Shivratan Shrigoapl Mundada, Jalna V. Assistant Commissioner of Income-tax, Circle - Jalna, Jalna

ITA 834/PUN/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5501 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-05-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, B PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.834/PUN/2019 / ASSESSMENT YEAR : 2014-15 SHIVRATAN SHRIGOPAL MUNDADA, PLOT NO.28/29, FINE LIVING SOCIETY, BEHIND GOLDEN JUBILEE SCHOOL, JALNA, MAHARASHTRA 431203 PAN : ABPPM8459H VS. ACIT, JALNA CIRCLE, JALNA APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 25-03-2019 PASSED BY THE PR. COMMISSIONER OF INCOME-TA X-1, AURANGABAD U/S.263 OF THE INCOME-TAX ACT, 1961 (HEREINAF TER ALSO CALLED `THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2014-15. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN DECLARING TOTAL INCOME OF RS.18,06,880/-. THE A SSESSMENT WAS COMPLETED U/S.143(3) ON 29-12-2016 AT THE SAME INCOM E. THE LD. PCIT NOTICED THAT THE ASSESSEE SOLD A PIECE OF LAND ON 11 -12- 2013 (DAREGAON LAND) FOR A CONSIDERATION OF RS.1.30 CR ORE, WHICH ASSESSEE BY SHRI B.D. BHIDE REVENUE BY SHRI DEEPAK GARG DATE OF HEARING 19-05-2021 DATE OF PRONOUNCEMENT 19-05-2021 ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 2 HAD BEEN PURCHASED IN THE YEAR 2004 FOR A SUM OF RS. 4,73,880/-. AFTER INDEXATION, THE ASSESSEE HAD COMPUTED THE LONG TERM CA PITAL GAIN OF RS.1,20,72,972/- AND THEREAFTER CLAIMED EXEMPT ION U/S.54F TOWARDS INVESTMENT OF RS.1,42,05,400/- ON CONSTRUCTION O F A NEW RESIDENTIAL HOUSE. THE LD. PCIT NOTICED THAT THE ASSESSEE OB TAINED THE PERMISSION FROM MUNICIPAL COUNCIL, JALNA ON 20-08-2014 FOR COMMENCEMENT OF CONSTRUCTION ON A PLOT WHICH WAS PURCHASE D ON 17-12-2013. IT WAS THUS OPINED THAT THE AO WRONGLY ALLOWED EXEMPTION U/S.54F BECAUSE THE ASSESSEE DID NOT SUBMIT COM PLETION CERTIFICATE TOWARDS CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE DURING THE COURSE OF ASSESSMENT. IT WAS STILL FURTHER NOTICED FROM TH E RELEVANT CERTIFICATE THAT THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE WAS TO BE COMMENCED ON PLOT NO.28 ONLY WHEREAS THE ASSESS EE INCLUDED COST OF PLOT NO.29 ALSO FOR COMPUTING THE COST OF CONSTRUCTION IN CLAIMING EXEMPTION U/S.54F OF THE ACT. THE LD. PCIT THUS CAME TO HOLD THAT THE AO DID NOT CONDUCT ANY ENQUIR Y ON THIS ISSUE. 3. ON BEING SHOW CAUSED, THE ASSESSEE PUT FORTH THAT THE DETAILS OF SALE OF LAND AND CONSTRUCTION OF NEW RESIDENTIAL HOUSE WERE SUBMITTED TO THE AO DURING THE COURSE OF REGULAR ASSESSMEN T COMPLETED U/S.143(3). IT WAS ALSO STATED THAT THE CONSTRUCTION OF ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 3 NEW HOUSE WAS COMPLETED WELL BEFORE THE COMPLETION OF THRE E YEARS FROM THE DATE OF TRANSFER OF ASSET, I.E. IN THE MONTH OF OC TOBER, 2016. THE ASSESSEE FURNISHED CERTIFICATE IN THIS REGARD ISSUED BY THE LAND OWNER/PROMOTER OF FINE LIVING COOPERATIVE HOUSING SOCIETY LAND WHERE HE HAD ACQUIRED PLOTS FOR CONSTRUCTION OF THE NEW RE SIDENTIAL HOUSE. IT WAS STATED THAT THE COMPLETION CERTIFICATE WAS APPLIED FOR ON 24-10-2016 TO THE CHIEF OFFICER, JALNA MUNICIPAL COUNC IL WHICH WAS RECEIVED LATER ON. AS REGARDS THE INVESTMENT IN TWO P LOTS, THE ASSESSEE SUBMITTED THAT THE CONSTRUCTION WAS CARRIED OUT ON B OTH THE PLOTS EVEN THOUGH THE APPLICATION WAS INADVERTENTLY MADE ONLY W .R.T. ONE PLOT AND SANCTION WAS ALSO GIVEN ACCORDINGLY. 4. WITHOUT ACCEPTING THE ASSESSEES COPY OF INVITATION CA RD OF HOUSE WARMING ON 02-11-2016, THE LD. PCIT WENT WITH THE COMPLETION CERTIFICATE WHICH WAS BEYOND A PERIOD OF THREE Y EARS FROM THE DATE OF TRANSFER. HE ALSO DID NOT ACCEPT THE ASSE SSEES CONTENTION THAT THE CONSTRUCTION WAS CARRIED OUT ON TWO PLOTS AS AGAINST PERMISSION SOUGHT AND ACCORDED ONLY IN RESPECT OF P LOT NO.28. THIS IS HOW, HE HELD THAT THE AO FAILED TO APPLY HIS MIND WHILE FRAMING THE ASSESSMENT WHICH LED TO THE PASSING OF AN ERRONEOUS ORDER WHICH WAS PREJUDICIAL TO THE INTEREST OF REV ENUE. ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 4 AGGRIEVED THEREBY, THE ASSESSEE HAS COME UP IN APPEAL BE FORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THE AS SESSEES COMPUTATION OF TOTAL INCOME HAS BEEN PLACED AT PAGE 2 ONWARD S OF THE PAPER BOOK. UNDER THE HEAD LONG TERM CAPITAL GAIN, THE ASSESSEE DECLARED SALE CONSIDERATION OF DAREGAON LAND AT RS.1.30 CRORE AND COMPUTED CAPITAL GAIN AT RS.1.20 CRORE AND ODD . THEN, THERE IS A REFERENCE TO INVESTMENT OF RS.1.42 CRORE IN THE NEW HOUSE FOR THE PURPOSES OF EXEMPTION U/S.54F OF THE ACT. IT CAN B E SEEN FROM THE ASSESSMENT ORDER DATED 29-12-2016 THAT THERE IS N O REFERENCE TO THE CLAIM OF EXEMPTION U/S.54F. HOWEVER, IT IS DISCERNIBLE FROM THE COPY OF AOS ORDER SHEET ENTRY THAT H E DID INQUIRE ABOUT THE DETAILS OF ADMISSIBILITY OF DEDUCTION CLAIMED U/S.54F . IN THE ORDER SHEET ENTRY DATED 26-12-2016, THERE IS AGAIN A REFERENCE TO THE ASSESSEE FURNISHING THE NECESSARY DETAILS , SUCH AS, COMMENCEMENT CERTIFICATE OF NEW RESIDENTIAL HOUSE CONSTRUCTE D ALONG WITH APPROVED PLAN ON 20-08-2014 IN SUPPORT OF THE CLAIM FOR EXEMPTION U/S.54F. IN RESPONSE TO THE AOS QUERY, THE A SSESSEE FURNISHED THE RELEVANT DETAILS VIDE HIS LETTER DATED 22-08-2016 , A COPY OF WHICH HAS BEEN PLACED AT PAGE 2 ONWARDS OF THE ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 5 DEPARTMENTAL PAPER BOOK. POINT NO.3 IN THIS LETTER STATES ABOU T THE INVESTMENT OF THE AMOUNT OF SALE CONSIDERATION RECEIVED OF DAREGAON LAND IN CONSTRUCTION OF RESIDENTIAL HOUSE AT FINE LIVIN G, JALNA. THE FINE LIVING RESIDENTIAL HOUSE LEDGER ACCOUNT FOR THE F.Y. 2013-14 & F.Y. 2014-15 IS ENCLOSED HEREWITH AS ANNEXURE- 3. THE COPY OF FINE LIVING PLOT PURCHASED IS ALSO ENCLOSED WITH THIS LE TTER AS ANNEXURE-3. THERE CREPT SOME DISPUTE ABOUT THE CONTENTS OF ANNEXURE-3 BEFORE THE TRIBUNAL. WE GO WITH THE COPY OF A NNEXURE- 3, TAKEN FROM THE ASSESSMENT FOLDER, AS PRODUCED BY THE LD. DR. THE ANNEXURE-3 IS A COPY OF THE LEDGER ACCOUNT OF FINE LIVING RESIDENTIAL HOUSE A/C. AS ON 30-09-2014, WHICH SHOWS TOTA L INVESTMENT AMOUNTING TO RS.1,42,05,404/-. THUS, IT IS DISCER NIBLE THAT THE ASSESSEE PROPERLY DECLARED THE TRANSACTION OF DISPOS AL OF DAREGAON LAND AND INVESTMENT MADE IN THE NEW RESIDENTIAL HO USE FOR WHICH EXEMPTION WAS CLAIMED U/S.54F IN THE RETURN OF IN COME; THE AO REQUIRED THE ASSESSEE TO PRODUCE NECESSARY DETAILS IN SUPPORT OF CLAIM U/S.54F DURING THE COURSE OF ASSESSMENT PROCEED ING; THE ASSESSEE FURNISHED THE DETAILS WHICH ARE EVIDENT FROM THE DEPARTMENTAL PAPER BOOK SHOWING INVESTMENT OF RS.1.42 CR ORE; THE AO GOT CONVINCED AND HENCE DID NOT MAKE ANY DISALLOWANCE U /S 54F IN THE ASSESSMENT ORDER. IN SUCH CIRCUMSTANCES, IT CAN NOT BE ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 6 SAID THAT THE AO DID NOT EXAMINE THE ISSUE WHICH COULD HAVE LED TO THE REVISION OF THE ASSESSMENT ORDER U/S.263 OF THE ACT ON THAT COUNT. 6. NOW WE TURN TO THE SPECIFIC OBJECTIONS TAKEN BY THE LD. PCI T. THE FIRST OBJECTION IS THAT THE ASSESSEE DID NOT FURNISH COMPLE TION CERTIFICATE AT THE TIME OF ASSESSMENT, WHICH HE IS DISPUTING TO BE BEYOND A PERIOD OF THREE YEARS. AS AGAINST THAT, THE ASS ESSEE IS CLAIMING THAT THOUGH THE COMPLETION CERTIFICATE WAS ISSUED BEYOND THE PERIOD OF THREE YEARS BUT THE CONSTRUCTION WAS, IN FACT , COMPLETED WITHIN THE STATUTORY PERIOD AND THE ASSESSEE ALSO DID HOUSE WARMING WELL WITHIN THE STIPULATED PERIOD. WE DO NOT FIND ANY RELEVANCE OF THE COMPLETION OF CONSTRUCTION INSOFAR AS THE EXEMPTION U/S. 54F IS CONCERNED. WHAT THE SECTION REQUIRES IS THAT THE ASSESSEE P URCHASES A NEW RESIDENTIAL HOUSE OR HAS WITHIN A PERIOD OF THREE YEARS, AFTER THE DATE CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA . THIS SECTION SIMPLY TALKS OF PURCHASING A HOUSE OR CONSTRUCTING A HOUS E WITH THE NET CONSIDERATION RECEIVED FROM THE TRANSFER OF OLD ASSET. IT NO WHERE WARRANTS THE COMPLETION OF CONSTRUCTION WITHIN THE STIPULATED PER IOD. IF THE AMOUNT REQUIRED FOR EXEMPTION U/S.54F HAS BEEN PRO PERLY INVESTED IN THE NEW HOUSE, THE CLAIM CANNOT BE DENIED SIMPLY BECAUSE THE CONSTRUCTION WAS NOT COMPLETED WITHIN THE PERIOD OF THREE YEARS. AS AND WHEN THE TARGET OF INVESTMENT OF THE ELIGIBLE ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 7 AMOUNT IS ACHIEVED WITHIN A PERIOD OF THREE YEARS, THE ASSES SEE EARNS EXEMPTION U/S.54F NOTWITHSTANDING THAT HE MAY CONTINUE TO INVE ST MORE ON SUCH NEW HOUSE BEYOND THE GIVEN PERIOD. SINCE THE LAW SIMPLY PROVIDES FOR INVESTING THE NET CONSIDERATION OF THE EA RLIER TRANSFERRED PROPERTY AS A SINE QUA NON FOR CLAIMING THE EXEMPTION AND NOT THE COMPLETION OF CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE, SUCH A CONDITION CANNOT BE READ IN THE PROVISION, AS HAS BE EN CANVASSED BY THE LD. PCIT. 7. THE OTHER OBJECTION TAKEN BY THE LD. PCIT IS THAT THE ASSESS EE CLAIMED TO HAVE INVESTED A SUM OF RS.1.42 CRORE WHICH W AS NOT REFLECTED EITHER IN THE BALANCE SHEET OR IN THE CAPITAL ACCOUNT OF THE ASSESSEE. ON THE CONTRARY, WE FIND FROM THE DEPARTMENTA L PAPER BOOK ITSELF THAT THE ASSESSEE DID FURNISH FINE LIVING RESIDENTIA L HOUSE A/C. AS ON 30-09-2014 WITH INVESTMENT OF RS.1.42 CRORE AS ON 30-09-2014. THUS, THIS VIEW POINT OF THE LD. PCIT ALSO DOES NOT STAND. 8. ANOTHER OBJECTION TAKEN BY THE LD. PCIT IS THAT THE ASSESSEE CLAIMED PURCHASE COST OF PLOT NOS.28 AND 29 IN THE SUM TOTAL OF RS.1.42 CRORE FOR THE PURPOSES OF EXEMPTION U/S.54F, W HEREAS THE PERMISSION FOR CONSTRUCTION WAS TAKEN ONLY IN RESPECT OF PLOT N O.28. IT IS SEEN THAT BOTH THE PLOTS, NAMELY, 28 AND 29 WERE SIMULTA NEOUSLY ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 8 PURCHASED AND ARE ADJACENT TO EACH OTHER. THE ASSESSE E HAS CLAIMED THAT BOTH THE PLOTS WERE USED FOR CONSTRUCTION OF NEW RESIDE NTIAL HOUSE. SIMPLY BECAUSE THE APPLICATION FOR CONSTRUCTION WAS GIVEN ONLY WITH REFERENCE TO PLOT NO.28, THE CLAIM FOR ACTUAL INVEST MENT IN PLOT NO.29, QUALIFYING FOR EXEMPTION U/S.54F, CANNOT BE DENIE D. BE THAT AS IT MAY, EVEN IF WE PROCEED WITH THE PRESUMPTION THAT TH E ASSESSEE CONSTRUCTED NEW RESIDENTIAL HOUSE ONLY ON PLOT NO.28 , STILL PLOT NO.29 ADJACENT TO NEW RESIDENTIAL HOUSE WILL FORM PART OF N EW RESIDENTIAL HOUSE THUS ENTITLING THE ASSESSEE TO EXEMPTION PRO TANTO . 9. THE NEXT OBJECTION TAKEN BY THE LD. PCIT IS THAT THE AO FAILE D TO ENQUIRE AND VERIFY THE ISSUE OF COST OF CONSTRUCTION WH ICH SHOULD HAVE BEEN DONE. HERE AGAIN, THE LD. PCIT IS NOT C ORRECT. NOT ONLY THIS ISSUE WAS VERIFIED BY THE AO BUT THE NECESSARY EVID ENCE TO CORROBORATE THE ASSESSEES CLAIM WAS ALSO PLACED BEFORE HIM, WHICH IS EVIDENT FROM THE FINE LIVING RESIDENTIAL HOUSE DECIPHERING INVESTMENT OF RS.1.42 CRORE IN THE NEW HOUSE. THE LD. D R SUBMITTED THAT THE COMMENCEMENT OF CONSTRUCTION CERTIFICATE WAS ISSUED ON 20-08-2014 WHEREAS THE ASSESSEE CLAIMED TO HA VE INVESTED A SUM OF RS.1.42 CRORE AS ON 30-09-2014. WE FIND FR OM THE DETAILS OF FINE LIVING RESIDENTIAL HOUSE THAT A SUM OF RS.55.04 LAKH W AS INVESTED IN PURCHASE OF TWO PLOT NOS. 28 AND 29. THIS LEA VES WITH A ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 9 SUM OF RS.87.00 LAKH WHICH HAS BEEN INVESTED BY THE ASS ESSEE TOWARDS PURCHASE OF CEMENT, STEEL, SAND, BRICKS, MURUM A ND SOILING, LABOUR PAYMENT AND OTHER CONSTRUCTION EXPENSES. EXCEPT F OR CASTING A DOUBT, THE LD. DR COULD NOT POINT OUT AS TO HOW THE SPENDIN G OF RS.87.00 LAKH WITHIN A PERIOD OF 1 MONTH AND 10 DAYS WAS NOT POSSIBLE. MERE DOUBT CANNOT LEAD TO THE REVISION OF AN ORDE R UNLESS IT IS SHOWN THAT EITHER THE AO FAILED TO APPLY HIS MIND ON THE ISS UE OR HE APPLIED HIS MIND BUT HIS VIEW WAS WRONG IN FACTS OR IN LAW. NONE OF THE CONDITIONS IS SATISFIED IN THE INSTANT CASE. IN VIE W OF THE FOREGOING DISCUSSION, WE ARE SATISFIED THAT THE LD. PCIT FA ILED TO MAKE OUT A PROPER CASE FOR REVISION OF THE ASSESSMENT OR DER PASSED U/S.143(3) OF THE ACT. ERGO, THE IMPUGNED ORDER IS OV ERTURNED. 10. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MAY, 2021. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 19 TH MAY, 2021 ITA NO.834/PUN/2019 SHIVATAN SHRIGOPAL MUNDADA 10 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE PR.CIT(A)-1, AURANGABAD 4. 5. DR, ITAT, B BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 19-05-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19-05-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *