S Narendra S.Patel, Nagpur V. Income Tax Officer , Ward-6(3), Nagpur

ITA 96/NAG/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3076 (ITAT-NAGPUR)
• Duration Of Justice: 7 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 09-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H WANARE
• Assessee Lawyers: M MANI
• Keywords: Capital asset
• Section: 143(3); 54F; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 96/NAG/2011 / ASSESSMENT YEAR 2005-06 NARENDRA S. PATEL, 202, SHANTINATH APARTMENT NO.2, HIWARI LAY-OUT, NAGPUR-440008. PAN: ACIPP 9283 E VS. INCOME TAX OFFICER, WARD 6(3), AAYAKAR BHAWAN, CIVIL LINES, NAGPUR. ( / APPELLANT ) ( / RESPONDENT ) APPELLANT BY : SHRI M. MANI RESPONDENT BY : SHRI H. WANARE ! '#$ / DATE OF HEARING : 20-12-2012 %& ! '#$ / DATE OF PRONOUNCEMENT : 31-12-2012 '( / O R D E R PER RAJENDRA, AM CHALLENGING THE ORDER DT. 18-02-2011 OF CIT(A)-II, NAGPUR, APPELLANT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN NOT GRANTING THE EXEMPT ION U/S. 54F IN RESPECT OF AMOUNT OF RS. 2193864/-. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER MAKING AN ADDITION OF RS. 2193864/-. 3. THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE DECIS IONS OF ITAT REFERRED IN THE WRITTEN SUBMISSION OF THE ASSESSEE BEFORE CI T(A). 4. ANY OTHER GROUND THAT MAY BE TAKEN AS THE TIME OF H EARING. ITA NO. 96/NAG/2011 NARENDRA S. PATEL 2 2. ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 09-08-2005 DISCLOSING TAXABLE INCOME OF RS. 3.11 LAKHS. ASSESSING OFFICE R (AO) FINALIZED THE ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (ACT) ON 28 -12-2007 DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. 25.70 LAKHS. 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THA T IN THE AY UNDER CONSIDERATION, ASSESSEE HAD SOLD 15,001 SHARES OF H ITECH PVT. LTD., FOR RS. 42.45 LAKHS THAT WERE PURCHASED FOR RS. 15 LAKHS, RESULTI NG IN CAPITAL GAINS OF RS. 21.93 LAKHS. ASSESSEE CLAIMED DEDUCTION U/S. 54F IN RESP ECT OF INVESTMENT IN RESIDENTIAL HOUSE FOR RS. 18.48 LAKHS AND DECLARED TAXABLE LONG TERM CAPITAL GAIN (LTCG) AT RS. 3.45 LAKHS. DETAILS OF CLAIM MADE U/S. 54F WER E AS UNDER: I. INVESTMENT IN RESIDENTIAL HOUSE DURING FY 2004-05 R S. 15,48,307/- WHICH CONSIST OF COST OF PLOT OF RS. 3,85,645/- AND AMOUNT OF CONSTRUCTION MADE IN FY 2004-05 OF RS. 11,62,662/-. II. INVESTMENT MADE IN RESIDENTIAL HOUSE IN FY 2005-06 RS. 3,00,000/-. TOTAL INVESTMENT = RS. 18,48,307/- AO DENIED HIM THE BENEFIT OF SECTION 54F OF THE ACT AS HE WAS OF THE OPINION THAT INVESTMENT IN CONSTRUCTION OF HOUSE HAD TAKEN PLACE PRIOR TO THE DATE OF SALE OF ASSETS, THAT AMOUNT EXPENDED ON SUCH CONSTRUCTION WAS BY WA Y OF LOAN TAKEN FROM STATE BANK OF INDIA. AO ALSO HELD THAT THE CASES RELIED UPON BY THE ASSESSEE BOMBAY HOUSING CORPORATION (81 ITD 454); MRS. PREMA P. SHAH 282 IT R (AT) 211 (MUM), KAPOOR (H.K.)(DECD.) (ALL) [234 ITR 753], VASUDEVAN CHET TIAR (M.) (MAD) [234 ITR 705] WERE DISTINGUISHABLE ON FACTS. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE AO (DT. 05-01-2009), HE HELD THAT THE ASSESSEE HAD VIO LATED TWO CONDITIONS OF SECTION 54F NAMELY THE TIME FRAME STIPULATED FOR CONSTRUCTION O F A NEW RESIDENTIAL HOUSE AND THE USE OF BORROWED FUNDS FOR CONSTRUCTION AS AGAINST T HE SALE CONSIDERATION RECEIVED ON TRANSFER OF LONG TERM CAPITAL ASSET. HE FURTHER HE LD THAT ASSESSEE WAS IN POSSESSION OF PLOT OF LAND FROM 1998-99 ONWARDS, THAT THE COST OF LAND COULD NOT BE BROUGHT WITHIN THE PURVIEW OF THE SECTION, THAT THE LEGISLA TIVE INTENT OF SECTION 54F OF THE ACT WAS TO OFFER INCENTIVES TO INDIVIDUALS TO ACQUIRE R ESIDENTIAL HOUSES OUT OF THE SALE CONSIDERATION OF LONG TERM CAPITAL ASSETS AND NOT T O ENABLE TO SET OFF THE VALUE OF AN EXISTING PLOT OF LAND WHEN A LONG TERM CAPITAL ASSE T WAS SOLD AT A FUTURE DATE, THAT THE AO WAS RIGHT IN HOLDING THAT THE COST OF PLOT O F LAND (RS. 3.85 LAKHS) WAS NOT ELIGIBLE FOR DEDUCTION U/S. 54F OF THE ACT. HE ALS O HELD THAT CONSTRUCTION OF THE NEW PROPERTY HAD COMMENCED PRIOR TO THE DATE OF SALE OF THE ASSETS-IN-QUESTION, THAT AMOUNT INVESTED IN CONSTRUCTION OF THE HOUSE FROM T HE LOAN TAKEN FROM THE STATE BANK OF INDIA AMOUNTING TO RS. 15.5 LAKHS, THAT AN AMOUN T OF RS. 11.62 LAKHS HAD BEEN INVESTED IN CONSTRUCTION OF THE RESIDENTIAL HOUSE I N FINANCIAL YEAR 2004-05 OUT OF THE LOAN TAKEN FROM THE BANK, THAT THE DATE OF SALE OF SHARE WAS 31-03-2005, THAT THE ENTIRE INVESTMENT IN FINANCIAL YEAR 2004-05 WAS MADE PRIOR TO THE DATE OF SALE OF SHARES, THAT ASSESSEE HAD NOT UTILIZED THE AMOUNT RECEIVED OUT O F SALE CONSIDERATION IN THE CONSTRUCTION OF THE HOUSE, THAT ASSESSEE WHILE CLAI MING DEDUCTION U/S. 54F OF THE ACT HAD ALSO SOUGHT BENEFIT OF CLAIMING INTEREST U/S. 2 4B ON THE SAME BORROWED FUNDS, THAT ITA NO. 96/NAG/2011 NARENDRA S. PATEL 3 ASSESSEE HAS TRIED TO AVAIL UNDUE BENEFIT UNDER TWO DIFFERENT SECTIONS OF THE ACT ON THE SAME AMOUNT, THAT FACTS OF THE CASE OF MRS. PREMA P . SHAH (SUPRA) WERE NOT APPLICABLE IN THE CASE UNDER CONSIDERATION AS THE CASES OF PRE MA P. SHAH (SUPRA) HAD BEEN DISTINGUISHED BY THE G BENCH OF ITAT, MUMBAI IN T HE CASE OF MILAN SHARAD RUPAREL (121 TTJ 770). FINALLY, HE HELD THAT ASSES SEE WAS NTO ENTITLED TO THE INVESTMENT MADE IN AY 2005-06 ALSO BECAUSE PROVISIO NS OF SECTION 54F (4) HAD NOT BEEN COMPLIED WITH, THAT THE PROVISIONS OF SECTION 54F(4) ONLY SPEAKS ABOUT THE UN- UTILIZED AMOUNT OF THE SALE PROCEEDS, THAT THE AMOU NT HAD BEEN INVESTED IN THE MONTH OF APRIL 2005, THAT THE DUE DATE OF FURNISHING OF R ETURN WAS 31-07-2005, THAT THE AMOUNT OF SALE PROCEEDS INVESTED IN CONSTRUCTION PR IOR TO THE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT WAS ELIGIBLE FOR REDU CTION. HE DIRECTED THE AO TO ALLOW RELIEF U/S. 54F OF THE ACT PROPORTIONATELY AFTER EX AMINING THE AMOUNT INVESTED IN CONSTRUCTION OF HOUSE OUT OF SALE CONSIDERATION. 5. BEFORE US, AUTHORSIED REPRESENTATIVE (AR) SUBMITTED THAT IN BOTH THE GROUNDS OF APPEAL, AMOUNT DISPUTED SHOULD BE READ AS RS. 11,62 ,662/- INSTEAD OF RS. 21,93,864/-. HE SUBMITTED THAT COST OF CONSTRUCTION (RS. 11.62 L AKHS) SHOULD BE ALLOWED U/S. 54F OF THE ACT, THAT ASSESSEE HAD FULFILLED ALL THE CON DITIONS STIPULATED IN THE SAID SECTION. DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE OR DER OF THE FAA. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PUT BEFORE US. WE FIND THAT THE FAA IN PARA NO. 3.11 (PG.10) HAS GIVE N DIRECTION TO THE AO TO ALLOW PROPORTIONATE RELIEF 54F OF THE ACT. AFTER CONSIDE RING THE JUDGMENT OF MILAN SHARAD RUPAREL (SUPRA), WE ARE OF THE OPINION THAT ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND HENCE REQUIRES NO INTERFERENCE FROM OUR SIDE. AO IS DIRECTED TO PASS CONSEQUENTIAL ORDER IN LIGHT OF THE ORDER OF T HE FAA, IF SAME HAS NOT BEEN PASSED. GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE REJECTE D. AS A RESULT, APPEAL FILED BY THE ASSESSEE STAN DS DISMISSED. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 31 ST DAY OF DECEMBER, 2012. )* ! *,- . '( ! %& 31 1' *,2012 & ! . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) '6 / JUDICIAL MEMBER $ '6 / ACCOUNTANT MEMBER )* MUMBAI, 1' DATE: 31 ST DECEMBER, 2012 TNMM ITA NO. 96/NAG/2011 NARENDRA S. PATEL 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE 7' ' //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT