Alagappan Natarajan, CHENNAI V. ITO Non Corp Ward 3(4), CHENNAI

ITA 904/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4345 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SRINIVASA RAO
• Assessee Lawyers: M ABHISHEK
• Keywords: Capital asset; Cost of acquisition
• Section: 80C; 54F; 234B

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A. NO. 904/CHNY/2018 /ASSESSMENT YEAR: 2013-14 SHRI ALAGAPPAN NATARAJAN, C/O VICTOR GRACE & CO., SPENCER PLAZA, O-704, 769, ANNA SALAI, CHENNAI -02. [PAN:AACPN7561M] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 3(4), CHENNAI. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI M. ABHISHEK, C.A. / RESPONDENT BY : SHRI M. SRINIVASA RAO, CIT / DATE OF HEARING : 31.01.2019 /DATE OF PRONOUNCEMENT : 14.02.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 4, CHENNAI, DATED 19.09.2017 RELEVANT TO THE ASSESSMENT YEAR 2013-14. THE EFFECTIVE GROUNDS RAISED IN THE APPEAL OF THE ASSESSEE ARE THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE DEVELOPMENT CHARGES OF .6,98,875/- PAID BY THE ASSESSEE AT THE TIME OF ACQUISITION OF THE ORIGINAL CAPITAL ASSET AND RESTRICTING THE CLAIM OF EXEMPTION UNDER SECTION 54F OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. I.T.A. NO. 904/CHNY/18 2 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS CLAIMED THE COST OF ACQUISITION [BEFORE INDEXATION] OF .9,42,735/-. HOWEVER, THE ASSESSING OFFICER HAS TAKEN THE COST OF ACQUISITION OF THE PROPERTY AT .2,21,400/-, BEING PURCHASE CONSIDERATION BY DISALLOWING STAMP PAPER COST, REGISTRATION CHARGES PAID AND DEVELOPMENT CHARGES PAID BY THE ASSESSEE. IT IS THE SUBMISSION THAT THE STAMP DUTY AS WELL AS REGISTRATION CHARGES PAID BY THE ASSESSEE SHOULD BE ADDED TO THE COST OF THE ASSET AND SHOULD HAVE BEEN TAKEN AS COST OF ACQUISITION. IT WAS ALSO SUBMITTED THAT THE ASSESSEE PAID THE SUM OF .6,96,875 TOWARDS DEVELOPMENT OF THE PROPERTY TO THE VERY SAME SELLER AND ON THE VERY SAME DATE THROUGH CHEQUE AND THEREFORE THE SAME SHOULD ALSO BE TAKEN AS COST OF THE PROPERTY PURCHASED. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY EXPLANATION WITH THE SUPPORT OF BILLS/VOUCHERS TOWARDS COST OF IMPROVEMENTS MADE ON THE VACANT LAND AS ADMITTEDLY, THE ASSESSEE SOLD THE VACANT LAND ONLY. PAYMENT BY CHEQUE ALONE IS NOT SUFFICIENT TO CLAIM THE EXPENDITURE. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO THE COST OF ACQUISITION OF THE PROPERTY, BESIDES TAKING THE PURCHASE I.T.A. NO. 904/CHNY/18 3 CONSIDERATION PAID UNDER THE SALE DEED, THE REGISTRATION CHARGES AND STAMP DUTY PAID BY THE ASSESSEE ARE ALSO INCLUDED SUBJECT TO THE CONDITION THAT THE ASSESSEE SHOULD NOT HAVE BEEN CLAIMED DEDUCTION UNDER SECTION 80C OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO VERIFY AND ALLOW THE CLAIM OF STAMP DUTY AND REGISTRATION CHARGES, IF THE ASSESSEE HAS NOT CLAIMED DEDUCTION UNDER SECTION 80C OF THE ACT. WITH REGARD TO THE PAYMENT OF DEVELOPMENT CHARGES, IN THE GROUNDS OF APPEAL AT GROUND NO. 5, THE ASSESSEE HAS RAISED THAT THE AUTHORITIES BELOW HAVE OVERLOOKED THE LOAN SANCTION LETTER, LEDGERS, BOOKS OF ACCOUNTS, REGULARLY MAINTAINED BY THE ASSESSEE AND OTHER INFORMATION FURNISHED TOWARDS DEVELOPMENT CHARGES PAID. AS CONTENDED BY THE LD. DR, THE PAYMENT OF DEVELOPMENT CHARGES THROUGH CHEQUE ALONE IS NOT SUFFICIENT TO ADMIT THE CLAIM. MOREOVER, THE ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE TRIBUNAL WITH REGARD TO THE DEVELOPMENT CHARGES PAID. SINCE SPECIFIC GROUND HAS BEEN RAISED BEFORE THE TRIBUNAL, THE ASSESSING OFFICER IS DIRECTED TO VERIFY AS TO WHETHER THE ASSESSEE HAS ACTUALLY INCURRED ANY DEVELOPMENT CHARGES WITH CONCRETE EVIDENCE BEFORE SALE AND ALLOW THE SAME IF NOT CLAIMED DEDUCTION UNDER ANY PROVISIONS OF THE ACT. THUS, THE GROUND RAISED BY THE ASSESSE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 904/CHNY/18 4 5. WITH REGARD TO THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54F OF THE ACT, THE ASSESSEE HAS CLAIMED THE ENTIRE CAPITAL GAINS OF .55,65,205/- UNDER SECTION 54F OF THE ACT, WHEREAS, THE ASSESSING OFFICER HAS RESTRICTED THE DEDUCTION TO THE AMOUNT WHICH WAS INVESTED IN THE CONSTRUCTION OF THE NEW HOUSE PROPERTY AFTER THE DATE OF SALE OF THE ORIGINAL ASSET ON 20.03.2013 AND BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. BEFORE THE LD. CIT(A), BY REFERRING THE DECISION OF THE TRIBUNAL IN THE CASE OF SARASWATHY V. ITO IN I.T.A. NO. 1170/MDS/2016 DATED 20.01.2017, THE ASSESSEE PRAYED FOR ALLOWING THE BENEFIT OF INVESTMENT MADE IN ACQUIRING NEW PROPERTY FROM THE DATE OF SALE OF THE ORIGINAL ASSET TILL THE EXTENDED DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139(4) OF THE ACT. ACCORDINGLY, BY FOLLOWING THE ABOVE ITAT ORDER, THE LD. CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO VERIFY THE RELEVANT DETAILS TO ASCERTAIN THE EXACT AMOUNT OF INVESTMENT MADE FROM THE DATE OF SALE OF THE ORIGINAL ASSET TILL THE EXTENDED DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139(4) OF THE ACT AND ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. 5.1 HOWEVER, BY WAY OF GROUNDS OF APPEAL, THE ASSESSEE CLAIMS EXEMPTION UNDER SECTION 54F OF THE ACT ON THE REINVESTMENT OF .17.00 LAKHS MADE ON 21.11.2012 AND ALSO CLAIMS FOR THE REINVESTMENT MADE I.T.A. NO. 904/CHNY/18 5 ONE YEAR BEFORE THE DATE OF SALE OF THE ORIGINAL CAPITAL ASSET. FOR INSTANT REFERENCE, THE RELEVANT PROVISIONS OF SECTION 54F OF THE ACT ARE REPRODUCED AS UNDER: 54F. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR [TWO YEARS] AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45: [PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; IN VIEW OF THE ABOVE PROVISIONS, THE ASSESSEE IS EITHER ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 54F OF THE ACT ONE YEAR PRIOR TO THE DATE OF SALE OF THE ORIGINAL ASSET ON 20.03.2013 OR THE INVESTMENTS MADE IN THE NEW I.T.A. NO. 904/CHNY/18 6 PROPERTY FROM THE DATE OF WALE OF THE ORIGINAL ASSET TILL THE EXTENDED DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139(4) OF THE ACT AND THEREFORE, THE ASSESSEE CANNOT CLAIM THE ENTIRE INVESTMENTS ON BOTH COUNTS. 6. WITH REGARD TO PAYMENT OF INTEREST UNDER SECTION 234B OF THE ACT, IF AN ASSESSEE, WHO IS LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 OF THE ACT HAS FAILED TO PAY SUCH TAX OR, WHERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTION 210 OF THE ACT IS LESS THAN NINETY PER CENTS OF THE ASSESSED TAX, THE ASSESSEE IS LIABLE TO PAY INTEREST UNDER SECTION 234B OF THE ACT WHICH IS MANDATORY AND THEREFORE, NOT ARBITRARY OR BAD IN LAW. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT CONTROVERT THE ABOVE FACTS PROVIDED IN THE ACT. THUS, THE LEVY OF INTEREST UNDER SECTION 234B OF THE ACT CANNOT BE CANCELLED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 14 TH FEBRUARY, 2019 IN CHENNAI. SD/ - SD/ - (INTURI RAMA RAO) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 14.02.2019 VM/- I.T.A. NO. 904/CHNY/18 7 /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.