Sri B.Suman, Visakhapatnam V. THE ITO, WARD - 3(2), Visakhapatnam

ITA 98/VIZ/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8922 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R S NARAYAN
• Keywords: Gift
• Section: 54F; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 98/VIZ/2014 (ASST. YEAR : 2010-11) SRI BOLLINA SUMAN, D.NO.49-54-15, B.S. LAYOUT, SEETAMMADHARA, VISAKHAPATNAM. V. ITO, WARD-3(2), VISAKHAPATNAM. PAN NO. AHDPB 1719 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADVOCATE. DEPARTMENT BY : SHRI S.R.S. NARAYAN SR.DR DATE OF HEARING : 22/03/2017. DATE OF PRONOUNCEMENT : 28/04/2017. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM, DATED 17/02/2014 FOR THE ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 30/09/2010 UNDER SECTION 139(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT'). IN THE RETURN OF INCOME, ASSESSEE HAS ESTIMATED THE COST OF CONSTRUCTION, WHICH IS GOING TO BE INCURRED AND CLAIMED BENEFIT UNDER SECTION 54F OF THE ACT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBMIT DETAILED NOTE ON THE 2 ITA NO.98/VIZ/2014 (BOLLINA SUMAN) CAPITAL GAINS INCOME. IN RESPONSE TO THAT, ASSESSEE SUBMITTED THE FOLLOWING DETAILS:- I STATE THAT I SOLD RESIDENTIAL LAND OF 560.83 SQ YARDS AT MADHAVADHARA, VISAKHAPATNAM FOR AN AMOUNT OF RS. 72,84 803 ON 12-11-2009, FURTHER I CLAIMED COST OF INDEXATION OF RS 19,25,141 AND ARRIVED CAPITAL GAINS OF RS 53,59, 662. I SUBMIT THAT I OWN LAND OF 1,228.16 SQ. YARDS AT PLOT NO.11 AND 12 AT GANTLAM VILLAGE, DENKADA MANDAL, VIZIANAGARAM DT., WHICH WAS RECEIVED AS GIFT FROM MY FATHER ON 29-11-2009. I STARTED CONSTRUCTION OF RESIDENTIAL BUILDING BY APPLYING BUILDING PLAN TO GRAMA PANCHYAT ON SAID LAND FROM 15-12-2009 AND ESTIMATED THE COST OF CONSTRUCTION AT RS.41,72,000 FURTHER AS THE GIFT DEED IS NOT REGISTERED AND SECRETARY OF PANCHAYAT REQUESTED ME TO SUBMIT REGISTERED DEED FOR PLAN APPROVAL DOING SO. I GOT MY BUILDING PLAN APPROVED ON 24-6-2010, MEANWHILE I INVESTED IN CONSTRUCTION OF HOUSE DURING THE F YS 2009-10, 2010- 11 AND 2011-12 AS FOLLOWS:- 1. DURING F.Y. 2009-10 RS. 2,05,395 2. DURING F.Y. 2010-11 RS. 34,20,376 3. DURING F.Y. 2011-12 RS. 8,52,316 (CONSTRUCTION COMPLETED ON 9/2011) --------------- TOTAL RS. 44,78,087 I SUBMIT THAT AS PER SECTION 54 FOR EXEMPTION OF CAPITAL PINS INVESTED IN CONSTRUCTION OF RESIDENTIAL HOUSE PROPERTY WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER AND THE ENTIRE INVESTMENT IS EXEMPTED AND I SOLD MY LAND ON 12/11/2009 AND FURTHER COMPLETED CONSTRUCTION ON SEPTEMBER 2011 I.E., CONSTRUCTION COMPLETED WITHIN TWO YEARS. I STATE THAT AS THE LONG TERM CAPITAL GAINS ARRIVED AT RS. 53,59,662 AND COST OF RESIDENTIAL CONSTRUCTION COMES AROUND RS. 44,78,087 OUT OF WHICH I CLAIMED FOR EXEMPTION U/S 54 OF RS 41,72,000 (AS ESTIMATED AT THE TIME OF FILING OF ROI) AND BALANCE OF RS 11,87,662 I OFFERED TO CAPITAL GAINS TAX AND PAID CAPITAL GAINS TAX ACCORDINGLY. THE ASSESSING OFFICER AFTER CONSIDERING THE ABOVE DETAILS, CALLED UPON THE ASSESSEE TO EXPLAIN THAT AS TO HOW ELIGIBLE FOR EXEMPTION OF 41,72,000/- AND ONLY OF 2,05,395/- WAS SPENT UPTO THE DATE OF FILING OF THE RETURN. 3. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER SECTION 54F(4) OF THE ACT, THE AMOUNT OF NET CONSIDERATION, WHICH IS NOT APPROPRIATED 3 ITA NO.98/VIZ/2014 (BOLLINA SUMAN) BY THE ASSESSEE TOWARDS PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE, ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN. BUT, THE ASSESSEE HAS NOT INVESTED THE BALANCE AMOUNT OF RS. 39,66,605/-, WHICH WAS NOT APPROPRIATED TOWARDS THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE IN THE CAPITAL GAINS ACCOUNT SCHEME BEFORE FILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11. SINCE ASSESSEE FAILED TO INVEST SALE PROCEEDS IN THE CAPITAL GAIN ACCOUNT SCHEME, HE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 54F OF THE ACT. 4 . IN RESPONSE TO THE SHOW-CAUSE NOTICE, IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT AS PER SECTION 54F, EXEMPTION IS AVAILABLE FOR ALL THE AMOUNTS UTILIZED FOR PURCHASE / CONSTRUCTION OF NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN UNDER SECTION 139. FOR THIS ALTERNATIVE, BOTH RETURNS FILED UNDER SECTION 139(1) AND 139(4) CAN BE CONSIDERED. THEREFORE, THE AMOUNT UTILIZED UPTO 31/03/2012 I.E. THE LAST DAY OF FURNISHING RETURN OF INCOME UNDER SECTION 139(4) FOR THE ASSESSMENT YEAR 2010-11 HAS TO BE CONSIDERED FOR THE TIME LIMIT. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DENIED EXEMPTION UNDER SECTION 54F ON THE GROUND THAT ASSESSEE HAS NOT INVESTED THE AMOUNT AS SPECIFIED IN SECTION 54F OF THE ACT. 5. ON APPEAL, LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE BENEFIT UNDER SECTION 54F TO THE EXTENT OF INVESTMENT MADE BY THE 4 ITA NO.98/VIZ/2014 (BOLLINA SUMAN) ASSESSEE UPTO 30/09/2010 SUBJECTED TO PRODUCTION OF COMPLETION OF CERTIFICATE BY THE ASSESSEE. 6. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 7 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS CASE, THE ASSESSEE HAS FILED A RETURN OF INCOME UNDER SECTION 139(1) AND CLAIMED BENEFIT UNDER SECTION 54F BY ESTIMATING THE COST OF CONSTRUCTION. THOUGH, ASSESSEE FILED RETURN OF INCOME UNDER SECTION 139(1), THE TIME LIMIT AVAILABLE FOR HIM TO INVEST ON THE COST OF CONSTRUCTION OF THE BUILDING UNDER SECTION 139(4) OF THE ACT. IN SUPPORT, HE RELIED UPON THE FOLLOWING CASE-LAWS:- 1) CIT VS. RAJESH KUMAR JALAN [(2006) 286 ITR 274 (GAUHATI)] 2) CIT VS. MS. JAGRITI AGGARWAL [(2011) 339 ITR 610] 3) FATHIMA BAI VS. ITO [(2009) 32 DTR (KAR.) 243] 4) ITO VS. SAPANA DIMRI [(2012) 31 CCH 107 (DEL. TRIB.)] 5) NIPUN MEHROTRA VS. ACIT [(2008) 113 (BANG.) 223] 8 . ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDERS PASSED BY THE AUTHORITIES BELOW. 9 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 10. THE ASSESSEE HAS FILED RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT BY ESTIMATING THE COST OF CONSTRUCTION OF BUILDING AND CLAIMED BENEFIT UNDER SECTION 54F. THE CLAIM OF THE ASSESSEE WAS DENIED BY THE ASSESSING OFFICER ON THE GROUND THAT RETURN OF INCOME FIELD BY THE ASSESSEE WAS ON 30/09/2010. ON THE DATE OF FILING OF RETURN, THE 5 ITA NO.98/VIZ/2014 (BOLLINA SUMAN) ASSESSEE ONLY INCURRED EXPENDITURE TOWARDS COST OF CONSTRUCTION OF 2,05,395/- AND ALLOWED ONLY THE SAME AMOUNT. THE BALANCE AMOUNT OF 39,66,605/- NOT APPROPRIATED BEFORE FILING OF RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11, BENEFIT UNDER SECTION 54F WAS DENIED. ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. WE FIND THAT, TO CLAIM BENEFIT UNDER SECTION 54F, THE TIME LIMIT HAS BEEN PRESCRIBED IN SECTION 139 OF THE ACT. VARIOUS COURTS HAVE BEEN INTERPRETED THAT SECTION 54F BEING A BENEFICIAL PROVISION, IT HAS TO BE CONSTRUED LIBERALLY AND EXTENDED TIME LIMIT AS PROVIDED UNDER SECTION 139(4) OF THE ACT. 11. IN THE CASE OF RAJESH KUMAR JALAN (SUPRA), THE HON'BLE GAUHATI HIGH COURT HELD THAT ASSESSEE FULFILLED THE REQUIREMENT OF DEPOSITING THE UNUTILIZED PORTION OF THE CAPITAL GAIN UNDER SECTION 54 OF THE ACT ON SALE OF RESIDENTIAL PROPERTY AS NOTIFIED UPTO THE EXPIRY OF TIME LIMIT FOR FILING OF RETURN OF INCOME UNDER SECTION 139(4). FROM THE ABOVE, IT IS VERY CLEAR THAT THE HONBLE GAUHATI HIGH COURT HAS HELD THAT THE TIME LIMIT AVAILABLE FOR THE ASSESSEE TO INVEST UNUTILIZED PORTION OF THE CAPITAL GAIN AS PER TIME LIMIT PROVIDED UNDER SECTION 139(4) OF THE ACT. 12. IN THE CASE OF MS. JAGRITI AGGARWAL (SUPRA), THE HON'BLE PUNJAB & HARYANA HIGH COURT HELD THAT SUB-SECTION (4) OF SECTION 139 IS, IN FACT, A PROVISO TO SUB-SEC (1) OF SECTION 139 PROVIDES FOR EXTENSION IN PERIOD OF DUE DATE FOR FILING THE RETURN IN CERTAIN CIRCUMSTANCES AND, THEREFORE, EXEMPTION UNDER SECTION 54 WAS ALLOWABLE WHERE THE ASSESSEE HAD 6 ITA NO.98/VIZ/2014 (BOLLINA SUMAN) PURCHASED NEW PROPERTY BEFORE EXTENDED DUE DATE OF FILING OF RETURN AS PER SECTION 139(4) AND FILED RETURN WITHIN SUCH EXTENDED TIME. 13. IN THE CASE OF FATHIMA BAI (SUPRA) THE HON'BLE KARNATAKA HIGH COURT HELD THAT ASSESSEE HAVING UTILIZED THE ENTIRE CAPITAL GAINS BY PURCHASING A HOUSE PROPERTY BEFORE THE EXTENDED DUE DATE UNDER SECTION 139(4), SHE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. 14 . KEEPING IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS, WE ARE OF THE OPINION THAT TO CLAIM EXEMPTION UNDER SECTION 54 ONE HAS TO BE CONSIDERED THE EXTENDED TIME PERIOD PROVIDED IN SECTION 139(4) AND NOT IN SECTION 139(1). IN THIS CASE, THOUGH THE ASSESSEE HAS FILED THE RETURN OF INCOME UNDER SECTION 139(1) BY ESTIMATING THE COST OF CONSTRUCTION, HE WAS NOT ABLE TO UTILIZE THE ENTIRE AMOUNT AT THE TIME OF FILING OF THE RETURN AND UTILIZED THE SAME SUBSEQUENTLY, AND THEREFORE, BENEFIT UNDER SECTION 54F CANNOT BE DENIED TO THE ASSESSEE. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THAT IF THE ASSESSEE HAS INVESTED THE AMOUNTS IN THE CONSTRUCTION OF HOUSE PROPERTY AS PER TIME LIMIT AVAILABLE TO HIM UNDER SECTION 139(4), THE BENEFIT UNDER SECTION 54F SHOULD BE GRANTED TO THE ASSESSEE. 15 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF APRIL, 2017. SD/- SD/- (G. MANJUNATHA) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH APRIL, 2017. 7 ITA NO.98/VIZ/2014 (BOLLINA SUMAN) VR/- COPY TO: 1. THE ASSESSEE - SRI BOLLINA SUMAN, D.NO.49-54-15, B.S. LAYOUT, SEETAMMADHARA, VISAKHAPATNAM. 2. THE REVENUE - ITO, WARD-3(2), VISAKHAPATNAM. 3. THE CIT-1, VISAKHAPATNAM. 4. THE CIT(A), VISAKHAPATNAM. 5. THE D.R., VISAKHAPATNAM. 6. GUARD FILE. BY ORDER