F OF THE INCOME TAX ACT, 1961. THE OTHER PARTNER OF THE UN - REGISTERED FIRM ALSO FILED THE RETURN OF INCOME AND OFFERED CAPITAL GAINS FOR T AXATION AND CLAIMED BENEFIT U/S.54F OF THE INCOME TAX ACT, 1961. ONCE BOTH THE PARTNERS OF THE UN - REGISTERED F I RM FILED THE RETURN OF INCOME, IN OUR OPINION, TAXING THE FIRM SEPARATELY IS NOT REQUIRED. 10. THE ASSESSEE IS A PARTNER OF THE PARTNERSHIP FIR M , M/S. HOTEL VELA. THE PARTNERSHIP FIRM HAS PURCHASED VACANT PLOTS OF LAND AT KOTTIVAKKAM ON 04.01.2007. THE SAID PLOTS WERE REGISTERED IN THE NAME OF M/S. HOTEL VELA . DURING THE YEAR UNDER CONSIDERATION, THE PARTNERSHIP FIRM HA D SOLD THE PROPERTY VIDE SALE DEED DATED 27.09.2012 AND THE CONSIDERATION WAS RECEIVED FOR TRANSFER OF PROPERTY THAT HAS BEEN OFFERED TO TAX IN THE INDIVIDUAL CAPACITY AFTER COMPUTING THE INDEX COST ACQUISITION. THE ASSESSEE HAD ALSO CLAIMED THE BENEFIT OF EXEMPTION U/S.54F OF THE INCOME TAX ACT, 1961 IN RESPECT OF I . T . A NO 799/CHNY/2018 - 5 - | P A GE THE REINVESTMENT OF THE SALE CONSIDERATION IN ANOTHER RESIDENTIAL HOUSE PROPERTY WHICH WAS IN THE NAME OF HIS SON, MR. KARTHICK. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF THE PROCEEDINGS, THE ASSESS ING OFFICER NOTED THAT SINCE THE PROPERTY WAS SOLD BY THE PARTNERSHIP FIRM, THE BENEFIT OF EXEMPTION CLAIMED U/S.54F OF THE INCOME TAX ACT, 1961 CANNOT BE CLAIMED BECAUSE THE SAID PROVISION IS APPLICABLE ONLY FOR INDIVIDUAL AND HUF. 1 1 . SO FAR AS THE CLA IM U/S.54F OF THE INCOME TAX ACT, 1961 TOWARDS REINVESTMENT OF SALE CONSIDERATION FOR PURCHASE OF ANOTHER HOUSE PROPERTY IN THE NAME OF HIS SON, MR. KARTHICK, WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM ONLY FOR THE SIMPLE REASON THAT INVES TMENTS MADE IN THE NAME OF SON IS NOT ENTITLED FOR EXEMPTION , H OWEVER, BY NOT EXAMINING OTHER ASPECTS WITH REGARD TO THE ENTITLEMENTS OF THE ASSESSEE, IF CONDITIONS PRESCRIBED U/S.54F OF THE INCOME TAX ACT, 1961 ARE FULFILLED. 12. ALTHOUGH THE LEARNED A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS NOT ARGUED ON THE ISSUE BEFORE US BUT IN THE INTEREST OF JUSTICE, WE DEEM IT APPROPRIATE TO SET ASIDE THE ORDER AND REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO RECONSIDER IN THE LIGHT OF THE ARGUMENTS MADE AND THE DETAILS I . T . A NO 799/CHNY/2018 - 6 - | P A GE SUBMITTED BY THE ASSESSEE THAT IT HAS FULFILLED ALL THE CONDITIONS PRESCRIBED U/S.54F OF THE INCOME TAX ACT, 1961 FOR CLAIMING THE BENEFIT OF EXEMPTION. 13 . IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO PASS AN ASSESSMENT ORDER DE NOVA IN ACCORDANCE WITH LAW. 1 4 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN I .T.A NO. 799 /CHNY/20 18 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED ON 9 TH MARCH , 2021 IN CHENNAI. SD/ - ( ) ( G. MANJUNATHA ) /ACCOUNTANT MEMBER SD/ - ( ) ( V. DURGA RAO ) /JUDICIAL MEMBER / CHENNAI, / DATED: 9 TH MARCH , 2021 IA , SR. P.S /COPY TO: 1. /APP ELLANT 2. /RESPONDENT 3. () /CIT(A) 4. /CIT 5. /DR 6. /GF