Satyanarayan Sharma, Indore V. Principal Commissioner of Income Tax-I, Indore

MA 9/Ind/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5359 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 21-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONI
• Keywords: Capital asset; Revision of order; Valuation report; Set aside
• Section: 263; 154; 143(3); 54F

Judgement Text

अपील य अ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI RAJPAL YADAV HON'BLE VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER MA No.09/Ind/2021 ( Arising out of ITA No.426/Ind/2018 Assessment Year:2013-14 Satyanarayan Sharma, Indore बनाम/ Vs. Pr. CIT-I, Indore (Appellant) (Respondent ) P.A. No.AEAPS5126D Assessee by Shri Girish Agrawal & Mis. Nisha Lahoti, ARs Respondent by Shri Amit, Soni, Sr. DR Date of Hearing: 12.11.2021 Date of Pronouncement: 17.01.2022 आदेश / O R D E R PER MANISH BORAD: This Misc. Application is filed u/s 254 (2) of the Income Tax Act is arising out of the order of this Tribunal in ITANo.426/Ind/2018 dated 28.12.2012. Ld. counsel for the assessee vehemently argued referring to the following contents of this Misc. application. 1. Assessee had preferred a appeal before your honors for A.Y.2013-14. The relief sought by assessee through this appeal was against the order of Ld. Pr. CIT who had set aside the order passed by Ld. AO u/s 143(3) dated Satyanarayan Sharma . MA No09/Ind/2021 2 23.03.2016 by treating it as erroneous and prejudicial to the interest of revenue with regards to determination of cost of new asset acquired and computation of amount eligible u/s 54F of the Act. 2. Valuation report from Government approved valuer, shri O.P. Gupta, for the valuation of new asset acquired by the assessee was submitted both before Ld.AO during the course of assessment proceedings u/s 143(3) and it the course of proceedings u/s 263 before Ld. Pr. CIT. this valuation report specifically mentions the method of construction as –By employing Labour Directly’. 3. while arriving at the finding by the Hon'ble Bench, page 26, 9 th line from ttom of the impugned order reads - ..................... However it is not clear whether the assessee has entered into with a contract with the contractor that included the cost of furniture and other fixtures. Ld. Pr.ClT has also not brought any such evidence on record. Under these facts we modify the direction of Ld. PCIT to the extent that the Ld. Assessing Officer would allow the expenses incurred for furniture and Air Conditioners if it is part and parcel of the contract for construction of new house " [emphasis supplied] -to Ambiguity raised by the Hon'ble Bench while arriving at the finding as to 'whether the assessee has entered into with a contract with the contractor' is evidently discernible from the valuation report forming part of the Paper Book [PB 15] and which was always on record before the authorities below. Method of construction either by contract or by employing labour directly was never in dispute neither by the Ld. AO in the original assessment uls 143(3) nor by the Ld. Pr. CIT in the revision proceedings U/S 263 of the Act. 5.Hon 'ble Bench gave the finding of "modifying the direction of Ld. PC IT to the extent that the Ld. Assessing Officer would allow the expenses incurred for furniture and Air Conditioners if it is part and parcel of the contract for construction of new house" by raising a doubt as to "whether the assessee has entered into with a contract with the contractor" for which the Satyanarayan Sharma . MA No09/Ind/2021 3 documentary evidence of valuation report from a Government approved valuer has not been considered and dealt with. The valuation report from a Government Approved valuer in very specific and clear terms, removes the ambiguity and eliminates the doubt so raised by the Hon'ble Bench. [emphasis supplied] Not taking into consideration this specific part of the valuation report which very categorically addresses the doubt so raised by the Hon'ble Bench and based on which the direction of Ld. Pro CIT has been modified is a mistake apparent from record and ought to be rectified. The aforesaid mistake apparent from record be rectified and appeal be disposed off considering the valuation report, documentary evidences and written submissions furnished during the course of hearings. 20f3 2. Per contra, ld. DR supported the order of This Tribunal. 3. We have heard rival contentions and perused the records placed before us. Grievance of the assessee through this Misc. application is that there is a mistake apparent from record in the finding of this Tribunal given in para 11 page 26 and the relevant lines are ..................... However it is not clear whether the assessee has entered into with a contract with the contractor that included the cost of furniture and other fixtures. Ld. Pr.ClT has also not brought any such evidence on record. Under these facts we modify the direction of Ld. PCIT to the extent that the Ld. Assessing Officer would allow the expenses incurred for furniture and Air Conditioners if it is part and parcel of the contract for construction of new house"[emphasis supplied] Satyanarayan Sharma . MA No09/Ind/2021 4 4. We notice that the issue raised in the appeal was the eligibility of the assessee for claim deduction u/s 54F of the Act against the profits on sale of certain capital asset not a residential house, by making investment in other residential house by way of purchasing residential house either one year before or two year after the date of transfer of the property or investment in construction of residential house within three years from date of transfer. In the instant case assessee claimed the deduction for construction of residential house and the cost of construction included civil construction, furniture and fixture. A valuation report from the government approved valuer was filed before Ld. AO, Ld. Pr. CIT and before this tribunal in support of the deduction so claimed. While adjudicating the finding of Ld. Pr. CIT given in the revisionary proceedings u/s 263 of the Act and the grounds raised by the assessee against the order u/s 261 of the Act this Tribunal was of the view that order u/s 263 of the Act to be modified to the extent that the Ld. AO would allow the expenses incurred for furniture fixtures and air conditioner if it is part and parcel of the contract for construction of new house. 5. From perusal of the valuation report we find that the assessee did not enter into any contract for construction of the residential house and the construction was done by directly employing the labour and taking care of purchase of material and other equipment at its own. This fact remains undisputed before the Ld. AO and even before the proceeding u/s 263 of the Act that there was no specific contract for construction of residential house. The issue was only that whether the assessee can claim the benefit for cost of furnituere & air Satyanarayan Sharma . MA No09/Ind/2021 5 condition placed/installed in hew house. We, thus, find that an apparent mistake occurred in the order of this tribunal as it is observed in the impugned order that whether the assessee had entered into a contract with the contractor and the same needs to be verified. We, therefore, rectify the apparent mistake and substitute the following new para 11 in place of para 11 appearing in the impugned order: 11. We have given our thoughtful consideration to the rival contentions of the parties. So far exercising of powers u/s 263 of the Act is concerned, we find no infirmity in the order of Ld. PCIT as the Assessing Officer has wrongly allowed the claim without examining that how much deduction can be allowed. Ld. Counsel for the assessee argued that this order could be rectified by the Assessing Officer u/s 154 of the Act. However Ld. Counsel for the Satyanarayan Sharma /ITANo.426/Ind/2018 25 assessee did not bring to our notice any such action being taken by the Assessing Officer. Hence on this ground revision of the order is justified. Another ground for exercising of power u/s 263 of the Act was regarding adoption of the cost of acquisition of new asset. Ld. Counsel for the assessee submitted that the cost of furniture, Air Conditioners is allowable and the same would form part of acquisition of new assets. To buttress this contention Ld. Counsel has placed reliance on the decision of the Co-ordinate Bench rendered in the case of Shriniwas R Desai V/s ACIT, ITA No.1245 and 2432/Ahd/2010 wherein the Co-ordinate Bench has held that Satyanarayan Sharma . MA No09/Ind/2021 6 cost of the asset is not allowable but in a case where the assessee has purchased a new asset, which is not habitable condition the expenses incurred by the assessee to make it habitable should be allowed u/s 54(2) of the Act. Reliance has also placed on the decision of Co-ordinate Bench in the case of Rajat B Mehta V/s ITO (2018) 90 taxmann.com 176 wherein it has been held that the expression used in statute is cost of the residential house so purchased and it does not necessarily mean that the cost of residential house must remain confined to the cost of civil construction alone. A residential house may have many other Satyanarayan Sharma /ITANo.426/Ind/2018 26 things, other than civil construction and including things like furniture and fixtures, as its integral part and may also be on sale as an integral deal. Further the Tribunal held that if these things are integral part of house being purchased, the cost of house has to essentially include the cost of these things as well. In such circumstances, what is to be treated as cost of the residential house is the entire cost of house and it cannot be open to the Assessing Officer to treat only the cost of only civil construction as cost of house and segregate the cost of other things as not eligible for deduction u/s 54. In this case it was not a composite deal, and we find that the Ld. PCIT has also considered these case laws. Under the given facts and circumstances of the case, we find that Ld. Pr. CIT erred in observing that the investment made in the new house is only Rs. 63,97,000/-. On our examination of the fact and the settled Satyanarayan Sharma . MA No09/Ind/2021 7 judicial precedents the assessee is also entitled to get the benefit for the cost of furniture and fixtures, air-conditioner total Rs. 11,61,768/- and therefore, hold that Ld. AO rightly computed the deduction u/s 54F of the Act by considering the amount of investment in new house at Rs.75,58,768/-. We, therefore, find no merit in the finding of Ld. CIT(A) on this issue of deduction u/s 54F of the Act and on this issue assessee succeeds and the finding of Ld. AO in the assessment order dated 23.03.2016 is restored. This ground of the assessee is allowed. 6. In the result, Misc. Application filed by the assessee in MANo.09/Ind/2021 is allowed. Order pronounced as per Rule 34 of I.T.A.T., Rules 1963 on ... 17.01.2022. Sd/- (RAJPAL YADAV) Sd/- (MANISH BORAD) VICE PRESIDENT ACCOUNTANT MEMBER Indore; दनांक Dated : 17/01/2022 Patel/PS Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore