Harikrishna R, Bangalore V. CIT, Bangalore

ITA 981/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8649 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 01-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2015
• Court: TRIBUNAL
• Department Lawyers: M RAJASHEKAR
• Assessee Lawyers: S VENKATARAMANI
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ABRAHAM P. GEOGE, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.981/BANG/2015 ASSESSMENT YEAR : 2007-08 SHRI HARIKRISHNA R., NO.7 B, CRESCENT COURT, NO.8, CRESCENT ROAD, BANGALORE 560 001. PAN: ADRPR 4051J VS. THE INCOME TAX OFFICER, WARD 15(4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. VENKATARAMANI, CA RESPONDENT BY : SHRI M. RAJASHEKAR, ADDL. CIT(DR) DATE OF HEARING : 01.02.2016 DATE OF PRONOUNCEMENT : 10.02.2016 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 9.4.2015 OF THE CIT(APPEALS), BENGALURU-3 FOR THE A SSESSMENT YEAR 2007- 08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE CIT(A) ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING THE DISALLOWANCE OF DEDUCTION U/S 54F . ITA NO.981/BANG/2015 PAGE 2 OF 6 2. SHE FAILED TO APPRECIATE THAT (THE APPELLANT) T HE REGISTRATION OF SALE DEED WAS CONDITIONAL AND IT HA S BECOME COMPLETE ONLY AFTER REALISATION OF SALE CONSIDERATI ON. 3. WHILE SHE OBSERVED THAT THERE WAS CLAUSE IN THE SALE DEED WHICH SPECIFICALLY STATES THAT THE SALE SUBJECT TO REALISATION OF FULL SALE CONSIDERATION SHE HAS NO GROUND TO CONSIDER TH AT THE SALE IS COMPLETE ON REGISTRATION OF SALE DEED. 4. SHE ALSO FAILED TO APPRECIATE THAT THE DATE OF PAYMENTS WERE CONFIRMED BY THE PURCHASER OF THE HOUSE PROPER TY WHICH CLEARLY SHOWS THE DETAILS WORKING OF THE SALE CONSI DERATION AND THERE (I) NO GROUND TO STATE THAT ACCURATE PARTICUL ARS OF THE TRANSACTION WERE NOT PRODUCED. 5. SHE ERRED IN HOLDING THAT THE APPELLANT RECEIVE D FULL CONSIDERATION BEFORE 31 ST MARCH 31.3.2007 AND INVESTMENT (IN) U/S 54F SHOULD HAVE BEEN DONE BEFORE THAT INSTEAD O F WAITING BEYOND MARCH 2007. 6. HE FAILED TO APPRECIATE THAT THE APPELLANT HAD THE OPTION OF DEDUCTION BASED ON HIS INVESTMENTS U/S 54F OR IN AN OTHER HOUSE PROPERTY AND AVAIL BENEFIT U/S 54E. IT IS ONLY REAS ONABLE THAT THE APPELLANT WAS PONDERING OVER THE OPTIONS AND ULTIMA TELY DECIDED TO INVEST IN REC BONDS. FOR THESE REASONS AND FOR THE REASONS AS MAY BE SET OUT AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE DISALLOWANC E MADE MAY BE DELETED. 3. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THE APPEAL OF THE ASSESSEE FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 54EC IN RESPECT OF INVE STMENT MADE IN REC BONDS OF RS.50 LAKHS ON 31.7.2007. 4. THE BRIEF FACTS LEADING TO THE CONTROVERSY ARE T HAT THE ASSESSEE SOLD A RESIDENTIAL PROPERTY VIDE SALE DEED DATED 12.12.2 006 FOR AN AMOUNT OF ITA NO.981/BANG/2015 PAGE 3 OF 6 RS.2 CRORES. THE SAID PROPERTY WAS INHERITED BY WA Y OF DEED OF SETTLEMENT DATED 28.10.2005. THE ASSESSEE COMPUTED LONG TERM CAPITAL GAIN OF RS.1,81,16,030. THE ASSESSEE CLAIMED EXEMPTION U/S . 54 HAVING PURCHASED THE RESIDENTIAL PROPERTY FOR RS.60 LAKHS. FURTHER, THE ASSESSEE CLAIMED EXEMPTION U/S. 54EC FOR HAVING INVESTED IN REC BONDS OF RS.50 LAKHS EACH ON 31.3.2007 AND 31.7.2007. THE ASSESSI NG OFFICER HAS RESTRICTED THE EXEMPTION U/S. 54EC TO RS.50 LAKHS B EING INVESTMENT MADE IN REC BONDS ON 31.3.2007 AND DENIED THE EXEMPTION IN RESPECT OF INVESTMENT IN REC BONDS ON 31.7.2007 BEING BEYOND S IX MONTHS FROM THE DATE OF SALE OF THE CAPITAL ASSET. 5. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESS ING OFFICER BEFORE THE CIT(APPEALS) AND SUBMITTED THAT THE SALE OF RES IDENTIAL HOUSE WAS CONDITIONAL AND SUBJECT TO REALIZATION OF THE CONSI DERATION PAID THROUGH CHEQUE. THE ASSESSEE CONTENDED THAT PAYMENT OF RS. 1 CRORE WAS MADE BY THE PURCHASER BY WAY OF POST-DATED CHEQUE DATED 26.12.2006. HOWEVER, THIS CHEQUE WAS NOT HONOURED. THUS, THE A SSESSEE CLAIMED THAT THE LAST CHEQUE OF RS.50 LAKHS WAS HONOURED ONLY ON 27.2.2007 AND POSSESSION OF THE PROPERTY WAS HANDED OVER ON 16.2. 2007, THEREFORE INVESTMENT IN REC BONDS ON 31.7.2007 WAS WITHIN THE SIX MONTHS FROM THE DATE OF HANDING OVER POSSESSION OF THE PROPERTY ON 16.2.2007. 6. THE CIT(APPEALS) DID NOT ACCEPT THE CONTENTION O F THE ASSESSEE AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN RE STRICTING THE CLAIM OF ITA NO.981/BANG/2015 PAGE 4 OF 6 EXEMPTION U/S. 54EC ONLY TO RS.50 LAKHS, WHICH WAS INVESTED IN REC BONDS ON 31.3.2007. 7. BEFORE US, THE LD. AR OF THE ASSESSEE HAS REITER ATED ITS CONTENTION AS RAISED BEFORE THE AUTHORITIES BELOW AND SUBMITTED T HAT THE TRANSFER OF CAPITAL ASSET BY THE ASSESSEE WAS SUBJECT TO REALIZATION OF THE SALE CONSIDERATION PAID BY THE PURCHASER THROUGH POST-DATED CHEQUE WHI CH WAS NOT HONOURED AND THEREFORE PROPERTY WAS TRANSFERRED ONLY WHEN TH E PAYMENT WAS RECEIVED BY THE ASSESSEE AND POSSESSION OF THE ASSE T WAS HANDED OVER TO THE PURCHASER. THUS, THE LD. AR HAS SUBMITTED WHEN POSSESSION OF THE PROPERTY WAS HANDED OVER ON 16.2.2007, THEN THE INV ESTMENT IN REC BONDS MADE ON 31.7.2007 IS WITHIN THE PERIOD OF SIX MONTHS AND CONSEQUENTLY, THE ASSESSEE IS ENTITLED FOR EXEMPTIO N U/S. 54EC. 8. THE LD. AR HAS PLACED RELIANCE ON THE LETTER DAT ED 16.2.2007 WHEREBY THE PURCHASER HAS CONFIRMED THE TAKING OVER OF POSSESSION OF THE PROPERTY ON THE SAID DATE. 9. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE PROPERTY W AS TRANSFERRED BY THE ASSESSEE BY SALE DEED DATED 12.12.2006 AND THE INVE STMENT MADE IN REC BONDS ON 31.7.2007 IS BEYOND SIX MONTHS. THERE FORE THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S. 54EC IN RESPECT OF T HE SAID INVESTMENT WHICH IS BEYOND SIX MONTHS FROM THE DATE OF TRANSFER OF C APITAL ASSET. ITA NO.981/BANG/2015 PAGE 5 OF 6 10. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE CAPITAL ASSET BEING HOU SE PROPERTY IN QUESTION WAS SOLD BY ASSESSEE BY WAY OF SALE DEED DATED 12.1 2.2006. AS PER THE TERMS AND CONDITIONS OF SALE DEED AT PAGE 10, THE A SSESSEE RELEASED AND DELIVERED THE PARENTAL DOCUMENTS AND OTHER RELEVANT FILES AND PAPERS TO THE PURCHASER DIRECTLY AND TRANSFERRED ALL THE RIGHTS I N THE SCHEDULE PREMISES AS WELL AS HANDED OVER THE POSSESSION AND ADMINISTRATI ON OF THE ENTIRE PROPERTY TO THE PURCHASER. THEREFORE, AS PER THE R EGISTERED SALE DEED DATED 12.12.2006, THE PROPERTY WAS TRANSFERRED TO T HE PURCHASER AND POSSESSION OF THE PROPERTY WAS ALSO HANDED OVER TO THE PURCHASER BY THE ASSESSEE. THE REALIZATION OF THE SALE CONSIDERATIO N IS NOT A CONDITION OF THE TRANSFER. HOWEVER, IT IS AN OBLIGATION ON THE PART OF THE PURCHASER TO PAY THE SALE/PURCHASE CONSIDERATION. EVEN IF THE PURCHASER FAILS TO MAKE THE PAYMENT OF THE SALE CONSIDERATION, THE ASSESSEE CAN RECOVER THE SAME BY ENFORCING THE RIGHTS IN THE SALE DEED / CONTRACTUAL RIGHTS. EVEN OTHERWISE, TRANSFER OF IMMOVABLE PROPERTY CANNOT BE SUBJECT TO ANY CONDITION FOR UNCERTAINTY AND THEREFORE ONCE THE PARTIES HAVE AGR EED AND DECIDED TO SELL/PURCHASE THE PROPERTY IN QUESTION AGAINST THE AGREED SALE CONSIDERATION, THEN THE TRANSACTION OF THE TRANSFER IS COMPLETED ON THE DATE WHEN THE SALE DEED WAS EXECUTED AND REGISTERED BY T HE PARTIES WHEREIN BOTH THE PARTIES HAVE MADE THE STATEMENT THAT ALL R ELEVANT DOCUMENTS, RIGHTS IN THE PROPERTY AS WELL AS POSSESSION OF THE PROPERTY WAS CONVEYED TO THE PURCHASER. THE SUBSEQUENT CONFIRMATION OF TAKING OVER OF ITA NO.981/BANG/2015 PAGE 6 OF 6 POSSESSION BY THE PURCHASER WILL NOT ALTER THE STAT US OF THE TRANSFER OF PROPERTY VIDE SALE DEED DATED 12.12.2006. ONCE TR ANSFER OF PROPERTY WAS COMPLETED ON 12.12.2006, THEN THERE IS NO DISPUTE T HAT INVESTMENT MADE IN REC BONDS ON 31.7.2007 IS BEYOND SIX MONTHS AND THE REFORE THE SAID INVESTMENT IS NOT ENTITLED FOR EXEMPTION U/S. 54EC OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUG NED ORDERS OF AUTHORITIES BELOW. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF FEBRUARY, 2016. SD/- SD/- ( ABRAHAM P. GEORGE ) (VIJA Y PAL RAO ) ACCOUNTANT MEMBER J UDICIAL MEMBER BANGALORE, DATED, THE 10 TH FEBRUARY, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.