Gobindram Hathiramani Chandru, CHENNAI V. ITO International Taxation Ward 1(1), CHENNAI

ITA 956/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2148 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 143(3); 54F; 13; 54

Judgement Text

, ( ) , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH, CHENNAI , BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT ./ ITA NO.: 956 / CHNY / 2018 / ASSESSMENT YEAR: 2012-13 LATE GOBINDRAM HATHIRAMANI CHANDRU, REP.BY LEGAL HEIR PRITI MANOHAR , HATHI VILLA, PLOT NO.861, 13 TH MAIN ROAD, ANNA NAGAR, CHENNAI 600 040 PAN : AGKPP3895Q V. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD -1(1), CHENNAI. ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI N. ARJUN RAJ, CA /RESPONDENT BY : SHRI A. SUNDARARAJAN, ADDL.CIT / DATE OF HEARING : 13.02.2020 / DATE OF PRONOUNCEMENT : 17.03.2020 / O R D E R 1. THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-16, CHENNAI, IN ITA NO.103/CIT(A)-16/2013-14 DATED 12.02.2018. THE ASSESSMENT WAS FRAMED BY INCOME TAX OFFICER, (INTERNATIONAL TAXATION) WARD -1(1), CHENNAI FOR THE A.Y. 2013-14 VIDE ORDER DATED 30.11.2016 U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2 I.T.A. NO.956/CHNY/2018 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE AGAINST THE ORDER OF CIT(A) IS CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN SUSTAINING THE CLAIM OF EXEMPTION U/S.54F OF THE ACT IN THE COMPUTATION OF LONG TERM CAPITAL GAIN REINVESTED AGAINST PURCHASE OF HOUSE PROPERTY. FOR THIS ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE RELEVANT GROUNDS ARE AS UNDER:- 2. THE CIT(APPEALS) ERRED IN SUSTAINING THE RESTRICTION OF THE CLAIM FOR TAX EXEMPTION U/S 54F OF THE ACT IN THE COMPUTATION OF LONG TERM CAPITAL GAINS AND CONSEQUENTLY ERRED IN SUSTAINING THE ADDITION OF RS.25,02,243/- WHICH SUM WAS CONSTRUED AS EXCESS CLAIM FOR DEDUCTION WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE MISCONSTRUCTION OF THE PROVISIONS OF SECTION 54F OF THE ACT WAS WHOLLY UNJUSTIFIED AND FURTHER OUGHT TO HAVE APPRECIATED THAT THE FACTUAL MISTAKE IN UNDERSTANDING THE CASE OF THE APPELLANT/COMPUTATION OF LONG TERM CAPITAL GAINS FURNISHED BY THE APPELLANT WOULD VITIATE THE DECISION RENDERED IN RELATION THERETO. 4. THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE MISTAKE IN THE COMPUTATION OF LONG TERM CAPITAL GAINS U/S 54F OF THE ACT WAS PATENT/OBVIOUS AND OUGHT TO HAVE APPRECIATED THAT THE COST OF NEW ASSET IN THE STATUTORY FORMULA WAS WRONGLY TAKEN AS RS.1,16,00,000/- WHICH REPRESENTED THE AMOUNTS INVESTED IN THE CAPITAL GAINS ACCOUNT SCHEME AS AGAINST THE ACTUAL REINVESTMENT AT RS.1,48,42,691/- THEREBY VITIATING THE WRONG COMPUTATION OF THE PROPORTIONATE DEDUCTION U/S 54F OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE WAS OWNER OF 2/3 RD SHARE OF ONE COMMERCIAL PROPERTY AT CAREX CENTRE, #244, ANNA SALAI, THOUSAND LIGHTS, CHENNAI-600 006 AND ASSESSEE SOLD HIS SHARE FOR A 3 I.T.A. NO.956/CHNY/2018 SUM OF RS.1.5 CRORES VIDE SALE DEED DATED 30.03.2012. AFTER CLAIMING EXPENSES INCURRED ON SALE OF RS.1,21,241/-, THE NET SALE CONSIDERATION CONSIDERED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN WAS RS.1,48,78,755/-. THE ASSESSEE KEPT THE ENTIRE NET CONSIDERATION IN HIS SAVINGS BANK ACCOUNT WITH INDIAN BANK TILL THE PURCHASE OF NEW ASSET AND NOT UTILIZED FOR ANY OTHER PURPOSE. SUBSEQUENTLY, A SUM OF RS.1.16 CRORE WAS TRANSFERRED FROM HIS SAVINGS BANK ACCOUNT TO CAPITAL GAINS ACCOUNT SCHEME OF THE BANK ON 30.08.2012. THE ASSESSEES CONTENTION BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) WAS THAT THE ENTIRE FUNDS RECEIVED ON SALE OF PROPERTY WAS LYING IN THE BANK ACCOUNT AND THE ASSESSEE HAS NOT DIVERTED OR UTILIZED THE NET SALE CONSIDERATION FOR ANY PURPOSE UNTIL THE NEW RESIDENTIAL PROPERTY WAS PURCHASED BY THE ASSESSEE ON 12.10.2012. THE ASSESSEE COMPUTED THE NET CONSIDERATION AFTER CLAIM OF EXPENSES AT RS.1,48,78,755/- AND LONG TERM CAPITAL GAIN ARISING ON THIS TRANSACTION WAS COMPUTED AT RS.1,13,55,000/-. THE ASSESSEE PURCHASED NEW ASSET BEING A RESIDENTIAL HOUSE [ADMITTED BY ASSESSING OFFICER AS WELL AS BY CIT(A)] ON 12.10.2012 FOR A TOTAL CONSIDERATION OF RS.1,48,42,691/- AND CLAIMED THE INVESTMENT AS DEDUCTION U/S.54F OF THE ACT, ON ACCOUNT OF INVESTMENT OF LONG TERM CAPITAL GAIN IN PURCHASE OF NEW ASSET. THE ASSESSING OFFICER AND CIT(A), BOTH REJECTED THE ASSESSEES CLAIM OF EXEMPTION ON ACCOUNT OF LONG TERM CAPITAL GAIN AS INVESTMENT IN PURCHASE OF NEW RESIDENTIAL HOUSE BY 4 I.T.A. NO.956/CHNY/2018 QUOTING THE PROVISIONS OF SECTION 54F(4) OF THE ACT, THAT THE NET CONSIDERATION WHICH IS NOT UTILIZED BY HIM FOR PURCHASE OF NEW ASSET BEFORE THE DUE DATE OF FURNISHING THE RETURN OF INCOME U/S.139(1) OF THE ACT, NOR THE AMOUNT WAS DEPOSITED BY HIM BEFORE FURNISHING OF SUCH RETURN OF INCOME IN TO CAPITAL GAIN ACCOUNT SCHEME NOT LATER THAN THE DUE DATE APPLICABLE U/S.139(1) OF THE ACT. THEREBY, ACCORDING TO ASSESSING OFFICER AND CIT(A) AS SUCH THE AMOUNT ALREADY UTILIZED FOR PURCHASE OF NEW ASSET HAS NOT FULLY BEEN DEPOSITED IN SUCH SCHEME ON DUE DATE AND ONLY THE AMOUNT OF RS.1.16 CRORE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S.54F OF THE ACT. ACCORDINGLY, THE EXCESS CLAIM OF DEDUCTION U/S.54F OF THE ACT, WAS DISALLOWED AMOUNTING TO RS.25,02,243/- AND THE SAME WAS CONFIRMED BY CIT(A). AGGRIEVED ASSESSEE CAME IN APPEAL BEFORE TRIBUNAL. 4. I HAVE HEARD RIVAL CONTENTION AND PERUSED THE MATERIAL PLACED BEFORE ME. I NOTED THAT THE ASSESSEE HAS MADE INVESTMENT OF THE ENTIRE CONSIDERATION BEING PURCHASE IN NEW PROPERTY ON 12.10.2012, WHICH WAS SOLD ON 30.03.2012. NO DOUBT THE INVESTMENT IN CAPITAL GAIN ACCOUNT SCHEME WAS MADE ON 30.08.2012 AMOUNTING TO RS.1.16 CRORE. ONCE THE ASSESSEE HAS INVESTED THE FULL AMOUNT IN PURCHASE OF THE NEW PROPERTY WITHIN THE TIME PRESCRIBED U/S.54F OF THE ACT, I.E., ON 12.10.2012 AMOUNTING TO RS.1,48,42,691/-, THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S.54F OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE 5 I.T.A. NO.956/CHNY/2018 ALSO RELIED ON THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF VENKATA DILIP KUMAR VS. CIT, REPORTED IN 419 ITR 298 (MADRAS), WHEREIN IT WAS HELD THAT THE AMOUNT FOR WHICH DEDUCTION WAS SOUGHT FOR U/S.54 OF THE ACT WAS UTILIZED EITHER FOR PURCHASING OR CONSTRUCTING RESIDENTIAL HOUSE WITHIN TIME PRESCRIBED U/S.54(1) OF THE ACT, ASSESSEE COULD NOT BE DENIED BENEFIT OF SECTION 54 OF THE ACT FOR MERE NON- COMPLIANCE OF A PROCEDURAL REQUIREMENT U/S.54(2) OF THE ACT. HENCE, PLACING RELIANCE ON THE JURISDICTIONAL HIGH COURT IN THE CASE OF VENKATA DILIP KUMAR, SUPRA , I DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE WHICH IS AS PER THE PROVISIONS OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH, 2020 AT CHENNAI. SD/- ( ) (MAHAVIR SINGH) / VICE PRESIDENT /CHENNAI, /DATED, THE 17 TH MARCH, 2020 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF.