A.Nazumudeen, CHENNAI V. ITO, Kumbakonam

ITA 965/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5801 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARV SREENIVASAN JCIT
• Assessee Lawyers: S SRIDHAR
• Section: 54F; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 965/MDS/2017 / ASSESSMENT YEAR : 2006-07 SHRI A. NAZUMUDEEN, 25, A.R. NAZIM COMPLEX, TOWN EXTENSION, MAYLLADUTHURAI, CHENNAI. [PAN: ACEPN 3878R] VS. THE INCOME TAX OFFICER, WARD -2, KUMBAKONAM. ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE )*% & / RESPONDENT BY : SHRI. ARV SREENIVASAN, JCIT & /DATE OF HEARING : 15.11.2017 & /DATE OF PRONOUNCEMENT : 20.11.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-2, THIRUCHIRAPALLI, IN ITA NO. 429/2010-11/CIT(A)- 2/TRY DATED 21.03.2017 FOR ASSESSMENT YEAR 2006-07. :-2-: ITA NO. 965/MDS/2017 2. SHRI. A. NAZUMUDEEN, THE ASSESSEE, IS THE OWNER OF A COMMERCIAL COMPLEX FILED HIS RETURN BELATEDLY ON 05.03.2009. THE AO RE-OPENED THE ASSESSMENT U/S. 148 AND COMPLETED THE RE-ASSESSMENT ON 27.12.2010. WHILE MAKING THE RE-ASSESSMENT, THE ASSESSING OFFICER NOT ED, INTER ALIA, THAT THE ASSESSEE DID NOT ADMIT CAPITAL GAIN ON THE SALE OF HIS LAND WITHIN THE SIRKALI MUNICIPALITY. WHEN HE PROPOSED TO MAKE AN ADDITION , THE ASSESSEE CLAIMED DEDUCTION U/S. 54F IN THE RE-ASSESSMENT PROCEEDINGS . SINCE, THE CLAIM WAS NOT MADE IN THE ORIGINAL RETURN, AND THE ASSESSEE W AS HAVING MORE THAN ONE RESIDENTIAL HOUSE AND OTHER COMPLIANCES AS REQUIRED U/S. 54F WERE NOT MADE, THE AO REFUSED TO GRANT THE DEDUCTION U/S. 54F AND ASSESSED THE CAPITAL GAIN. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A)-2, TRICHY AND THE CIT(A), INTER ALIA, DISMISSED THIS ISSUE. AGGRIEVE D, THE ASSESSEE FILED THIS APPEAL. 3. THE AR SUBMITTED THAT THE CIT(A) FAILED TO APPRE CIATE THAT THE CONDITIONS PRESCRIBED TO MAKE THE SAID CLAIM FOR DE DUCTION/TAX EXEMPTION WERE COMPLIED WITH CONCURRENTLY AND OUGHT TO HAVE A PPRECIATED THAT THE PROVISO TO SECTION 54F OF THE ACT WAS WRONGLY APPLI ED/PRESSED INTO SERVICE BY THE ASSESSING OFFICER IN FROM PARA 4.5 OF THE ASSES SMENT ORDER. THE CIT(A) ALSO FAILED TO APPRECIATE THAT THE PURPOSIVE CONSTR UCTION OF THE TAX EXEMPTION PROVISIONS UNDER CONSIDERATION WOULD FORTIFY THE SA ID CLAIM AND OUGHT TO HAVE APPRECIATED THAT HAVING NOT DISPUTED THE FACT OF TH E RESIDENTIAL UNITS IN ONE :-3-: ITA NO. 965/MDS/2017 FLOOR WHICH SHOULD BE CONSIDERED AS A SINGLE UNIT, THE SUSTENANCE OF REJECTION OF THE CLAIM OF TAX EXEMPTION U/S. 54F OF THE ACT W AS WRONG, ERRONEOUS, UNJUSTIFIED, INCORRECT AND NOT SUSTAINABLE IN LAW A ND THE CIT(A) FAILED TO APPRECIATE THAT THERE WAS NO VIOLATION OF THE SAID CONDITION OF NOT OWNING MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, THEREBY VITIATING T HE DECISION RENDERED. 4. PER CONTRA, THE DR INVITED OUR ATTENTION TO THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSE SSEE PURCHASED A SITE IN LAXMAN NAGAR, MAYILADUTHURAI ON 04.03.2005, CONSTRU CTED A BUILDING IN TWO FLOORS. THE CONSTRUCTION OF THE GROUND FLOOR WAS O VER IN MARCH 2006 AND HE HAS OCCUPIED IT AS PER EB CARD PRODUCED BEFORE THE AO. HE HAS CONSTRUCTED RESIDENTIAL HOUSES IN THE FIRST FLOOR AND LET OUT T O VARIOUS TENANTS, WHICH HAVE SEPARATE EB CONNECTIONS AND MUNICIPAL NUMBERS. HE SOLD THE LAND AT SIRKALI MUNICIPALITY ON 17.08.2005, BUT HAS NOT DEPOSITED T HE SALE CONSIDERATION OR THE CAPITAL GAINS IN THE CAPITAL GAINS ACCOUNT SCHE ME AS REQUIRED U/S. 54F. HE HAS NEITHER UTILISED THE SUM FOR THE CONSTRUCTION N OR COMPLETED THE CONSTRUCTION AS REQUIRED U/S. 54F. FURTHER, THE AS SESSEE OWNED MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF ORIGINAL ASSET. IN THE FACTS AND CIRCUMSTANCES, TH E CIT(A) HAS RIGHTLY DISTINGUISHED THE CASE LAW IN THE CASE OF CIT VS V. V.R. KARPAGAM (MADRAS HIGH COURT) AND HELD THAT THE ASSESSEE IS IN POSSE SSION OF A COMMERCIAL :-4-: ITA NO. 965/MDS/2017 COMPLEX IN WHICH ONE FLOOR ENTIRELY CONSISTS OF MAN Y RESIDENTIAL UNITS AND THE HENCE, THE CLAIM OF THE ASSESSEE THAT ALL THE RESID ENTIAL UNITS IS A SINGLE UNIT IS NOT ACCEPTABLE. THE CLAIM OF DEDUCTION U/S. 54F DI SMISSED WHICH IS CORRECT AND HENCE, THE ORDER OF THE CIT(A) MAY BE CONFIRMED . 4. THE AR REBUTTED SAYING THAT THE ASSESSEE IS NOT HAVING MORE THAN ONE RESIDENTIAL UNITS, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET AND THE RATIO OF THE MADRAS HIGH COU RT IN THE CASE OF CIT VS GUMANMAL JAIN REPORTED IN TCA NO 33 OF 2017, DATED 03.03.2017 (2017) 98 CCH 0093 IS APPLICABLE. 5. WE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. IT IS NOT CLEAR FROM THE ORDER, WHETHER THE ASSESSEE HAD MORE THAN ONE RESIDENTIAL UNIT, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET. THE COPIES ENCLOSE D WITH ORIGINAL RETURN AS ON 31.03.2006 SHOW THAT THE ASSESSEE IS HAVING AGRICUL TURAL LANDS, SHOP AT BIG BAZAR, ST. MAYILADUTHURAI, LAND AND BUILDING NAZIM COMPLEX, HOUSE SITE ACCOUNT ETC. FURTHER, THE ASSESSEE HAS ALSO ADMITT ED SHORT TERM CAPITAL GAINS ON SALE OF BUILDING AT 3/6 TOWN EXTENSION, MAYILADU THURAI. FURTHER, VARIOUS REQUIREMENTS U/S. 54F I.E., AS TO WHEN THE CONSTRUC TIONS OF THE GROUND FLOOR & FIRST FLOORS WERE COMPLETED, WHEN EACH OF THE UNITS WERE OCCUPIED, THE SOURCES FOR THE IMPUGNED CONSTRUCTIONS, WHETHER THE SALE CONSIDERATION OR :-5-: ITA NO. 965/MDS/2017 CAPITAL GAINS, AS THE CASE MAY BE, WAS DEPOSITED I N THE CAPITAL GAINS ACCOUNT SCHEME ETC WERE NOT CLEARLY BROUGHT ON THE ORDERS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE ORDERS OF THE LOWER AU THORITIES ARE SET ASIDE AND THE EXEMPTION CLAIM U/S. 54F IS REMITTED BACK TO TH E AO. THE AO SHALL RE- EXAMINE THE CLAIM, AFRESH, AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE 6. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 20 TH DAY OF NOVEMBER, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 20 TH NOVEMBER, 2017 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF