SMT. SHEELA SHARMA, AJMER V. INCOME TAX OFFICER, WARD-2-2, AJMER

ITA 907/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4857 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P P MEENA JCIT DHK
• Assessee Lawyers: SUDHIR SOGANI
• Section: 54F; 148; 54; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH Y ADAV, AM VK;DJ VIHY LA-@ ITA NO. 907/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 SMT. SHEELA SHARMA, 780/31, NAND NIKETAN, NAGRA, AJMER. CUKE VS. INCOME TAX OFFICER, WARD- 2(2), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: DOKPS 0439 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SUDHIR SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI P.P. MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/10/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/10/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17/05/2018 OF LD. CIT(A), AJMER FOR THE A.Y. 2011-1 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF CLAIM O F SECTION 54F OF THE IT ACT, 1961. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD CIT(A) IS NOT JUSTIFIED IN SUSTAINING LEVY OF CAPITAL GAINS A T RS. 27,86,700/-. 3. THE ASSESSEE CRAVES TO ADD, AMEND, ALTER, INSERT , WITHDRAW ANY GROUNDS OF APPEAL BEFORE DISPOSAL OF THE APPEAL. ITA 907/JP/2018_ SHEELA SHARMA VS ITO 2 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF THE ASSES SEE IS REGARDING DISALLOWANCE OF CLAIM U/S 54 OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT). 3. THE ASSESSEE IS AN INDIVIDUAL AND SOLD AN IMMOVAB LE PROPERTY ON 27/2/2011 FOR A CONSIDERATION OF RS. 1.50 CRORES. TH E ASSESSEE WAS HAVING 1/5 TH SHARE IN THE SAID PROPERTY BEARING F-29, JAMNA LAL BAJAJ MARG, F-BLOCK, C-SCHEME, JAIPUR, ACCORDINGLY THE AS SESSEES SHARE IN THE SALE CONSIDERATION IS RS. 30.00 LACS. SINCE THE ASS ESSEE HAS NOT FILED ANY RETURN OF INCOME, THEREFORE, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT ON 30/3/2017 TO ASSESS THE CAPITAL GAIN ARI SING FROM SALE OF THE PROPERTY IN QUESTION. THE ASSESSEE CLAIMED DEDUCTION U/S 54F OF THE ACT AND THEREBY IN COMPUTATION, THE ASSESSEE HAS SHOWN N IL CAPITAL GAIN. THE ASSESSING OFFICER HAS DENIED THE CLAIM U/S 54 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOU NT IN THE CAPITAL GAIN SCHEME BEFORE DUE DATE OF FILING THE RETURN U/S 139 (1) OF THE ACT. 4. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 5. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE AFTER RECEIVING THE SALE CONSIDERATION, DE POSITED THE SAME IN THE FIXED DEPOSIT WITH STATE BANK OF INDIA AND THE FIXED DEPOSIT WAS ITA 907/JP/2018_ SHEELA SHARMA VS ITO 3 SUBSEQUENTLY USED FOR PURCHASE OF NEW RESIDENTIAL H OUSE ON 06/02/2013. THEREFORE, ONCE THE ASSESSEE HAS INVESTED THE NET PR OCEEDS WITHIN THE PERIOD OF TWO YEARS FROM THE DATE OF TRANSFER OF THE EXISTING ASSET THEN THE CLAIM OF DEDUCTION U/S 54/54F OF THE ACT CANNOT BE DENIED MERELY ON THE GROUND THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME. IN SUPPORT OF HIS CONTENTION, THE LD AR HAS RELIED ON THE FOLLOWING DECISIONS: (I) ITA NO. 4923/DEL/2010, SHRI JAGTAR SINGH CHAWLA VS ACIT ORDER DATED 30/06/2011. (2) HONBLE KARNATAKA HIGH COURT DECISION IN THE CA SE OF CIT VS. SHRI K RAMACHANDRA RAO IN ITA NO. 47 OF 2014 DECISION DATE D 14/07/2014. (3) SRI NIPUN MEHROTRA VS. ACIT (2008) 297 ITR 110. (4) ITA NO. 272/CHD/2017, MRS. SEEMA SABHARWAL VS I TO ORDER DATED 05/02/2018. 6. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT IT IS A MANDATORY CONDITION THAT IF THE ASSESSEE HAS NOT INVESTED THE SALE CONSIDERATION IN PURCHASE OF NEW HOUSE BEFORE DUE DATE OF FILING THE RETURN U/S 139(1) OF THE ACT THEN THE SAID AMOUNT IS REQUIRED TO BE DEPO SITED IN CAPITAL GAIN ACCOUNT SCHEME. THE ASSESSEE HAS UNDISPUTEDLY NOT D EPOSITED THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME AND THERE FORE, THE CLAIM OF DEDUCTION U/S 54/54F OF THE ACT IS NOT ALLOWABLE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA 907/JP/2018_ SHEELA SHARMA VS ITO 4 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE EXISTING IMMOVABLE PROPERTY WAS SOLD BY THE ASSESSEE ON 17/02/2011 AND THEREAFTER THE ASSESSEE HAS DEPOSITED THE ENTIRE SALE CONSIDERATION IN THE FIXED DEPOSIT WITH THE STATE BANK OF INDIA, THUS, IT IS CLEAR THAT THE ASSESSEE HAS NOT UTILIZE D THE SAID CONSIDERATION OF THE EXISTING ASSET FOR ANY OTHER PURPOSE BUT THE SA ME WAS KEPT IN THE FDR WITH THE BANK AND THEREAFTER THE ASSESSEE PURCHA SED THE NEW RESIDENTIAL HOUSE ON 06/2/2013. THE PURCHASE OF THE NEW HOUSE ON 06/2/2013 HAS NOT BEEN DISPUTED BY THE ASSESSING OF FICER BUT THE CLAIM OF DEDUCTION U/S 54/54F OF THE ACT WAS DENIED ON THE G ROUND THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE CAPITA L GAIN ACCOUNT SCHEME. AT THE OUTSET WE NOTE THAT THE ASSESSEE HAS SATISFIED THE SUBSTANTIAL AND PRIMARY CONDITION OF INVESTMENT OF THE SALE CONSIDERATION IN PURCHASE OF NEW RESIDENTIAL HOUSE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF TRANSFER OF THE EXISTING ASSET. ONCE TH E ASSESSEE HAS SATISFIED THE SUBSTANTIAL REQUIREMENT FOR CLAIM OF DEDUCTION U/S 54/54F OF THE ACT THEN THE NON-DEPOSIT OF THE AMOUNT IN THE CAPITAL G AIN ACCOUNT SCHEME BUT DEPOSITING THE SAME IN THE FIXED FDR WITH THE SB I WOULD NOT DISENTITLE THE ASSESSEE OF THE CLAIM U/S 54/54F OF THE ACT. TH E COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JAG MOHAN SHARMA VS ITO IN ITA NO. ITA 907/JP/2018_ SHEELA SHARMA VS ITO 5 1089/JP/2016 VIDE ORDER DATED 13/3/2018 HAS CONSIDE RED AN IDENTICAL ISSUE IN PARA 5 OF THE ORDER AS UNDER: 5. AS REGARDS THE NON DEPOSIT OF THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME, WE NOTE THAT THE ASSESSEE HAS SOLD THE AGRI CULTURAL LAND ON 30 TH NOVEMBER, 2012 AND THE HOUSE WAS PURCHASED ON 30.10 .2014. THEREFORE, THE INVESTMENT MADE BY THE ASSESSEE IS W ITHIN TWO YEARS FROM THE SALE OF THE EXISTING ASSET AND IS NOT BEYOND TH E STIPULATED PERIOD AS PROVIDED UNDER SECTION 54F OF THE ACT. THE ONLY OB JECTION RAISED BY THE AO AND LD. CIT (A) IS NON DEPOSIT OF AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME. HOWEVER, WHEN THE ASSESSEE HAS INVESTED TH E AMOUNT WITHIN THE STIPULATED PERIOD AS PROVIDED UNDER THE PROVISI ONS OF SECTION 54F, THEN THE SUBSTANTIAL REQUIREMENT AS PER SECTION 54F (1) IS SATISFIED. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SA RDARMAL KOTHARI (SUPRA) HAS HELD IN PARA 4 AS UNDER :- 4. THE REQUIREMENT OF THE PROVISION IS THAT THE A SSESSEE, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER, HAS TO C ONSTRUCT A RESIDENTIAL HOUSE IN ORDER TO BECOME ELIGIBLE FOR EXEMPTION. IN THE CASES ON HAND, IT IS NOT IN DISPUTE THAT THE ASSESSES HAVE P URCHASED THE LANDS BY INVESTING THE CAPITAL GAIN AND THEY HAVE ALSO CO NSTRUCTED RESIDENTIAL HOUSES. IN ORDER TO ESTABLISH THE SAME, THE ASSESSES SUBMITTED BEFORE THE COMMISSIONER (APPEALS) SEVERAL MATERIAL EVIDENCES, VIZ., INVITATION CARD PRINTED FOR THE HO USE WARMING CEREMONY TO BE HELD ON 12.7.2003. THE ASSESSES HAV E ALSO PRODUCED THE COMPLETION CERTIFICATES FROM THE MUNICIPAL AUTH ORITY ON 30.1.2004. ON THE BASIS OF THE ABOVE DOCUMENTS, THE COMMISSIONER (APPEALS) CONCLUDED THAT THE REQUIREMENT OF THE STA TUTORY PROVISION HAS BEEN COMPLIED WITH BY THE ASSESSES AND THAT WAS RECONFIRMED BY THE TRIBUNAL IN THE ORDERS IMPUGNED. SIMILAR VIEW WAS TAKEN BY HONBLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS. K. RAMACHANDRA RAO (SUPRA) AT PAGE 4 AS UND ER :- SUB-SECTION (4) IS ATTRACTED ONLY TO A CASE WHERE T HE SALE CONSIDERATION IS NOT UTILIZED EITHER FOR PURCHASE OR FOR CONSTRUC TION OF A RESIDENTIAL HOUSE. IT HAS NO APPLICATION TO A CASE WHERE THE AS SESSEE INVESTS THE ITA 907/JP/2018_ SHEELA SHARMA VS ITO 6 SALE CONSIDERATION DERIVED FROM THE TRANSFER EITHER IN PURCHASING THE PROPERTY OR CONSTRUCTING THE RESIDENTIAL HOUSE WITH IN THE PERIOD STIPULATED IN SECTION 54F(1). THE PROVISO TO SECTIO N 54F PUTS AN EMBARGO ON THE APPLICATION OF SECTION 54F TO CASES WHICH AR E MENTIONED IN THE SAID PROVISO. THAT IS TO BE ELIGIBLE FOR THE BENEFI T UNDER SECTION 54F(1) THE ASSESSEE SHOULD NOT BE OWNING MORE THAN ONE RES IDENTIAL HOUSE OTHER THAN THE NEW ASSET ACQUIRED OR HE SHOULD NOT PURCHASE ANY RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF RESIDENTIAL ASSET OR CONSTRUCTS ANY RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE RESIDENTIAL ASSET. IN THE ENTIRE SCHEME THERE IS NO PROHIBITION FOR THE ASSESSEE PUT TING UP CONSTRUCTION OUT OF SALE CONSTRUCTION RECEIVED BY SUCH TRANSFER OF A SITE WHICH IS OWNED BY HIM AS IS CLEAR FROM THE LANGUAGE USED. IT IS OPEN FOR THE ASSESSEE TO PUT UP A RESIDENTIAL CONSTRUCTION OR TO PURCHASE A RESIDENTIAL HOUSE. IT IS NOT THE REQUIREMENT OF LAW THAT HE SHO ULD PURCHASE A RESIDENTIAL SITE AND THEN PUTUP CONSTRUCTION. THERE FORE, IN THE INSTANT CASE ADMITTEDLY THE ASSESSEE HAS PURCHASED A VACANT SITE PRI-31.3.2001. HE SOLD THE ORIGINAL ASSET ON 27.8.2003 ON WHICH DA TE HE WAS ALREADY OWNING A SITE. IN FACT EVEN BEFORE SALE OF THE ORIG INAL ASSET HE HAD STARTED CONSTRUCTION ON SUCH SITE BY AVAILING LOAN FROM THE BANK. IN TERMS OF SECTION 54F(1) ALL INVESTMENTS MADE IN THE CONSTRUCTION OF THE RESIDENTIAL HOUSE OF THE SAID SITE WITHIN A PERIOD OF ONE YEAR PRIOR TO 27.8.2003 WOULD BE ELIGIBLE FOR EXEMPTION UNDER SEC TION 54F(1). SIMILARLY ALL INVESTMENTS IN THE SAID CONSTRUCTION AFTER 27.8.2003 WITHIN A PERIOD OF THREE YEARS THEREFROM IS ALSO ELIGIBLE FOR EXEMPTION. THEREFORE, THE ARGUMENT THAT SUCH INVESTMENT IN PUT TING UP A RESIDENTIAL CONSTRUCTION CANNOT BE MADE ON A SITE OWNED BY HIM TO BE ELIGIBLE FOR EXEMPTION IS WITHOUT ANY SUBSTANCE. BOTH THE APPELL ATE AUTHORITIES HAVE RIGHTLY EXTENDED THE BENEFIT TO THE ASSESSEE A ND THERE IS NO ERROR COMMITTED BY THEM WHICH CALLS FOR INTERFERENCE. AGAIN IN THE CASE OF FATHIMA BAI VS. ITO (SUPRA), T HE HONBLE KARNATAKA HIGH COURT HAS REITERATED ITS VIEW THAT ONCE THE EN TIRE CAPITAL GAIN WAS UTILIZED BY THE ASSESSEE BY PURCHASING A HOUSE PROP ERTY BEFORE THE EXTENDED DUE DATE UNDER SECTION 139(4), THE EXEMPTI ON UNDER SECTION 54 WOULD BE ALLOWABLE TO THE ASSESSEE. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE HAS INV ESTED THE AMOUNT WITHIN THE STIPULATED PERIOD AS PRESCRIBED UNDER SE CTION 54F AND IN VIEW ITA 907/JP/2018_ SHEELA SHARMA VS ITO 7 OF THE VARIOUS DECISIONS CITED SUPRA, WE DECIDE THI S ISSUE IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54F IN RESPECT OF THE INVESTMENT MADE IN TH E HOUSE PURCHASED ON 13 TH OCTOBER, 2014. THEREFORE, IN VIEW OF THE VARIOUS DECISIONS OF THE HO N'BLE HIGH COURT AS REFERRED AND RELIED UPON BY THE COORDINATE BENCH, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE AND DIRECT T HE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE U/S 54/54F OF THE AC T, AS THE CASE MAY BE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/10/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 TH OCTOBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. SHEELA SHARMA, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD- 2(2), AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 907/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. 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