ITO, Ward-6(5), Hyd, Hyderabad V. Akepati Manogna, Hyd, Hyderabad

ITA 993/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6356 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 28-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Keywords: Benefit of exemption
• Section: 54F; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 993/HYD/2015 ASSESSMENT YEAR: 2011-12 INCOME-TAX OFFICER WARD 6(5), HYDERABAD. VS. AKEPATI MANOGNA, HYDERABAD. PAN - ABQPA 4258F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A. SITARAMA RAO ASSESSEE BY : SHRI K.C. DEVDAS DATE OF HEARING 01-08-2016 DATE OF PRONOUNCEMENT 05-08-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - VI, HYD ERABAD, DATED 12 TH MAY, 2015 FOR AY 2011-12. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL DERIVING INCOME FROM BANK INTEREST. SHE FILED HER RETURN OF INCOME ON 31/07/2011 DECLARING TOTAL INCOME OF RS. 3,68,040/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3)R.W.S. 147 OF THE ACT BY MAKING THE DISALLOWANCE OF EXEMPTION U/S 54F OF RS. 4,71,52,450/-. 2.1 BRIEF FACTS OF THE CASE ARE THAT DURING THE FY 2007-08, THE ASSESSEE SOLD SHARES FOR A TOTAL CONSIDERATION OF R S. 5,00,00,224/- ON 29/11/2007 AND ARRIVED AT CAPITAL GAINS OF RS. 4,71 ,52,450/-. THE APPELLANT CLAIMED THE ENTIRE CAPITAL GAINS AS EXEMP T U/S 54F OF THE 2 ITA NO. 993/H/15 SMT. AKEPATI MANOGNA, HYD. INCOME TAX ACT, 1961, BEING REINVESTMENT IN CONSTRU CTION OF RESIDENTIAL HOUSE. LATER, IT WAS NOTICED BY THE ASS ESSING OFFICER THAT THE APPELLANT PURCHASED A SITE ADMEASURING 793 SQ. YARDS FOR A CONSIDERATION OF RS. 3,27,53,115/- AND BALANCE AMOU NT OF RS.L,46,00,000/- WAS DEPOSITED IN CAPITAL GAINS ACC OUNT. OBSERVING THAT THE CONSTRUCTION OF THE RESIDENTIAL HOUSE WAS NOT COMPLETE WITHIN 3 YEARS FROM THE SALE OF ORIGINAL ASSET, AS EVIDENC ED BY 3 PHOTOGRAPHS, THE ASSESSING OFFICER ISSUED NOTICE U/ S 148 AND COMPLETED THE ASSESSMENT DISALLOWING THE ENTIRE CLA IM MADE U/S 54F. 3. ON AN APPEAL BEFORE THE CIT(A), THE APPELLANT SU BMITTED THAT OUT OF CAPITAL GAINS, SHE HAS PURCHASED SITE ADMEAS URING 793 SQ. YARDS FOR A CONSIDERATION OF RS.3,27,53,115/- ON 10 .03.2008 FOR CONSTRUCTION OF RESIDENTIAL HOUSE AND THE BALANCE A MOUNT OF RS.L,46,00,000/- WAS DEPOSITED ON 24.07.2008 IN CAP ITAL GAINS ACCOUNT WITH STATE BANK OF INDIA, BALANAGAR BRANCH, WELL BEFORE FILING OF RETURN OF INCOME U/S 139(1). IT WAS SUBMITTED BY THE APPELLANT THAT SUBSEQUENTLY THE ENTIRE AMOUNT DEPOSITED IN CAPITAL GAINS ACCOUNT WAS WITHDRAWN FROM TIME TO TIME FOR UTILIZATION IN CONSTRUCTION OF RESIDENTIAL HOUSE ON THE SITE PURCHASED ABOVE AND T HE TOTAL AMOUNT WAS WITHDRAWN FROM BANK BY 24.11.2010, WHICH IS WEL L WITHIN THE PERIOD OF 3 YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET. FURTHER, THE APPELLANT SUBMITTED THAT DUE TO SOME PECULIAR CONDI TIONS PREVAILING OVER THE HOUSE SITE WHICH SHE PURCHASED AND EXPLAIN ED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CONSTRUCTION OF RESIDENTIAL HOUSE WAS NOT COMPLETED WITHIN THE STIPULATED TIME PRESCRIBED U/S 54F BUT THE ENTIRE CAPITAL GAIN WAS INVESTED IN CON STRUCTION OF THE RESIDENTIAL HOUSE. IT IS THE CLAIM OF THE APPELLANT THAT SINCE THE ENTIRE CONSIDERATION WAS INVESTED IN CONSTRUCTION OF RESID ENTIAL HOUSE WITHIN THE PERIOD OF 3 YEARS FROM THE DATE OF SALE OF ORIG INAL ASSET, SHE IS ELIGIBLE TO CLAIM U/S 54F. EXTENDING HER ARGUMENTS, IT WAS SUBMITTED BY THE ASSESSEE THAT TO BE ELIGIBLE FOR EXEMPTION U /S 54F THE 3 ITA NO. 993/H/15 SMT. AKEPATI MANOGNA, HYD. APPELLANT NEED NOT COMPLETE CONSTRUCTION OF RESIDEN TIAL HOUSE. IN SUPPORT OF THE ABOVE, THE APPELLANT RELIED ON THE F OLLOWING CASE LAWS: A. CIT VS SARDARMAL KOTHARI (2008) 302 ITR 286 (MAD RAS) B. CIT VS SAMBANDAM UCEV KUMAR (2012) 345 ITR 389 ( KARNATAKA) C. SRI NARASMIHA RAJU RUDRA RAJU VS ACIT (REPORTED IN 26 ITR (TRIBUNAL) AT PAGE 681) D. SMT SASHIVARMA VS CIT (224 ITR 106) (MP) E. SMT V A THARABAI VS DCLT (50 SOT 538), ITAT, CHE NNAI BENCH F. SRI NIMISH AJMEERA VS DCLT (120 -RN 573), ITAT, MUMBAI BENCH G. SMT USHA VAID VS (53 SOT 385), ITAT, AMRITSAR BE NCH 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS REFERRING THE CASE LAWS RELIED ON BY THE ASSESSEE, DIRECTED THE AO TO ALLOW THE CLAIM OF EXEMPTION U/S 54F BY O BSERVING AS UNDER: 5.2.AS BROUGHT OUT BY THE APPELLANT, A PORTION OF AMOUNT OF CAPITAL GAINS WAS INVESTED FOR PURCHASE OF SITE AND THE BALANCE WAS DEPOSITED IN CAPITAL GAINS ACCOUNT SCHE ME WITHIN THE PERMISSIBLE PERIOD. IT IS NOT THE CASE OF THE R EVENUE THAT THE TOTAL CAPITAL GAINS WERE NOT UTILIZED IN CONSTRUCTI ON OF RESIDENTIAL HOUSE BUT THE CONCLUDING PARA OF THE ASSESSMENT ORD ER, INCLUDING THE 3 PHOTOGRAPHS ANNEXED, ONLY REFERS THAT THE CON STRUCTION OF THE RESIDENTIAL HOUSE WAS NOT COMPLETE WITHIN 3 YEA RS FROM THE DATE OF SALE OF ORIGINAL ASSET. THE ISSUE FOR CONSI DERATION IS WHETHER THE APPELLANT, TO BE ELIGIBLE FOR EXEMPTION U/S 54F SHOULD COMPLETE CONSTRUCTION OF A RESIDENTIAL HOUSE , OR IS IT ENOUGH THAT THE ENTIRE CAPITAL GAINS SHOULD HAVE BE EN INVESTED IN CONSTRUCTION WITHIN 3 YEARS? 5.3 5.4 5.5.. 5.6 AS BROUGHT OUT EARLIER, THE APPELLANT UTILIZED THE ENTIRE CAPITAL GAINS IN PURCHASE OF LAND AND CONSTRUCTION OF RESID ENTIAL HOUSE THEREON. IN THE ABSENCE OF ANY CONTRARY FINDINGS TO THE ABOVE BY THE ASSESSING OFFICER AND FOLLOWING ABOVE DECISIONS , THE CLAIM MADE BY THE APPELLANT U/S 54F CANNOT BE DENIED REFE RRING TO THE NON-COMPLETION OF THE RESIDENTIAL HOUSE ALONE. THER EFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT B E SUSTAINED AND IS DIRECTED TO ALLOW THE CLAIM OF EXEMPTION U/S 54F. 4 ITA NO. 993/H/15 SMT. AKEPATI MANOGNA, HYD. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN CONSIDERING THE FACT TH AT PROVISIONS OF SECTION 54F CLEARLY SPECIFIES THAT THE CONSTRUCTION OF RESIDENTIAL HOUSE SHOULD BE COMPLETED WITHIN A PERIOD OF 3 YEAR S AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET. 6. CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES A ND PERUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF R EVENUE AUTHORITIES. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COVER ED BY THE FOLLOWING CASES: 6.1 THE HONBLE MADRAS HIGH COURT IN THE CASE OF CI T VS. SARDARMAL KOTHARI [2008] 302 ITR 286 HELD THAT IN O RDER TO GET BENEFIT U/S 54F OF THE IT ACT, 1961, THE ASSESSEE NEED NOT COMPLETE THE CONSTRUCTION OF THE HOUSE AND OCCUPY IT; IT WAS ENO UGH IF THE ASSESSEE ESTABLISHED THE INVESTMENT OF THE ENTIRE N ET CONSIDERATION WITHIN THE STIPULATED PERIOD. 6.2 IN THE CASE OF SAMBANDAM UDAYKUMAR [2012] 345 I TR 389, THE HONBLE KARNATAKA HIGH COURT, HAS HELD AS UNDER: SEC.54F, BEING A BENEFICIAL PROVISION FOR PROMOT ING CONSTRUCTION OF RESIDENTIAL HOUSE, HAS TO BE CONST RUED LIBERALLY FOR ACHIEVING THE PURPOSE FOR WHICH IT WAS INCORPOR ATED IN THE STATUTE. IT WAS HELD THAT ONCE IT IS DEMONSTRATED T HAT CONSIDERATION RECEIVED ON TRANSFER OF THE PROPERTY HAS BEEN INVESTED EITHER IN PURCHASE OR IN CONSTRUCTION OF A RESIDENTIAL HOUSE, EVEN THOUGH THESE TRANSACTIONS ARE NOT COMPL ETE IN ALL RESPECTS AND AS REQUIRED UNDER LAW, THE SAME WOULD NOT DISENTITLE THE ASSESSEE FROM THE BENEFIT OF EXEMPTI ON U/S 54F OF THE ACT. IN THIS CASE, IT WAS ALSO HELD THAT EVEN T HOUGH THE CONSTRUCTION WAS NOT COMPLETED WITHIN THREE YEARS, THE ASSESSEE WILL BE ENTITLED FOR BENEFIT OF EXEMPTION U/S 54F O F THE ACT. 6.3 FOLLOWING THE ABOVE DECISION, THE JURISDICTION AL ITAT IN THE CASE OF SRI NARASIMHA RAJU RDURA RAJU VS ACIT IN IT A NO. 234/HYD/12 DATED 26TH APRIL, 2013 HELD THAT ONCE TH E ASSESSEE DEMONSTRATES THAT THE CONSIDERATION RECEIVED ON TRA NSFER HAS BEEN 5 ITA NO. 993/H/15 SMT. AKEPATI MANOGNA, HYD. INVESTED EITHER IN PURCHASE OF A RESIDENTIAL HOUSE OR IN CONSTRUCTION OF A RESIDENTIAL HOUSE, EVEN THOUGH THE TRANSACTIONS A RE NOT COMPLETE IN ALL RESPECTS AND AS REQUIRED UNDER THE LAW THAT WOU LD NOT DISENTITLE THE ASSESSEE FROM AVAILING BENEFIT U/S 54F OF THE I NCOME TAX ACT,1961. 6.4 FOLLOWING THE RATIOS LAID DOWN IN THE AFORESAID DECISIONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) I N DIRECTING THE AO TO ALLOW THE ASSESSEES CLAIM OF EXEMPTION U/S 54F OF THE ACT, AND ACCORDINGLY WE CONFIRM THE ORDER OF THE CIT(A) DISM ISSING THE GROUNDS RAISED BY THE REVENUE ON THIS ISSUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2016 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 5 TH AUGUST, 2016 KV COPY TO:- 1) ITO, WARD 6(5), 7 TH FLOOR, D BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 2) SMT. AKEPATI MANOGNA, 8-3-169/64, SIDDARTHA NAG AR, HYDERABAD. 3) CIT(A) - VI, HYDERABAD 4) CIT - VI, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6 ITA NO. 993/H/15 SMT. AKEPATI MANOGNA, HYD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER