Deepak Varma , Bangalore V. Income Tax Officer Ward-1(2)(4), Bangalore

ITA 842/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4710 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Capital asset; Opportunity of being heard
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 842 / BANG/201 8 ASSESSMENT YEAR : 20 1 3 - 14 SHRI DEEPAK VARMA, NO. G001, H M ASTORIA, 10 BENSON CROSS ROAD, BENSON TOWN, BANGALORE 560 046. PAN: ABHPV9676M VS. THE INCOME TAX OFFICER, WARD 1 (2) (4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI SANDEEP .C, CA RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 07 . 0 5 .2018 DATE OF PRONOUNCEMENT : 01.06. 201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT (A)-3, BANGALORE DATED 13.02.2018FOR ASSESS MENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) IN SO FAR IT IS PREJUDICIAL TO THE INTERE STS OF THE APPELLANT IS BAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW AND ON FACTS IN DISALLOWING A SUM OF RS. 15,74, 710 BEING THE STAMP DUTY, RS. 34,240 TOWARDS REGISTRATION CHARGES , RS. 3,14,850 FOR VAT AND RS. 15,000 TOWARDS SCANNING CHARGES ON THE ONLY GROUND THAT THESE AMOUNTS WERE NOT INCURRED WITHIN 3 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET AND WAS NOT DEPOSITED IN CAPITAL GAINS ACCOUNTS SAVING SCHEME. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE AMOUNT OF CONSIDERATION PAID O R PAYABLE FOR THE ACQUISITION OF PROPERTY IS MATERIAL AND NOT THE ACT UAL DATES OF PAYMENTS. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN ITA NO.842/BANG/2018 PAGE 2 OF 6 LAW AND ON FACTS IN NOT ALLOWING THE SUM OF RS. 7 L AKH BEING THE BROKERAGE PAID. ADDITIONAL GROUND 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THEAMOUNT OF CONSIDERATION OF RS. 29,35,158/- PAID FOR THE ACQUISITION OF PROPERTY IS MATERIALAND NOT THE ACTUAL DATES OF PAYMENTS. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO O NE ANOTHER AND THE APPELLANT CRAVES LEAVE OF THE HON'BLE INCOME TAX AP PELLATE TRIBUNAL, BANGALORE, ADD, DELETE, AMEND OR OTHERWISE MODIFY O NE OR MORE OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARI NGOF THIS APPEAL. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ASSESSEE SOLD FLAT AT MUMBAI AS PER SALE DEED DATED 27.12.2012 FOR A CONSIDERATI ON OF RS. 6.30 CRORES. HE ALSO SUBMITTED THAT THE ASSESSEE COMPUTED LONG TERM CAPITAL GAIN AT RS. 3,50,16,475/- AND THE ASSESSEE CLAIMED DEDUCTION U/ S. 54 FOR ENTIRE AMOUNT OF SUCH CAPITAL GAIN. HE FURTHER SUBMITTED THAT THE A O HAS RESTRICTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 54 OF IT ACT TO RS. 3,18,61,800/- AND IN DOING SO, HE HAS EXCLUDED THE AMOUNT OF RS. 29,35,138/- W HICH WAS PAID PRIOR TO ONE YEAR FROM THE DATE OF SALE OF THE PROPERTY I.E. 27. 12.2012. THE AO HAS ALSO EXCLUDED THE AMOUNT OF RS. 19,38,800/- BEING STAMP DUTY, REGISTRATION CHARGES, VAT CHARGES AND SCANNING CHARGES PAID BY T HE ASSESSEE ON 11.01.2016 AND CLAIMED BY THE ASSESSEE BEFORE AO BY WAY OF REVISED COMPUTATION. HE SUBMITTED THAT THESE TWO AMOUNTS W ERE NOT CONSIDERED BY THE AO FOR THIS REASON THAT THE FIRST AMOUNT IS PAID BY THE ASSESSEE MORE THAN ONE YEAR BEFORE THE DATE OF SALE AND THE SECOND AMOUNT IS IGNORED BY THE AO BY SAYING THAT IT IS INCURRED BY THE ASSESSEE AFTER MO RE THAN THREE YEARS AFTER DATE OF SALE. HE SUBMITTED THAT SUCH DECISION OF THE AO IS NOT JUSTIFIED AND ENTIRE AMOUNT SHOULD BE CONSIDERED FOR THE PURPOSE OF ALLO WING DEDUCTION U/S. 54 OF IT ACT AND IN SUPPORT OF HIS CONTENTION, RELIANCE W AS PLACED BY HIM ON TRIBUNAL ORDER RENDERED IN THE CASE OF SHRI R.M.M. ATHREYA V S. ITO IN ITA NO. 467/BANG/2013 DATED 26.09.2014, COPY AVAILABLE ON P AGES 102 TO 110 OF PAPER BOOK AND IT WAS SUBMITTED THAT THE RELEVANT PAGE IS 108 OF PAPER BOOK. RELIANCE WAS ALSO PLACED ON ANOTHER TRIBUNAL ORDER RENDERED IN THE CASE OF GOPILAL LADDHA VS. ACIT, COPY AVAILABLE ON PAGES 11 5 TO 122 OF PAPER BOOK AS REPORTED IN [2014] 62 SOT 59 (ITAT[BANG]). REGARDI NG THE JUDGEMENT OF ITA NO.842/BANG/2018 PAGE 3 OF 6 HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. K. RAMACHANDRA RAO AS REPORTED IN 56 TAXMANN.COM 163 (KARNATAKA) A ND FOLLOWED BY THE AO, HE SUBMITTED THAT THIS JUDGEMENT IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. IN REPLY, THE LD. DR OF REVENUE SUPPORTED TH E ORDERS OF AUTHORITIES BELOW. HE ALSO SUBMITTED THAT AS PER THE INDEX OF THE PAPE R BOOK, ON PAGE 22 TO 73 OF PAPER BOOK IS COPY OF SALE DEED DATED 11.01.2016 BU T THERE IS NO SALE DEED AND THE DOCUMENT AVAILABLE ON THESE PAGES OF THE PA PER BOOK IS AN AGREEMENT TO SALE, WHICH WAS EXECUTED ON 11.01.2016 AND HENCE , THE PROPERTY WAS NOT ACQUIRED TILL THAT DATE AND THEREFORE, DEDUCTION AL LOWED BY THE AO IS ALSO EXCESSIVE AND IT IS NOT ALLOWABLE BECAUSE TILL 11.0 1.2016, THE PROPERTY HAS NOT BEEN ACQUIRED BY THE ASSESSEE. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THERE IS NO DISPUTE REGARDING THE FACTS THAT THE AMOUNT OF RS. 29,35,13 8/- HAS BEEN INCURRED MORE THAN ONE YEAR PRIOR TO THE SALE OF THE ASSET AND TH E SECOND AMOUNT OF RS. 19,38,800/- WAS INCURRED AFTER MORE THAN THREE YEAR S FROM THE DATE OF SALE OF THE PROPERTY. AS PER THE PROVISION OF SECTION 54 O F IT ACT, IF THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFT ER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERI OD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA, T HEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE P REVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCO RDANCE WITH THE FOLLOWING PROVISIONS OF THAT SECTION AS PER WHICH THE ASSESSE E IS ELIGIBLE FOR DEDUCTION. HENCE IT IS SEEN THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54 IF A NEW PROPERTY IS PURCHASED EITHER BEFORE ONE YEAR FROM T HE DATE OF SALE OR WITHIN TWO YEARS OR THREE YEARS AFTER THE DATE OF SALE IN THE CASE OF PURCHASES / CONSTRUCTION RESPECTIVELY. HENCE AS PER THE SIMPLE READING OF THE PROVISIONS OF THIS SECTION, THESE TWO AMOUNTS IN QUESTION WHICH A RE SPENT BY THE ASSESSEE MORE THAN ONE YEAR BEFORE SALE OF THE PROPERTY AND MORE THAN THREE YEARS AFTER THE SALE ARE NOT ELIGIBLE FOR DEDUCTION U/S. 54 OF IT ACT. IN THE LIGHT OF THESE FACTS, NOW I EXAMINE THE VARIOUS JUDGEMENTS ON WHIC H RELIANCE HAS BEEN PLACED BY LD. AR OF ASSESSEE AND THE JUDGMENT OF HO N'BLE KARNATAKA HIGH COURT WHICH HAS BEEN FOLLOWED BY THE AO. ITA NO.842/BANG/2018 PAGE 4 OF 6 5. FIRST I EXAMINE THE APPLICABILITY OF TRIBUNAL OR DER RENDERED IN THE CASE OF SHRI R.M.M. ATHREYA VS. ITO (SUPRA). IN THAT CASE, THE ASSESSEE SOLD HOUSE PROPERTY ON 01.09.2008. APART FROM CLAIMING DEDUCT ION U/S. 54EC OF IT ACT FOR INVESTMENT OF A SUM OF RS. 18 LAKHS, THE ASSESSEE H AS ALSO CLAIMED DEDUCTION U/S. 54 OF IT ACT. ACCORDING TO ASSESSEE IN THAT C ASE, THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH L&T FOR PURCHASE OF A F LAT FOR A CONSIDERATION OF RS. 45.92 LAKHS AND AS PER THE DETAILS OF PAYMENT O F THESE AMOUNTS OF RS. 45.92 LAKHS NOTED BY TRIBUNAL ON PAGE NO. 2 OF THE TRIBUNAL ORDER, THE AMOUNT OF RS. 2,29,600/- WAS PAID ON 28.02.2008 WHICH IS W ITHIN ONE YEAR BEFORE THE DATE OF SALE BEING 01.09.2008 AND THE REMAINING PAY MENTS WERE MADE MORE THAN ONE PRIOR TO THE DATE OF SALE. THE AO IN THAT CASE DID NOT GRANT EXEMPTION U/S. 54 OF IT ACT ON THE GROUND THAT THE FLAT WAS A GREED TO BE PURCHASED ON 25.11.2006 MEANING THEREBY THAT THE FLAT WAS PURCHA SED ON 25.11.2006 WHICH IS MORE THAN ONE YEAR BEFORE THE DATE OF SALE. IN PARA 4 OF THIS TRIBUNAL ORDER, IT IS NOTED BY THE TRIBUNAL THAT IN THAT CASE, IT WAS CLAIMED BY THE ASSESSEE THAT ALTHOUGH THE FLAT WAS BOOKED ON 25.11.2006, IT WAS HANDED OVER TO THE ASSESSEE IN MAY, 2008 WHICH IS FALLING IN THE WINDO W PERIOD OF ONE YEAR PRIOR TO THE SALE OF THE LONG TERM CAPITAL ASSET AS THE SALE WAS MADE ON 01.09.2008 AND THE SALE DEED FOR THE PURCHASE OF THE FLAT WAS EXEC UTED ON 15.10.2009 WHICH IS ALSO FALLING WITHIN THE WINDOW PERIOD FROM THE SALE OF LONG TERM CAPITAL ASSET. PARA 6 OF THIS TRIBUNAL ORDER IS RELEVANT AND HENCE , THE SAME IS REPRODUCED FROM PAGE 109 OF PAPER BOOK AND THE SAME IS AS UNDE R. 6. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE V IEW THAT THE LEARNED CIT (A) HAS ERRED IN RESTRICTING THE BENEFIT U/S 54 TO THE EXTENT THE PAYMENTS MADE WITHIN A PERIOD OF ONE YEAR FOR PURCH ASE OF THE NEW ASSET. THE PURCHASE OF THE NEW ASSET IS TO BE CONSI DERED EITHER AS MAY, 2008 OR 15.10.2009 ON THAT DATE TOTAL INVESTMENT IN THE NEW ASSET IS TO BE TAKEN INTO CONSIDERATION. THE ASSESSEE HAS COMPU TED THE CAPITAL GAIN ON THIS BASIS AND THEREFORE, HE IS ENTITLED FO R THE EXEMPTION TO THE EXTENT OF THE INVESTMENT MADE IN THE PURCHASE OF NE W ASSET. THE ASSESSING OFFICER IS DIRECTED TO RE-COMPUTE THE EXE MPTION ADMISSIBLE TO THE ASSESSEE. THE ORDER OF THE LEARNED CIT (A) I S SET ASIDE TO THIS EXTENT. 6. FROM THE ABOVE PARA REPRODUCED FROM THE TRIBUNAL ORDER, IT IS SEEN THAT IT WAS HELD BY TRIBUNAL IN THIS CASE THAT THE RELEVANT DAT ES ARE DATE OF POSSESSION, BEING MAY, 2008 IN THAT CASE OR 15.10.2009 BEING TH E DATE OF REGISTRATION OF ITA NO.842/BANG/2018 PAGE 5 OF 6 SALE DEED. IN THE PRESENT CASE, VARIOUS DATES ARE NOTED BY CIT(A) IN PARA 4.3 OF HIS ORDER AND IN THE SAID CHART, THE DATE OF POS SESSION, DATE OF REGISTRATION OF SALE DEED ARE NOT MENTIONED. IN THE PAPER BOOK, IT IS STATED IN THE INDEX THAT ON PAGES 22 TO 73 OF PAPER BOOK IS SALE DEED DATED 11. 01.2016 BUT WHEN WE GO TO PAGE 22 OF PAPER BOOK, THE HEADING IS AGREEMENT FOR SALE AND IT IS STATED BELOW THE HEADING THAT THIS AGREEMENT IS MADE AT MUMBAI, THIS 11 TH DAY OF JANUARY, 2016. IT IS ALSO STATED IN THE SAID SALE DEED / AG REEMENT FOR SALE THAT CONSIDERATION IS RS. 171 LAKHS WHICH HAS TO BE PAID IN VARIOUS INSTALMENTS TO THE EXTENT OF 20% OF THE SALE PRICE AS EARNEST MONE Y DEPOSIT ON OR BEFORE THE EXECUTION OF THE SAID AGREEMENT / SALE DEED, THEN 1 0% ON COMPLETION OF THE BASEMENT SLAB, FURTHER 10% ON COMPLETION OF THE PLI NTH LEVEL OF THE SAID BUILDING AND FURTHER 10% ON COMPLETION OF THE 2 ND PODIUM SLAB, FURTHER 10% ON COMPLETION OF 2 ND FLOOR SLAB, FURTHER 10% ON COMPLETION OF 5 TH FLOOR SLAB, FURTHER 10% ON COMPLETION OF 8 TH FLOOR SLAB,FURTHER 10% ON COMPLETION OF 11 TH FLOOR SLAB OF THE BUILDING, FURTHER 5% OF THE SALE CONSIDERATION SHOULD BE PAID ON COMPLETION OF 15 TH FLOOR SLAB OF THE SAID BUILDING AND FURTHER 5% ON THE SALE PRICE SHOULD BE PAID ON POSSESSION OF THE SAID PREM ISES. THERE IS NO MENTION ABOUT THE DATE OF POSSESSION IN THE SAID SALE DEED / SALE AGREEMENT AVAILABLE ON PAGES 22 TO 73 OF PAPER BOOK. HENCE IT IS SEEN THAT IN THE PRESENT CASE, NEITHER THE DATE OF POSSESSION IS COMING OUT NOR TH E EXECUTION OF SALE DEED IS COMING OUT AND AS PER THIS TRIBUNAL ORDER, THESE TW O DATES ARE RELEVANT FOR THE PURPOSE OF GRANTING DEDUCTION U/S. 54. HENCE, I FE EL IT PROPER THAT IN THE INTEREST OF JUSTICE, THIS MATTER SHOULD GO BACK TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER EXAMINING AND FINDING OUT THESE TWO DATES I.E. DATE OF POSSESSION OF THE RESIDENTIAL HOUSE OR THE DATE OF SALE DEED AND THEN THE ISSUE MAY BE DECIDED IN THE LIGHT OF THIS TRIBUNAL ORDER RENDERED IN THE CA SE OF SHRI R.M.M. ATHREYA VS. ITO (SUPRA) ON WHICH RELIANCE HAS BEEN PLACED BY LD . AR OF ASSESSEE. THE ISSUE IS RESTORED BACK TO THE FILE OF CIT(A) FOR FR ESH DECISION AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. ITA NO.842/BANG/2018 PAGE 6 OF 6 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 01 ST JUNE, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.