Subhadra Raju, CHENNAI v. ITO, CHENNAI

ITA 1035/CHNY/2016 | 2010-2011
Pronouncement Date: 29-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 103521714 RSA 2016
Assessee PAN AXNPS2824C
Bench Chennai
Appeal Number ITA 1035/CHNY/2016
Duration Of Justice 1 year(s) 7 month(s) 11 day(s)
Appellant Subhadra Raju, CHENNAI
Respondent ITO, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 29-11-2017
Last Hearing Date 16-11-2017
First Hearing Date 16-11-2017
Assessment Year 2010-2011
Appeal Filed On 18-04-2016
Judgment Text
B/ SMC IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH CHENNAI . BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER I.T.A.NO.1035 /MDS./2016 ( ASSESSMENT YEAR : 2010-11 ) MS. SUBHADRA RAJU 34/3/16 ROYAL VILLA RUKMANI ROAD KALASHETRA COLONY BESANT NAGAR CHENNAI 600 041. VS. THE INCOME TAX OFFICER SALARY WARD VI(3) CHENNAI. PAN AXNPS 2824 C ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.S.SRIDHAR ADVOCATE & MR.A.S.SRIRAMAN ADVOCATE / RESPONDENT BY : MR.N.MADHAVAN ACIT D.R ! ' / DATE OF HEARING : 16.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 29.11.2017 / O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-15 CHENN AI DATED 10.02.2016 PERTAINING TO ASSESSMENT YEAR 2010-11. ITA NO.1035 /MDS/2016 2 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO NON-GRANTING OF DEDUCTION U/S.54F OF THE ACT THOUGH THE ASSESSEE HAS CREATED A NEW ASSET WITHIN THE TIM E ALLOWED U/S.54F OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND E-FILED HER RETURN OF INCOME ON 02.1 0.2010 FOR THE A.Y. 2010-11 ADMITTING TOTAL INCOME OF ` 6 01 365/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. THEREAFTER THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 2 7.03.2013 ASSESSING THE TOTAL INCOME AT ` 40 77 950/-. 3.1 DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE ALONG WITH TWO OTHER PERSONS HAVE SOLD A V ACANT LAND FOR A CONSIDERATION OF ` 1 15 29 000/- AT MUTTUKADU IN KANCHEEPURAM DISTRICT. THE ASSESSEES SHARE OF LONG TERM CAPITAL GAIN WORKED OUT TO ` 34 76 585/- AND THE SAME WAS CLAIMED AS EXEMPT U/S 54F. THE DATE OF SALE OF OLD BUILDING WAS 15.02.2010 AND THE NEW BUILDING (AGAINST WHICH 54F WAS CLAIMED) WAS ALSO LET OUT ON THE SAME DATE 15.02.20 10 WHICH ITA NO.1035 /MDS/2016 3 MEANS THAT THE CONSTRUCTION OF THE NEW BUILDING WAS COMPLETED BEFORE DATE OF SALE OF OLD BUILDING I.E. 15.02.2010 IN WHICH CASE THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 54F. THE CERTIFICATE GIVEN TO THE ASSESSEE BY THE BUILDER M/ S VISHRANTHI SABARI CONSTRUCTION VIDE ITS LETTER DATED 12.02.201 0 STATING THAT THE SAID APARTMENT (AGAINST WHICH 54F WAS CLAIMED) WAS COMPLETED AND READY FOR OCCUPATION. HENCE THE BUIL DING WAS READY FOR POSSESSION ON 12.02.2010 BEFORE THE SALE OF OLD BUILDING I.E. 15.02.2010. FURTHER THE ASSESSEE ST ATED TO HAVE TAKEN SECURITY DEPOSIT OF ` 2 00 000/- FROM HER TENANT. THE SECURITY DEPOSIT SHOULD HAVE BEEN TAKEN ONLY BY WAY OF CHEQUE. NO SUCH CREDIT ENTRY IS AVAILABLE IN THE BANK STATE MENT DURING THE PERIOD OF FEBRUARY 2010. ACCORDING TO LD. ASSESSING OFFICER THE SUBJECT BUILDING WAS LET OUT FOR MORE THAN 3 MONTHS AND THE RENT OF ` 54 000/- WAS PAID TO THE ASSESSEE. THE RENTAL AGREE MENT WAS MADE AS 15.02.2010 ONLY BECAUSE THE DATE OF SAL E OF OLD BUILDING WAS ALSO 15.02.2010 SO AS TO CLAIM DEDUCTI ON U/S 54F. HENCE THE AO WAS OF THE OPINION THAT THE ASSESSEE IS NOT ENTITLED FOR CLAIMING DEDUCTION U/S 54F OF THE ACT OF ` 34 76 585/-. ITA NO.1035 /MDS/2016 4 AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER TH E ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL THE LD.CIT(A) CONFIRMED THE ACTION OF AO IN DENYING EXE MPTION U/S.54F OF THE ACT. AGAINST THE ORDER OF LD.CIT(A) NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US LD.A.R SUBMITTED THAT THE ASSESSEE S OLD THE VACANT LAND IN FEBRUARY 2010 AND USED THE SALE PROC EEDS TOWARDS CONSTRUCTION COST WHICH IS NOT DISPUTED BY THE AO. THE DISPUTE IS ONLY WITH REGARD TO THE CONSTRUCTION HAV ING BEEN COMPLETED BEFORE THE SALE OF THE VACANT LAND AND EX EMPTION CANNOT BE ALLOWED. THE ASSESSEE TRIED HER BEST TO D ISPOSE THE VACANT LAND BUT COULD NOT DO SO AND IMMEDIATELY ON THE SALE USED THE PROCEEDS FOR CONSTRUCTION. FURTHER LD.A.R SUBMITRTED THAT THE SALE PROCEEDS WERE INVESTED FOR PURCHASE O F A RESIDENTIAL PROPERTY HENCE IT MAYBE ALLOWED THE E XEMPTION U/S.54F OF THE ACT. 5. ON THE OTHER HAND LD.D.R SUBMITTED THAT THE A SSESSEE ITA NO.1035 /MDS/2016 5 PURCHASED 1074.60 SQ.FT. OF UNDIVIDED SHARE OF LAND ON 30.01.2008 AND HAD ENTERED INTO AN AGREEMENT WITH M /S VISHRANTHI SABARI CONSTRUCTIONS ON 27.03.2007 FOR C ONSTRUCTION OF 1734.45 SQ.FT. OF SUPER BUILT UP AREA. THE NEW P ROPERTY WAS ALSO LET OUT ON 15.02.2010 AND THE NON-JUDICIAL STA MP PAPER USED WAS PURCHASED ON 07.10.2009. FURTHER LD.D.R SUBMI TTED THAT NO DETAILS ARE GIVEN EITHER BY THE AO OR THE ASSESS EE REGARDING THE DETAILS OF PAYMENTS RECEIVED ON SALE OF VACANT LAND AND PAYMENTS MADE TO THE BUILDER. ACCORDING TO LD.D.R THE ASSESSEE DOES NOT FULFILL ANY OF THE CONDITIONS LAI D DOWN FOR CLAIMING EXEMPTION U/S 54F I.E. PURCHASING FLAT BE FORE ONE YEAR OF SALE OF OLD ASSET OR PURCHASING FLAT WITHIN TWO YEARS OF SALE OF OLD ASSET OR CONSTRUCTING FLAT WITHIN THREE YEARS O F SALE OF OLD ASSET. HENCE LD.D.R PLEADED TO CONFIRM THE ORDER OF LD.CIT(A). 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE THE LOWER AUTHORITIES REJECT ED THE CLAIM OF ASSESSEE U/S.54F OF THE ACT FOR THE REASON THAT CON STRUCTION OF A NEW RESIDENTIAL HOUSE WAS COMMENCED BEFORE THE DAT E OF TRANSFER OF CAPITAL ASSET AND ALSO COMPLETED BEFORE THE DATE OF ITA NO.1035 /MDS/2016 6 SALE OF OLD BUILDING. IT WAS NOTED BY THE AO THAT T HE OLD BUILDING WAS SOLD ON 15.02.2010 THE NEW BUILDING WAS LET OU T ON THE SAME DAY I.E. 15.02.2010. NENCE IT WAS INFERRED B Y THE LD. ASSESSING OFFICER THAT THE CONSTRUCTION OF A NEW B UILDING WAS COMPLETED BEFORE THE DATE OF SALE OF THE BUILDING WHICH WAS SOLD. IT IS ALSO NOTED THAT THE ASSESSEE PURCHASED THE UNDIVIDED SHARE IN THE LAND ON 30.01.2008 AND ENTERED INTO AN AGREEMENT WITH M/S VISHRANTHI SABARI CONSTRUCTIONS ON 27.03.2 007 FOR CONSTRUCTION OF 1734.45 SQ.FT. OF SUPER BUILT UP AR EA I.E. BEFORE PURCHASING THE UNDIVIDED SHARE OF LAND. 6.1 NOW THE PLEA OF THE ASSESSEE IS THAT AS PER S EC.54F THE ASSESSEE HAS TO INVEST THE CAPITAL GAINS ARISING FR OM THE TRANSFER OF ANY LONG TERM CAPITAL GAINS NOT BEING A RESIDEN TIAL HOUSE WITHIN ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE IN THE PURCHASE OF NEW RESIDENT IAL HOUSE OR WITHIN THREE YEARS AFTER THE DATE OF TRANSFER CONST RUCTED A NEW RESIDENTIAL HOUSE. ACCORDING TO LD.A.R THERE IS N O STIPULATION FOR THE DATE OF COMMENCEMENT OF CONSTRUCTION OF NEW RES IDENTIAL HOUSE WHICH IS IRRELEVANT AND CONSTRUCTION MAY BE COMMENCED ITA NO.1035 /MDS/2016 7 EVEN BEFORE THE TRANSFER OF ASSET AND ONLY THE REQU IREMENT IS THE INVESTMENT IN THE CONSTRUCTION OF A NEW BUILDING TO BE MADE WITHIN THREE YEARS OF SALE OF PROPERTY THEN THE BE NEFIT OF SEC.54F TO BE GIVEN. 6.2 IN THE PRESENT CASE THERE IS NO DISPUTE TO TH E FACT THAT THE CONSTRUCTION IS COMPLETED WITHIN THREE YEARS FROM THE SALE OF CAPITAL ASSET. HOWEVER DEDUCTION WAS DENIED ON TH E REASON THAT CONSTRUCTION WAS COMMENCED BEFORE THE SALE OF ORIGINAL CAPITAL ASSET. IN MY OPINION IF THE ASSESSEE START ED THE CONSTRUCTION BEFORE THE DATE OF TRANSFER OF CAPITAL ASSET AND IT WAS COMPLETED WITHIN THREE YEARS FROM THE DATE OF T HAT ASSET THE BENEFIT OF SEC.54F TO BE GIVEN. THIS VIEW WAS FORT IFIED BY THE DECISION OF CO-ORDINATE BENCH OF CHENNAI TRIBUNAL IN THE CASE OF SHRI VENU SUKUMAR IN ITA NO.3407/MDS./2016 DATED 26.04.2017 FOR ASSESSMENT YEAR 2013-14 WHEREIN HELD THAT:- 7. WE FIND A FORCE IN THE ARGUMENT OF THE ASSESSE E FOR THE REASON THAT THE ACT DOES NOT DESCRIBE ANY CONDITION AS TO THE DATE OF COMMENCEMENT OF CONSTRUCTION OF A NEW HOUSE PROPERTY. THE ONLY CONDITION IS THAT CONSTRUCTION OF HOUSE PR OPERTY SHOULD BE COMPLETED WITHIN THREE YEARS FROM THE DATE OF TR ANSFER. THE DATE OF COMMENCEMENT OF CONSTRUCTION IS IRRELEVANT AND THE ITA NO.1035 /MDS/2016 8 CONSTRUCTION MAY BE COMMENCED EVEN BEFORE THE TRANS FER OF ASSET AS HELD BY DELHI HIGH COURT IN THE CASE OF CI T VS. BHARTI MISHRA REPORTED IN [2014] 41 TAXMANN.COM.50(DELHI). FURTHER HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS.J.R.S UBRAMANYA BHAT IN [1986] 28 TAXMAN 578 (KAR.) HAS TAKEN A SI MILAR VIEW WHICH WAS IN TURN FOLLOWED BY ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. H.K.KAPOOR IN [1998] 234 ITR 753 (ALLAHA BAD). FURTHER THE ANDHRA PRADESH HIGH COURT AND TELANGAN A IN THE CASE OF LEARNED COMMISSIONER OF INCOME TAX VS. SMT. V.VENKATA LAXMI IN [2015] 59 TAXMANN.COM 216 HELD T HAT WHERE INVESTMENT IN CONSTRUCTION OF A NEW BUILDING IS MAD E WITHIN 3 YEARS OF SALE OF THE PROPERTY THE BENEFIT OF SEC.5 4F IS GIVEN. THUS AS SEEN FROM THE FACTS BROUGHT ON RECORD THE ASSESSEE COMPLETED THE CONSTRUCTION IN FINANCIAL YEAR 2013-1 4 FOR WHICH NO DISPUTE AND AO RECORDED IN HIS ORDER. FURTHER IN THE PRESENT CASE THE LD. LEARNED COMMISSIONER OF INCOME TAX(A) ACCEPTED THAT THE CONSTRUCTION WAS COMPLETED WITHIN 3 YEARS FROM THE DATE OF SALE OF CAPITAL ASSET. HOWEVER DEDUCTION WAS D ENIED ON THE REASON THAT CONSTRUCTION WAS COMMENCED BEFORE SALE OF CAPITAL ASSET. FURTHER AS RIGHTLY ARGUED BY THE LD. A.R THE LAW DOES NOT CONTEMPLATE THE IDENTITY OF THE FUNDS FOR INVESTMEN TS IN CONSTRUCTION OF NEW HOUSE OF RESIDENTIAL PROPERTY. IF THE ASSESSEE STARTED THE CONSTRUCTION BEFORE THE TRANSF ER OF PROPERTY THE ASSESSEE CANNOT BE PRECLUDED FROM CLAIMING DEDU CTION U/S.54 OR U/S.54F OF THE ACT. THIS VIEW WAS FORTIF IED BY THE DECISION OF CO-ORDINATE BENCH OF TRIBUNAL IN THE C ASE OF MUNEER KHAN VS. ITO IN [2010] 41 SOT 504 (TRIBUNAL HYD]). BEING SO WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.54F OF THE ACT FOR THE ENTIRE COST OF THE CONST RUCTION INCURRED ITA NO.1035 /MDS/2016 9 BY THE ASSESSEE BEFORE ONE YEAR OF TRANSFER OF CAPI TAL ASSET OR 3 YEARS AFTER TRANSFER OF CAPITAL ASSET. IN OTHER WO RDS EXPENSES INCURRED BY ASSESSEE FOR CONSTRUCTION OF NEW RESIDE NTIAL HOUSE BETWEEN 19.11.2011 TO 18.11.2014 TO BE CONSIDERED FOR DEDUCTION U/S.54F OF THE ACT. FURTHER SIMILAR VIE W WAS ALSO TAKEN BY CHENNAI TRIBUNAL IN THE CASE OF MR.C.ARYA SUNDARAM FOR ASSESSMENT YEAR :2010-11 IN I.T.A.NO.1208/MDS./ 2015 VIDE ORDER DATED 27.12.2016. ACCORDINGLY THIS GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED AND THE AO IS DIRECTED T O RE-COMPUTE THE DEDUCTION U/S.54F OF THE ACT AFTER GIVING AN OP PORTUNITY TO THE ASSESSEE OF BEING HEARD. 8. IN THE RESULT THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. THE TRIBUNAL ALSO TOOK A SIMILAR VIEW IN THE CASE O F MR.C.ARYA SUNDARAM FOR ASSESSMENT YEAR 2010-11 VIDE ORDER DAT ED 27.12.2016 IN ITA NO.1208/MDS./2015. 6.3 IN VIEW OF THIS THE COST OF CONSTRUCTION INCU RRED BY THE ASSESSEE TO A NEW RESIDENTIAL HOUSE BETWEEN 15.02.2 010 AND 14.02.2013 TO BE CONSIDERED FOR GRANT OF DEDUCTION U/S.54F OF THE ACT. THE ASSESSEE HAS TO FURNISH THE DETAILS O F COST OF CONSTRUCTION INCURRED BY THE ASSESSEE DURING THIS P ERIOD. ACCORDINGLY THIS GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED ITA NO.1035 /MDS/2016 10 AND THE LD. ASSESSING OFFICER IS DIRECTED TO COMPUT E THE DEDUCTION U/S.54F OF THE ACT AFTER GIVING AN OPPORT UNITY OF BEING HEARD. 7. IN THE RESULT THE APPEAL OF ASSESSEE IS ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 29 TH NOVEMBER 2017 . SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI DATED THE 29 TH NOVEMBER 2017 . K S SUNDARAM. ' ( )!*+ +%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF