THAMARASSERY GOVINDA PILLAI VENUGOPAL,ERNAKULAM V. ITO, WARD INT. TAX, KOCHI

ITITA 1/COCH/2023

AI Insights

The case involves Thamarassery Govinda Pillai Venugopal, a non-resident individual, who appealed against the decision of the Dispute Resolution Panel-2, Bangalore, which confirmed the Income Tax Officer's (ITO) order. The ITO had assessed the appellant's income for the Assessment Year 2013-14, following the sale of an immovable property for Rs. 78,86,560, and added Rs. 72,00,846 under the head 'capital gains', denying exemption under section 54F of the Income Tax Act, 1961. The appellant's request for condonation of delay in filing the return was also considered but not accepted, leading to the appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38577 (ITAT-COCHIN)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 28-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJIT KUMAR DAS
• Keywords: Capital asset; Capital Gains
• Section: 148; 54; 54F

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI KESHAV DUBEY, JM IT(IT)A No. 01/Coch/2023 Assessment Year: 2013-14 Thamarassery Govinda Pillai Venugopal .......... Appellant Thamarassery House, Koduvazhanga Neericodu P.O., Ernakulam 683511 [PAN: AFSPV0555L] vs. The Income Tax Officer .......... Respondent International Taxation C.R. Building, I.S. Press Road Kochi 682018 Appellant by: ------- None ------- Respondent by: Shri Sanjit Kumar Das, CIT-DR Date of Hearing: 06.01.2025 Date of Pronouncement: 28.01.2025 O R D E R Per: Inturi Rama Rao, AM This appeal is filed by the assessee against the directions of the Dispute Resolution Panel-2, Bangalore dated 23.11.2022 for Assessment Year (AY) 2013-14. 2. The appellant is a non resident individual. The appellant not filed regular return of income under the provisions of section 139. 2 IT(IT)A No. 01/Coch/2023 Thamarassery Govinda Pillai Venugopal Based on the information that the assessee sold an immovable property for a consideration of Rs. 78,86,560/- the Income Tax Officer (International Taxation), Kochi (hereafter “the AO”) formed an opinion that income has escaped assessment to tax. Accordingly issued a notice u/s. 148 of the Income Tax Act, 1961 (the Act). Vide letter dated 04.04.2018 the appellant requested for condonation of delay in filing the return of income. Assessment was completed the AO vide order dated 22.12.2022 at a total income of Rs. 72,03,207/-. While doing so, the AO made addition of Rs. 72,00,846/- under the head “capital gains” on sale of immovable property denying exemption u/s. 54 of the Act as the appellant failed to utilize the same within the stipulated period prescribed u/s. 54 of the Act. 3. Being aggrieved, the appellant filed objections before the DRP, who wide the impugned order confirmed the action of the AO. 4. Being aggrieved, appellant is in appeal before us in the present appeal. 5. When the appeal was called nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR. 6. The solitary issue that arises for our consideration in the present appeal is whether the appellant is entitled for exemption u/s. 54F of the Act. The provisions of section 54F of the act provides as under: - 3 IT(IT)A No. 01/Coch/2023 Thamarassery Govinda Pillai Venugopal ”Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where— (a) the assessee,— (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head \"Income from house property\": 4 IT(IT)A No. 01/Coch/2023 Thamarassery Govinda Pillai Venugopal 69[Provided further that where the cost of new asset exceeds ten crore rupees, the amount exceeding ten crore rupees shall not be taken into account for the purposes of this sub-section.] Explanation.—For the purposes of this section,— \"net consideration\", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head \"Income from house property\", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub- section (1), shall be deemed to be income chargeable under the head \"Capital gains\" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head \"Capital gains\" relating to long-term capital assets of the previous year in which such new asset is transferred. (4) The amount of the net consideration which is not appropriated by the assessee towards the 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 [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) 5 IT(IT)A No. 01/Coch/2023 Thamarassery Govinda Pillai Venugopal of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall 70[, subject to the second proviso to sub- section (1)] be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— (i) the amount by which— (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub- section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid: [Provided further that the net consideration in excess of ten crore rupees shall not be taken into account for the purposes of this sub- section.] Explanation.—[Omitted by the Finance Act, 1992, w.e.f. 1-4- 1993.]” 7. Form reading of the above provisions, it would be clear that in order to avail exemption u/s. 54F of the Act the assessee is required to purchase new residential property within a period of 2 6 IT(IT)A No. 01/Coch/2023 Thamarassery Govinda Pillai Venugopal years from the date of sale of the original asset or construct a residential house within a period of 3 years from the date of sale of the original asset. Where the property is not purchased or construction of new house is not complete before the due date for filing the return of income, the sale consideration shall be deposited in the capital gain deposit scheme. From the material on record it is evident that the appellant had not fulfilled the above conditions which are precedent for availing exemption u/s. 54F of the Act. Therefore, the appellant is not entitled for deduction u/s. 54F of the Act. We do not find any merit in the appeal filed by the assessee. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 28th January, 2025. Sd/- Sd/- (KESHAV DUBEY) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 28th January, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "