Basabdutta Dutta. , Bankura V. ITO,Ward- 3(1), Kenduadihi, , Kenduadihi

ITA 868/KOL/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5832 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-05-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 20-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Capital Gains
• Section: 56(2)(vii)(b); 50C; 54F; 250

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Sanjay Awasthi, Accountant Member I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta................................................................Appellant Kayasthapara, P.O+Dist – Bankura, Pin-722101. [PAN: ADTPD8748C] vs. ITO, Ward-3(1), Bankura................................................................. Respondent Appearances by: Shri S. M. Surana, Advocate and D.K. Sen, Advocate, appeared on behalf of the appellant. Shri Sallong Yaden, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : May 13, 2024 Date of pronouncing the order : July 11, 2024 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 06.07.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. For that the ld. CIT(A)(NFAC) in consideration of the facts and circumstances of the case, erred in confirming disallowance on account of exemption of Rs.1,65,52,344.00 claimed u/s 54F on return of income. 2. For that the ld. CIT(A)(NFAC) in consideration of the facts and circumstances of the case, is not justified to confirm addition of Rs.7,38,588.00 made u/s 56(2)(VII) 3. For that the appellant reserves his right to add to, to alter, to amend the grounds and to adduce paper and document at the time of hearing.” I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 2 3. Ground No.1 – The brief facts of the case are that the assessee during the year transferred her long-term investment in shares valued at Rs.2,15,00,000/- to M/s Little Heart Children Hospital Pvt. Ltd. vide transfer deed dated 13.05.2013 and in lieu thereof received land of the equal value. The assessee had also entered into an agreement dated 03.08.2012 for purchase of residential plot for Rs.1,50,00,000/- through legal heir one Ms. Rangini Goenka. The assessee declared long- term capital gains amounting to Rs.1,75,07,520/- on the transfer of the shares, out of which the assessee claimed exemption u/s 54F of the Act amounting to Rs.1,65,52,344/- on account of purchase/consideration of the house on the land purchased from Goenkas. However, the Assessing Officer observed that the land in question was leasehold property allotted by Asansol Durgapur Development Authority (hereinafter referred to as the ‘ADDA’) through Shri Ashoke Goenka and other and that the assessee has purchase right in the property from these persons vide agreement dated 03.08.2012. The Assessing Officer further noted that the assessee had not constructed residential property within two years of the sale of original asset (equity shares) and therefore, the assessee was not entitled for deduction u/s 54F of the Act. He in this respect observed that the land in question could not have been transferred without the permission of the ADDA. That though the vendors/allottees had applied to ADDA to transfer of land in favour of the assessee, however, no such permission was granted till date and therefore, there was no transfer of land upon which the house was constructed in favour of the assessee. He, therefore, disallowed the deduction claimed by the assessee u/s 54F of the Act. 4. Being aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the ld. CIT(A). The assessee explained I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 3 before the ld. CIT(A) that there was no dispute that agreement of transfer of the residential plot was entered into on 03.08.2012 and further that the construction was made by the assessee on the said plot with the consent of the proposed vendor as well as of the ADDA. However, due to certain conditions laid down by the ADDA, the property was allowed to be transferred in the name of the assessee only when the same is fully constructed. It was, therefore, submitted before the ld. CIT(A) that the amount in the residential house was duly invested within one year prior to the date of sale of capital asset and further house was constructed within the stipulated period of three years from the date of sale of the capital asset and therefore, the assessee was entitled to deduction u/s 54F of the Act. The ld. CIT(A) however confirmed the order of the Assessing Officer on the following grounds: i) That the consideration received by the assessee on sale of his assets was in the form of asset whereas the key condition to avail the benefit u/s 54F is to “reinvest" the sale proceeds from the sale or transfer of old asset in new asset or equivalent amount by securing the money received on sale of old asset. (ii) That there could not have been sale without the permission of ADDA and that the agreement dated 03.8.2012 was not a legal document to prove that the assessee made investment in the residential house. (iii) That the construction of the residential house was not completed till the passing of the assessment order and that the assessee has only entered int agreement for purchase of land. (iv) that construction of residential house was not completed within the period of three years and that the seller applied for sanction of the plan for construction of the house. 5. Being aggrieved by the said order of the CIT(A), the assessee has come in appeal before us. 6. We have heard the rival contentions and gone through the record. I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 4 6.1 So far as the contention of the Revenue that the assessee has received the consideration in the form of asset and not in terms of money and further that the assessee should invest the money received from the sale of capital asset is concerned, the same is not tenable. As per the provisions of section 54F of the Act, the amount of consideration can be invested for purchase of house even the year prior to the date of sale of asset, hence it is not the same money but the amount equal to the net consideration received. 6.2 So far as the issue relating to belated transfer of the house in the name of the assessee is concerned, the ld. counsel for the assessee in this respect has made the following submissions: “1. Agreement dated 3.8.2012 (page 10-13) for purchase of land which also included clause 5,6 and 7 that the seller shall get the extension for construction of the property and that the purchaser shall make his construction. The seller had no alternative but the sale the land since the construction was not completed within 5 years of the date of allotment to them which they were getting extension after extension (vide clause (iii) page19-20). 2. Extension taken by the seller vide page 14 wherein the permission of transfer was also applied for but ADDA stated that permission can be given on completion of the construction only. 3. Sanction of plan letter dated 16.8.2013 paper book page 4 4. Construction completed and CC granted vide page 16 5. Agreement for purchase by the first owner (seller of the assessee with ADDA)18-23 6. Application for transfer by seller in favour of purchaser to ADDA on 15.12.2017. 7. Actual transfer deed duly executed in favour of the assessee page 27- 42 which also shown the details of payment for purchase of land vide page 34 8. Details of all payments page 45-46 I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 5 6.3 The ld. counsel for the assessee referring to the various pages of the paper-book has further explained that in this case, the shares were sold/transferred vide transfer deed dated 13.05.2013, whereas, the assessee had entered into an agreement for purchase of residential plot for construction of house thereon on 03.08.2012 with the Goenkas. It is not disputed by the revenue that the payment of Rs.19050000/- was made by the assessee to the land-owners towards purchase and construction cost within the stipulated time period as provided u/s 54F of the Act. It has been further explained that though the deal was finalized on 03.08.2012, however, there were certain legal/technical constraints as the development authority (ADDA) had imposed condition that the permission of transfer of the land in favour of the assessee would be granted only on completion of the construction of the property. Therefore, because of the aforesaid technical compulsions, the house was constructed first and then transferred in the name of the assessee. However, the construction was made out of the investment of the assessee, which was not disputed. The ld. counsel for the assessee has submitted that since the provisions of section 54F are beneficial provision for permitting purchase/construction of the residential house, therefore, as held time and again by various courts of law, the same are required to be liberally interpretated in this case. The ld. counsel in this case has relied upon the following case laws: 1. The Judgement of the Ld. ITAT, Chennai in Mr. Muthu Daniel Rajan vs ACIT Circle 1(1) in ITA No.1675/Chny/2019 pronounced on 31.01.2023 2. The Judgement of Hon'ble Delhi High Court in CIT vs. R.L. Sood vide [2000] 224 ITR 727 (Del) pronounced on 24.09.1999 3. The Judgement of the Ld. ITAT, Mumbai in Shri Hasmukh N. Gala vs ITO 20(1)(3) in ITA No.7512/Mum/2013 pronounced on 19.08.2015 I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 6 4. The Judgement of Hon'ble Madras High Court in CIT vs Sardarmal Kothari and Another vide [2008] 302 ITR 286 (Mad) pronounced on 17.06.2008 5. The Judgement of Hon'ble Karnataka High Court in CIT and Another vs Sambandam Udaykumar vide [2012] 345 ITR 389 (Karn) pronounced on 15.02.2012 6. The Judgement of Hon'ble Allahabad High Court in CIT Vs H.K. Kapoor (Decd.) vide [1998] 234 ITR 753 (All) pronounced on 12.08.1997 7. The Judgement of Hon'ble Karnataka High Court in CIT vs J.R. Subramanya Bhat vide [1987] 165 ITR 571 (Karn) pronounced on 09.06.1986 8. The Judgement of the Ld. ITAT, Delhi in Kapil Kumar Agarwal vs DCIT, Circle-1(1), Gurgaoon in ITA No.2630/Del/2015 pronounced on 30.04.2019 9. The Judgement of Hon'ble Madras High Court in MS. Moturi Lakshmi vs ITO vide [2020] 428 ITR 462 (Mad) pronounced on 17.08.2020 10. The Judgement of Hon'ble Delhi High Court in CIT vs Smt. Nilofer I. Singh vide [2009] 309 ITR 233 ((Del) pronounced on 27.08.2008 6.4 We find that the issue is covered by the various decisions of courts of law. The decision of the Coordinate Chennai Bench of the Tribunal in the case of ‘Mr. Muthu Daniel Rajan vs ACIT’ dated 31.01.2023 (supra) is squarely applicable to the facts and issues in the present case. The Coordinate Chennai Bench of the Tribunal while relying upon the decision of the Hon’ble Supreme Court in the case of ‘Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Another’ reported in [2012] 340 ITR 1 (SC) has held that when it comes to the beneficial provisions of section 54F of the Act, what is required to be seen is whether the assessee has invested amount for purchase of property or not? And further that the claim of benefit u/s 54F of the Act cannot be denied on the ground of technical lapses like non-registration of agreement to sale, etc. That in case, the assessee proves with evidences that finally he had registered the property in his favour and I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 7 further the investment was made within the stipulated period, then the exemption cannot be denied u/s 54F of the Act. The relevant part of the order of the Tribunal is reproduced as under: “5.6 In so far as the legal position with regard to deduction claimed u/s.54F of the Act, is concerned, the Hon'ble Supreme Court in the case of CIT v. Sanjeev Lal (supra) had considered a very similar issue and held that transfer in relation to capital asset including extinguish of any rights therein and it has been held that as execution of agreement to sale created a transfer as defined u/s.2(47) of the Act. It has been adjudicated that the date of sale agreement is effective date to be considered to enable the assessee to get the benefit of deduction u/s.54F of the Act. In so far as reliance on the decision of the Hon'ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Another reported in [2012] 340 ITR 1 (SC), we find that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Further, as per the Stamps and Registration Act, the title and interest in the property will not transfer to the buyer unless such transfer is by way of a deed, as held by the Hon'ble Supreme Court. But, when it comes to the beneficial provisions of Sec.54F of the Act, what is required to be seen is whether the assessee has invested consideration for purchase of property or not? In case, the assessee has satisfied conditions prescribed therein and invested sale consideration for purchase of residential house property, then even if some technical lapses like non-registration of agreement to sale, etc., does not disentitle assessee to claim benefit u/s.54F of the Act, in case, the assessee proves with evidences that finally he had registered the property in his favour. In this case, although, the agreement to sale was not registered, but the final Sale Deed executed in favour of purchaser, has been registered as required under the law. Therefore, in our considered view, when the assessee has filed evidences in the form of agreement to sale and if the agreement to sale date is considered, then the period of investment in new house property is less than one year before the date of sale of original asset and thus, in our considered view, the assessee is entitled for deduction u/s.54F of the Act.” 6.5 In view of the above discussion, this ground of the appeal of the assessee is accordingly allowed in favour of the assessee. 7. Ground No.2 – Vide Ground No.2, the Assessing Officer observed that though the value of the land purchased in lieu of transfer of shares was shown at Rs.2,15,00,000/-, however, the market value/stamp duty I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 8 value as determined by the stamp valuation authority was Rs.2,46,25,681/-. The market value was disputed by the assessee and therefore, the case was referred to Departmental Valuation Officer (‘DVO’). The DVO however estimated the market value of the property at Rs.2,22,38,588/-. The Assessing Officer thus added Rs.7,38,588/- invoking provisions of section 56(2)(vii)(b) of the Act. 8. The ld. CIT(A) confirmed the additions so made by the Assessing Officer. 9. The ld. counsel for the assessee has submitted that the difference between the value mentioned in the transfer deed as compared to the value determined by the DVO was less than 5%. He further referred to the provisions of section 56(2)(vii)(b) of the Act r.w.s 50C of the Act and submitted that as per the 3 rd Proviso to section 50C as inserted by the Finance Act, 2018 w.e.f. 01.04.2019, if the difference in value adopted by the stamp valuation authority and the value mentioned in the deed is less than 10% then the value in the transfer deed is to be taken, and that the same being beneficial and explanatory provision, has to be applied retrospectively. He in this respect has relied upon the decision of the Coordinate Mumbai Bench of the Tribunal in the case of ‘Shaista Irphan Mogul vs. ACIT’ in ITA No.4916/Mum/2019 dated 01.07.2021. The ld. counsel has further submitted that even otherwise, the entire receipts/value of consideration of sale of shares were invested in acquiring new house, hence no addition is called for. 10. In this case, admittedly, the difference in the value given by the DVO and the value mentioned by the assessee in the transfer deed is less than 5%. The market value determined by the DVO is purely a work of estimation only. In this case, there is a minor difference of the I.T.A. No.868/Kol/2023 Assessment Year: 2014-15 Basabdutta Dutta 9 estimation of market value of the property as declared by the assessee compared to the value estimated by the DVO. Moreover, undisputedly, the consideration received by the assessee has been invested for the purpose of construction of house amounting to Rs.19050000/-, whereas, the assessee has claimed deduction u/s 54F of the Act of Rs.1,65,52,344/- only. The assessee, otherwise, will be eligible of the aforesaid difference of the amount pointed out by the Assessing Officer towards deduction u/s 54F of the Act. In view of this, no additions are warranted on this ground also. 11. In view of our observations made above, the appeal of the assessee stands allowed. Kolkata, the 11 th July, 2024. Sd/- Sd/- [Sanjay Awasthi] [Sanjay Garg] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 11.07.2024. RS Copy of the order forwarded to: 1. Basabdutta Dutta 2. ITO, Ward-3(1), Bankura 3.CIT (A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches