SHRI ASHOK SOLANKI , JAIPUR V. INCOME TAX OFFICER, WARD-6-3, JAIPUR

ITA 995/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4688 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 29-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJENDER SINGH DHK
• Keywords: Reasonable cause
• Section: 143(3); 54F; 54

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; DS LE{K BEFORE : SHRI RAMESH C.SHARMA, ACCOUNTA NT MEMBER VK;DJ VIHY LA-@ ITA NO. 995/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15 SHRI ASHOK SOLANKI 31, JAIN VIHAR COLONY, KESHAV PURA, AJMER ROAD, JAIPUR CUKE VS. THE ITO WARD- 6 (3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: BQOPS 4238 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI RAJENDER SINGH, ADDL. CIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 31/07/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31 /07/2019 VKNS'K@ ORDER PER RAMESH C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 17-11-2017 FOR THE ASSESSM ENT YEAR 2014-15, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE I.T. A CT, 1961. 2.1 IN THIS APPEAL OF THE ASSESSEE, IT IS NOTED THA T THERE WAS A DELAY IN FLING THE APPEAL BY THE ASSESSEE FOR WHICH THE ASSE SSEE HAS FILED THE REASONS FOR DELAY ALONGWITH AFFIDAVIT. ITA NO.995/JP/2018 SHRI ASHOK SOLANKI VS ITO, WARD- 6(3), JAIPUR 2 2.2 AFTER GOING THROUGH THE REASONS FOR DELAY SO FI LED BY THE ASSESSEE, I AM SATISFIED THAT THERE WAS A REASONABLE CAUSE. ACC ORDINGLY, I CONDONE THE DELAY AND THE APPEAL OF THE ASSESSEE IS BEING H EARD ON MERIT. 3.1 THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO D ISALLOWANCE OF DEDUCTION U/S 54 OF THE ACT IN RESPECT OF CAPITAL G AINS EARNED BY THE ASSESSEE. 3.2 THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS EARNING INCOME FROM OTHER SOURCES. THE ASSESSEE FIL ED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 DECLARING TO TAL INCOME OF RS. 22,390/- ON 25-07-2014. THE ASSESSMENT WAS COMP LETED U/S 143(3) OF THE ACT VIDE ORDER DATED 28-10-2016 AT A TOTAL INCO ME OF RS. 17,91,130/-. THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR HAD SOLD A RESIDENTIAL HOUSE PROPERTY SITUATED AT 65, KAILASHPURI, OPP.SAN GHI FARM, TONK ROAD, JAIPUR WHICH WAS JOINTLY OWNED BY HIM WITH HIS BROT HER FOR A TOTAL SALE CONSIDERATION OF RS. 55,00,000/- (ASSESSEE'S SHARE RS. 27,50,000/-) WHICH WAS EVALUATED AT RS. 55,04,422/-(ASSESSEE'S SHARE R S. 27,52,211/-) BY STAMP VALUATION AUTHORITY. PART OF THE SALE PROCEED S OF RS. 12.50 LACS (RS. 6,25,000 + RS. 6,25,000) RECEIVED ON 6-04-2013 IN THE BANK ACCOUNT OF THE ASSESSEE WAS UTILIZED TO PURCHASE THE HOUSE PROPERTY IN THE NAME OF THE ASSESSEE AND HIS BROTHER SHRI SATISH SOLANKI F OR RS. 12.50 LACS (RS. 6.25 LACS + RS. 6.25 LACS) ON 22-04-2013 AND 27-04- 2013 AS EVIDENCED BY ITA NO.995/JP/2018 SHRI ASHOK SOLANKI VS ITO, WARD- 6(3), JAIPUR 3 THE BANK STATEMENT OF THE ASSESSEE. PART OF THE SAL E PROCEEDS RS. 15.00 LACS (RS. 7,50,000+7,50,000) RECEIVED ON 04-04-2013 WAS TRANSFERRED TO THE BANK ACCOUNT OF NEPHEW (BROTHERS SON) SHRI SOM IL SOLANKI ON 17-04-2013 AND FROM BANK STATEMENT OF NEPHEW THE AM OUNT WAS UTILIZED TO PURCHASE THE HOUSE PROPERTY IN THE NAME OF NEPHE W FOR RS. 15 LACS ON 22-04-2013 AS EVIDENCED BY THE BANK STATEMENT OF TH E NEPHEW. WHILE FRAMING THE ASSESSMENT, THE AO ALLOWED THE DEDUCTIO N ONLY FOR HALF PORTION OF ONE RESIDENTIAL HOUSE PURCHASED IN THE N AME OF ASSESSEE AND HIS BROTHER OF RS. 6,65,862/- (1/2 OF RS. 12,50,000 + RS. 81,723 REGISTRY EXPENSES) U/S 54 OF THE ACT FOR THE REASON THAT DE DUCTION U/S 54 CAN BE ALLOWED ONLY FOR ONE HOUSE PROPERTY PURCHASED IN TH E NAME OF ASSESSEE HIMSELF. THE AO DISALLOWED DEDUCTION IN RESPECT OF INVESTMENTS MADE IN THE NAME OF NEPHEW. 3.3 BY IMPUGNED ORDER, THE LD. CIT(A) AFTER PLACING RELIANCE ON THE JUDGEMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CA SE OF KALYA VS CIT (2012) 22 TAXMANN.COCM 67 (RAJ) CONFIRMED THE ORDER OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. 3.4 IT WAS CONTENDED BY THE LD.AR OF THE ASSESSEE T HAT THE DEDUCTION U/S 54 OF THE ACT SHOULD BE ALLOWED FOR RESIDENTIA L HOUSE PURCHASED IN THE NAME OF BROTHER/ NEPHEW. HE FURTHER SUBMITTED THAT IT IS NOWHERE MENTIONED U/S 54 OF THE ACT THAT THE INVESTMENT MAD E IN NEW RESIDENTIAL ITA NO.995/JP/2018 SHRI ASHOK SOLANKI VS ITO, WARD- 6(3), JAIPUR 4 HOUSE SHALL BE IN THE NAME OF THE ASSESSEE ONLY. TH E ONLY REQUIREMENT IS TO UTILIZE THE SALE PROCEEDS OF THE PROPERTY SOLD I N BUYING NEW PROPERTIES. THE LD.AR FURTHER SUBMITTED THAT LD. CIT(A) HAS MIS PLACED HER RELIANCE ON THE JUDGEMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF KALYA VS CIT (ITA NO. 112 OF2012). IT IS SUBMITTED THAT H ON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SHRI MAHADEV BALAI VS ITO (DBI TA NO.136/2007 CLC 57-2016) PRONOUNCED ON 7-11-2017, AFTER CONSIDE RING THE JUDGEMENT OF KALYA VS CIT (SUPRA) HAS HELD THAT WHEN THE INV ESTMENT IS MADE IN THE NAME OF WIFE, NO DISALLOWANCE CAN BE MADE. ACCORDIN GLY, IT WAS PLEADED THAT ENTIRE INVESTMENTS MADE BY THE ASSESSEE JOINTL Y WITH BROTHER AND ALSO IN THE NAME OF NEPHEW SHOULD BE ALLOWED WHILE COMPU TING THE CAPITAL GAINS. 3.5 ON THE OTHER, THE LD. DR CONTENDED THAT ONLY IN VESTMENTS MADE BY THE ASSESSEE IN HIS OWN NAME CAN BE ALLOWED IN TER MS OF STRICT PROVISIONS OF SECTION 54 OF THE ACT. 3.6 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, IN SO FAR AS, ASSESSEE HAS MADE INVESTMENT IN HIS JOINT NAME ALONGWITH BROTHER, THE SAME DESERVES TO BE ALLOWED IN TERMS OF THE DECISION OF HON'BLE RAJASTH AN HIGH COURT IN THE CASE OF MAHADEV BALAI VS ITO (SUPRA). I ALSO FIND T HAT SIMILAR VIEW HAS BEEN TAKEN BY VARIOUS COORDINATE BENCHES. IN THE CA SE OF JITENDRA V FARIA ITA NO.995/JP/2018 SHRI ASHOK SOLANKI VS ITO, WARD- 6(3), JAIPUR 5 VS ITO-18(2)(1), MUMBAI, 164 ITD 443 (MUMBAI), THE MUMBAI TRIBUNAL HAS HELD AS UNDER:- 8. NOW COMING TO THE ALLEGATION OF THE AO THAT SINCE ASSESSEE HAS INCORPORATED NAME OF HIS BROTHER, HE IS ENTITLED TO ONLY 50% OF THE INVESTMENT SO MADE IN THE NEW HOUSE. THERE IS NO JU STIFICATION IN THE AO'S ACTION, IN SO FAR ENTIRE INVESTMENT WAS MADE B Y THE ASSESSEE AND ONLY FOR THE SAFETY REASON HE HAS INCLUDED THE NAME OF HIS BROTHER. I FOUND THAT IN THE ASSESSMENT ORDER ITSELF AT PAGE 2 , THE AO HAS OBSERVED THAT ENTIRE COT OF NEW PROPERTY WAS BORNE BY THE AS SESSEE THOUGH THE PROPERTY IS IN THE JOINT NAME WITH HIS BROTHER. 9. UNDER THESE FACTS AND CIRCUMSTANCES, THERE IS NO J USTIFICATION FOR GIVING 50% BENEFIT OF INVESTMENT IN THE NEW HOUSE. THE ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. RAVINDER KUMAR ARORA [2012] 342 ITR 38/[2011] 203 TAXMAN 289/15 TAXMANN.COM 307 (DELHI) WHEREIN HIGH COURT HELD THAT THE ASSESSEE WAS ENTITLED TO FULL EXEMPTION U/ S. 54F WHEN THE FULL AMOUNT WAS INVESTED BY THE ASSESSEE EVEN THOUGH THE PROPERTY WAS PURCHASED IN THE JOINT NAMES OF THE ASSESSEE AND HI S WIFE. IT MAY BE APPRECIATED THAT EVEN IN THE CASE BEFORE THE HON'BL E DELHI HIGH COURT, THE AO HAD ALLOWED EXEMPTION ONLY TO THE EXTENT OF 50%. THE QUESTION RAISED BY THE REVENUE BEFORE THE HON'BLE HIGH COURT READS AS UNDER: 'WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS CORR ECT IN LAW IN GRANTING THE EXEMPTION UNDER SECTION 54F. OF THE IN COME-TAX ACT, 1961, TO THE ASSESSEE FOR THE WHOLE CONSIDERATION OF RS. 3,28,15,000 FOR THE PURPOSE OF THE NEW ASSET (THE RESIDENTIAL PROPERTY) IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE, AND NOT TO THE EXTENT OF 5 0 PER CENT. SHARE OF THE ASSESSEE IN THE NEW ASSET?' THE HON'BLE HIGH COURT HAS AT PAGES 42 AND 43 HELD AS UNDER: '9. AT THE OUTSET, THE IMPORTANT FACTUAL FINDINGS R ECORDED BY THE TRIBUNAL IN THIS CASE ARE THAT IT WAS THE ASSESSEE WHO INDEPENDENTLY INVESTED IN THE PURCHASE OF NEW RESIDENTIAL HOUSE T HOUGH IN HIS OWN NAME BUT ALONG WITH THE NAME OF HIS WIFE ALSO AND T HAT IT WAS THE ASSESSEE WHO PAID STAMP DUTY AND CORPORATION TAX AT THE TIME OF THE REGISTRATION OF THE SALE DEED OF THE HOUSE SO PURCH ASED AND HAS ALSO PAID COMMISSION AND LEGAL EXPENSES IN CONNECTION WI TH THE PURCHASE OF THE HOUSE. THE TRIBUNAL FURTHER RECORDS THAT WHOLE OF THE PURCHASE CONSIDERATION HAS BEEN PAID BY THE ASSESSEE AND NOT EVEN A SINGLE PENNY HAS BEEN CONTRIBUTED BY THE WIFE IN THE PURCHASE OF THE HOUS E. THE TRIBUNAL ALSO NOTED THE ARGUMENT THAT THE PROPE RTY WAS PURCHASED BY THE ASSESSEE IN THE JOINT NAMES WITH HIS WIFE FO R 'SHAGUN' PURPOSE AND BECAUSE OF THE FACT THAT THE ASSESSEE WAS PHYSI CALLY HANDICAPPED. ITA NO.995/JP/2018 SHRI ASHOK SOLANKI VS ITO, WARD- 6(3), JAIPUR 6 THE TRIBUNAL FURTHER CONCLUDES THAT AS A MATTER OF FACT, THE ASSESSEE WAS THE REAL OWNER OF THE RESIDENTIAL HOUSE IN QUES TION. 10. ON THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE CONDITIONS STIPULATED IN SECTION 54F STAND FULFILLED. IT WOULD BE TREATED AS THE PROPERTY PURCHASED BY THE ASSESSEE IN HIS NAME AND MERELY BECAUSE HE HAS INCLUDED THE NAME OF HIS WIFE AND THE PROPERTY PURCHASED IN THE JOINT NAMES WOULD NOT MAKE ANY DIFFERENCE. SUCH A C ONDUCT HAS TO BE, RATHER, ENCOURAGED WHICH GIVES EMPOWERMENT TO WOMEN . THERE ARE VARIOUS SCHEMES FLOATED BY THE GOVERNMENT ITSELF PE RMITTING JOINT OWNERSHIP WITH WIFE.IF THE VIEW OF THE ASSESSING OF FICER (AO) OR THE CONTENTION OF THE REVENUE IS ACCEPTED, IT WOULD BE A DEROGATORY STEP. 11. EVEN WHEN WE LOOK INTO THE MATTER FROM ANOTHER ANGLE, THE FACTS REMAIN THAT THE ASSESSEE IS THE ACTUAL AND CONSTRUC TIVE OWNER OF THE HOUSE. IN CIT V. PODAR CEMENT P. LTD. [1997] 226 ITR 625 (SC) , THE SUPREME COURT HAS ALSO ACCEPTED THE THEORY OF CONST RUCTIVE OWNERSHIP. MOREOVER, SECTION 54F MANDATES THAT THE HOUSE SHOUL D BE PURCHASED BY THE ASSESSEE AND IT DOES NOT STIPULATE THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. HERE IS A CASE WHERE THE HOUSE WAS PURCHASED BY THE ASSESSEE AND THAT TOO IN HIS NAME AND WIFE 'S NAME WAS ALSO INCLUDED ADDITIONALLY. SUCH INCLUS ION OF THE NAME OF THE WIFE FOR THE ABOVE-STATED PECULIAR FACTUAL REAS ON SHOULD NOT STAND IN THE WAY OF THE DEDUCTION LEGITIMATELY ACCRUING T O THE ASSESSEE. THE OBJECTIVE OF SECTION 54F AND THE LIKE PROVISION SUC H AS SECTION 54 IS TO PROVIDE IMPETUS TO THE HOUSE CONSTRUCTION AND SO LO NG AS THE PURPOSE OF HOUSE CONSTRUCTION IS ACHIEVED, SUCH HYPER TECHN ICALITY SHOULD NOT IMPEDE THE WAY OF DEDUCTION WHICH THE LEGISLATURE H AS ALLOWED. PURPOSIVE CONSTRUCTION IS TO BE PREFERRED AS AGAINS T THE LITERAL CONSTRUCTION, MORE SO WHEN EVEN LITERAL CONSTRUCTIO N ALSO DOES NOT SAY THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF T HE ASSESSEE ONLY. SECTION 54F OF THE ACT IS THE BENEFICIAL PROVISION WHICH SHOULD BE INTERPRETED LIBERALLY IN FAVOUR OF THE EXEMPTION/DE DUCTION TO THE TAXPAYER AND DEDUCTION SHOULD NOT BE DENIED ON HYPE R TECHNICAL GROUND. THE ANDHRA PRADESH HIGH COURT IN THE CASE O F LATE MIR GULAM ALI KHAN V. CIT [1987] 165 ITR 228 (AP) HAS HELD THAT THE OBJECT OF GRANTING EXEMPTION UNDER SECTION 54 OF TH E ACT IS THAT AN ASSESSEE WHO SELLS A RESIDENTIAL HOUSE FOR PURCHASI NG ANOTHER HOUSE MUST BE GIVEN EXEMPTION SO FAR AS CAPITAL GAINS ARE CONCERNED. THE WORD 'ASSESSEE' MUST . BE GIVEN WIDE AND LIBERAL IN TERPRETATION SO AS TO INCLUDE HIS LEGAL HEIRS ALSO. THERE IS NO WARRAN T FOR GIVING TOO STRICT AN INTERPRETATION TO THE WORD 'ASSESSEE' AS THAT WO ULD FRUSTRATE THE OBJECT OF GRANTING EXEMPTION. ' 10. THIS DECISION OF THE DELHI HIGH COURT WAS SUBSEQUE NTLY FOLLOWED BY DELHI HIGH COURT ITSELF IN CASE OF CIT V. KAMAL WAHAL [2013] 351 ITR 4/214 TAXMAN 287/30 TAXMANN.COM 34 (DELHI) . ITA NO.995/JP/2018 SHRI ASHOK SOLANKI VS ITO, WARD- 6(3), JAIPUR 7 11. IN VIEW OF THE ABOVE DISCUSSION, I DO NOT FIND ANY MERIT IN THE ACTION OF AO FOR RESTRICTING EXEMPTION U/S.54 TO TH E EXTENT OF 50% OF THE VALUE OF THE NEW HOUSE. THE CIT(A) WAS ALSO NOT JUSTIFIED IN DIRECTING THE AO TO TAX ENTIRE CAPITAL GAIN ON SALE OF OLD PROPERTY IN THE HANDS OF ASSESSEE WHEN 50% OF THE OLD HOUSE WAS OWN ED BY HIS WIFE AND SHE HAD PAID CAPITAL GAIN SEPARATELY FOR HER SH ARE OF THE HOUSE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. RESPECTFULLY FOLLOWING DECISIONS OF THE HON'BLE JU RISDICTIONAL HIGH COURT AS WELL AS COORDINATE BENCH (SUPRA), I DIRECT THE AO TO ALLOW CLAIM OF DEDUCTION U/S 54 OF THE ACT IN RESPECT OF THE IN VESTMENTS OF RS. 13,31,723/- MADE BY THE ASSESSEE IN HIS OWN NAM E ALONGWITH THE NAME OF HIS BROTHER. I DIRECT ACCORDINGLY. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 31/07/20 19. SD/- JESK LH 'KEKZ (RAMESH C. SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 /07/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI ASHOK SOLANKI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6(3), JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.995/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR