Smt. Anita Miglani, Ghaziabad v. ITO, Ghaziabad

ITA 2235/DEL/2016 | 2009-2010
Pronouncement Date: 18-11-2019 | Result: Allowed
Expert Summary: Capital gain for the purpose of S.54F has to be worked out applying S.48 without imposing fiction of S.50C into it.

Appeal Details

RSA Number 223520114 RSA 2016
Assessee PAN AAVPM0623N
Bench Delhi
Appeal Number ITA 2235/DEL/2016
Duration Of Justice 3 year(s) 6 month(s) 22 day(s)
Appellant Smt. Anita Miglani, Ghaziabad
Respondent ITO, Ghaziabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2019
Appeal Filed By Assessee
Tags 2235
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 18-11-2019
Date Of Final Hearing 16-02-2017
Next Hearing Date 16-02-2017
First Hearing Date 16-02-2017
Assessment Year 2009-2010
Appeal Filed On 26-04-2016
Judgment Text
1 I.T.A NO. 2235/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE MS SUCHITRA KAMBLE JUDICIAL MEMBER AND SHRI O. P. MEENA ACCOUNTANT MEMBER I.T.A NO. 2235/DEL/2016 (A.Y 2009-10) ANITA MIGLANI KJ-2 KAVI NAGAR GHAZIABAD. (AAVPM 0623 N) (APPELLANT) VS ITO WARD 1(1) GAZIABAD (RESPONDENT) APPELLANT BY SHRI AJAY WADHWA ADV. MS. VANSHIKA TANEJA ADV. RESPONDENT BY SHRI RAGNI HANDA C.A. SHRI SURENDRA PAL SR. D.R ORDER PER SUCHITRA KAMBLE JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 29.03.2016 PASSED BY CIT(A)-IV KANPUR FOR ASSESSMENT YEAR 200 9-10. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS OF THE CASE AND IN LAW THE C OMMISSIONER OF INCOME TAX (APPEAL-IV) KANPUR ERRED TO ENHANCE AND THUS C ONFIRMED THE ADDITION OF RS. 64 07 515/- IN PLACE OF AN AMOUNT O F RS. 30 17 456/- AS MADE TO THE INCOME OF THE APPELLANT IN RESPECT O F LONG TERM CAPITAL GAIN DERIVED ON THE SALE OF THE PROPERTY. THE ENHAN CEMENT HAS BEEN MADE WITHOUT ISSUING ANY SPECIFIC NOTICE OF ENHANCE MENT BY THE COMMISSIONER OF INCOME TAX (APPEAL-IV) KANPUR THOU GH EARLIER PROPOSED BY HIS PREDECESSOR AND THE SAME IS UNJUSTI FIED UNWARRANTED ILLEGAL BAD IN LAW AND IN ANY CASE WI THOUT MERITS. 2. THAT ON THE FACTS OF THE CASE AND IN LAW THE CO MMISSIONER OF INCOME TAX (APPEAL-IV) KANPUR MISDIRECTED HIM TO CALCULAT E THE LONG TERM CAPITAL GAIN ON THE SALE OF THE PROPERTY BY ADOPTIN G DEEMED SALE DATE OF HEARING 14.11.2019 DATE OF PRONOUNCEMENT 18.11.2019 2 I.T.A NO. 2235/DEL/2016 VALUE UNDER SECTION 50C OF THE ACT AT A FIGURE OF R S. 64 07 515/- AND FURTHER TO CALCULATE THE LONG TERM CAPITAL GAIN OF RS. (-) 41 57 485 BY ADOPTING FULL VALUE OF CONSIDERATION RECEIVED THERE BY OBSERVING THAT THE DEDUCTION UNDER SECTION 54F AND 54(1 )(A) WOULD BE NIL RESULTING INTO NET TAXABLE LONG TERM CAPITAL GAIN OF RS. 64 0 7 515/- AND AS SUCH CONFIRMED THE ACTION OF THE ASSESSING OFFICER TO ASSESS THE LONG TERM CAPITAL GAIN AT RS. 64 07 515/-. THE CONFIRMAT ION OF ENHANCEMENT IS UNJUSTIFIED UNWARRANTED WITHOUT FOL LOWING THE PROVISIONS CONTAINED UNDER SECTION 54F OF THE ACT A ND THUS BAD IN LAW. 3. THAT ON THE FACTS OF THE CASE AND IN LAW THE FI NDINGS RECORDED AND METHOD ADOPTED TO WORK OUT LONG TERM CAPITAL GAIN A ND TO DENY EXEMPTION IN RESPECT OF INVESTMENT MADE IN THE PURC HASE OF THE RESIDENTIAL HOUSE AS CONTAINED UNDER SECTION 54F(1) (A) OF THE ACT IS THUS WRONG ILLEGAL AND AGAINST THE LEGAL PROVISION S CONTAINED UNDER SECTION 54F(1)(A) OF THE ACT. THE CIT(A- IV) KANPU R MISDIRECTED HIM TO SIMPLY CALCULATE LONG TERM CAPITAL GAIN WITHOUT CONSIDERING THE INVESTMENT MADE IN PURCHASE OF THE RESIDENTIAL HOUS E BEING THE MAIN ISSUE AND SUBJECT MATTER OF THE APPEAL AND IS THUS ILLEGAL AND BAD IN LAW THE WORKING ADOPTED OBSERVATION MADE ARE BASED ON SURMISES CONJECTURES HYPOTHETICAL IN NATURE ILLE GAL UNWARRANTED BAD IN LAW AND IN ANY CASE AGAINST THE FACTS OF THE CASE. 4. THAT ON THE FACTS OF THE CASE AND IN LAW THE CO MMISSIONER OF INCOME TAX (APPEAL-IV) KANPUR ERRED IN NOT ALLOWING BENEF IT OF EXEMPTION FROM LONG TERM CAPITAL GAIN IN RESPECT OF THE INVES TMENT MADE IN THE PURCHASE OF THE RESIDENTIAL HOUSE IN VIEW OF THE PR OVISIONS CONTAINED IN SECTION 54F(1)(A) OF THE ACT 5. THAT THE APPELLANT CRAVES LEAVE TO MODIFY/AMEND OR ADD ANY ONE OR MORE GROUNDS. 3. THE RETURN DECLARING AN INCOME OF RS.7 01 200/- WAS FILED ON 12.08.2009. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) DATED 25.08.2010 WAS ISSUED AND SERVED ON THE ASSESSEE. S UBSEQUENTLY NOTICE U/S 142(1) DATED 09.09.2011 ALONG WITH QUESTIONNAIRE WA S ISSUED. ON 18.11.2011 CA OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDI NGS AND FILED WRITTEN SUBMISSIONS AND WAS ASKED TO SUBMIT THE DETAILS OF PROPERTY SOLD. AS PER AIR INFORMATION TWO PROPERTIES ONE PROPERTY FOR RS.1 5 8 00 000/- AND OTHER PROPERTY FOR RS.3 14 67 000/- HAVE BEEN SOLD. THE C A OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND REPLIED TO TH E QUERIES RAISED BY THE ASSESSING OFFICER. THE ASSESSEE IS DERIVING INCOME FROM SALARY FROM 3 3 I.T.A NO. 2235/DEL/2016 ORGANIZATIONS. INCOME FROM BUSINESS AND PROFESSION WAS ALSO DECLARED AND INTEREST FROM M/S. GLOBE CONSTRUCTION WAS ALSO DECL ARED UNDER THE HEAD INCOME FROM BUSINESS LONG TERM CAPITAL GAIN FOR RS.49 54 576/- WAS SHOWN AND WAS CLAIMED EXEMPTION U/S 54 BY SHOWING PURCHAS E OF RESIDENTIAL PROPERTY FOR RS.1 15 32 500/- AND WAS ALSO SHOWN BANK INTERE ST AS WELL AS OTHER INTEREST INCOME OF RS.1 17 112/- FROM OTHER SOURCES OUT OF WHICH INTEREST PAID ON LOANS FOR RS.1 35 656/- WAS DEDUCTED AND INCOME FROM OTHER SOURCES WAS SHOWN IN NEGATIVE FOR RS.18 544/-. THE ASSESSMENT W AS COMPLETED AT RS.38 55 743/- VIDE ASSESSMENT ORDER DATED 30.12.20 11. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A) IN THIS CIT(A) DISMISSED THE APPEAL OF T HE ASSESSEE. 5. THE LD. AR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ALONG WITH HER HUSBAND SOLD TWO PROPERTIES (EACH HAVING 1/2 SHARE) AND THE SALE PROCEEDS WERE INVESTED IN THE PURCHASE OF RESIDENTIAL HOUSE. THE PROPERTIES WERE SOLD FOR A TOTAL VALUE OF RS.2 60 6 1 000/- WHILE THE STAMP DUTY PAID ON A TOTAL VALUE OF RS.4 71 91 000/-. THE CAPI TAL GAIN ON THE SALE OF THE PROPERTY WAS CLAIMED AS EXEMPT BY THE ASSESSEE IN V IEW OF THE PROVISIONS CONTAINED IN SECTION 54F(1)(B) OF THE ACT. THE ASSE SSING OFFICER WHILE NOT DISPUTING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U /S 54F(1)(B) OF THE ACT IN RESPECT OF INVESTMENT OF LONG TERM CAPITAL GAIN HAS CALCULATED AND WORKED OUT THE ADDITION OF RS.30 17 456/- TO THE INCOME AS PER WORKING CONSIDERING THE FULL VALUE OF CONSIDERATION AS PER SECTION 50C WHIL E DETERMINING EXEMPTION. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) GHAZIA BAD. THE LD. AR FURTHER SUBMITTED THAT PENDING THE DISPOSAL OF THE APPEAL F ILED BEFORE THE CIT(A) GHAZIABAD A SEARCH WAS CONDUCTED ON 19.02.2013 BY THE DEPARTMENT AT THE BUSINESS PREMISES OF THE COMPANY AND ALSO AT THE RE SIDENCES OF THE DIRECTORS. AS A RESULT OF WHICH THE CASES WERE CENTRALIZED WIT H THE ACIT AND LIKEWISE THE APPEAL WHICH WAS PENDING WITH CIT(A) GHAZIABAD WAS TRANSFERRED TO THE CIT(A) KANPUR. THE CIT(A) KANPUR VIDE ORDER DATED 29.03.2016 WHEREBY THE CAPITAL GAIN ASSESSED BY THE ASSESSING OFFICER AT R S.30 17 056/- WAS ENHANCED TO THE RS.64 07 515/- AS PER CALCULATIONS GIVEN IN THE ORDER. THE CIT(A) HELD 4 I.T.A NO. 2235/DEL/2016 THAT NO EXEMPTION WOULD BE AVAILABLE SINCE THE ASSE SSEE HAS SUFFERED CAPITAL LOSS EVEN THOUGH CAPITAL GAIN IS BEING CHARGED TO TAX AFTER APPLICATION OF SECTION 50C OF THE ACT. THE ADDITION OF LONG TERM C APITAL GAIN WAS ENHANCED BY THE CIT(A) KANPUR FROM THE ASSESSED LONG TERM CAPI TAL GAIN OF RS.30 17 456/- TO RS.64 07 515/-. THE LD. AR SUBMIT TED THAT THE ISSUE UNDER CONSIDERATION IS RELATING TO WORKING ADOPTED FOR CA LCULATING THE BENEFIT OF EXEMPTION AVAILABLE TO THE ASSESSEE UNDER SECTION 5 4F(1)(B) OF THE ACT. THE ONLY DISPUTE WITH THE ASSESSING OFFICER IS WITH THE WORK ING OF THE EXEMPTION AS CLAIMED U/S 54 OF THE ACT. THE ASSESSEE CALCULATED EXEMPTION U/S 54 FOR THE INVESTMENT MADE BY THE ADOPTING THE FIGURE OF ACTUA L SALE CONSIDERATION RECEIVED AND THE LEARNED ASSESSING OFFICER CALCULAT ED THE EXEMPTION U/S 54 OF THE INVESTMENT MADE BY ADOPTING THE FIGURE OF THE S ALE CONSIDERATION BY INVOKING SECTION 50C OF THE ACT. THE CIT(A) HAS MIS DIRECTED AND ENHANCED THE ADDITION. THE INVESTMENT MADE IN THE PURCHASE OF NE W RESIDENTIAL HOUSE THE ESSENTIAL CRITERIA FOR ALLOWING BENEFIT OF DEDUCTIO N U/S 54F(1)(B) OF THE ACT WAS IGNORED. THE LD. AR SUBMITTED THAT SECTION 54F CLEA RLY STATES THAT IF THE COST OF NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RES PECT OF THE ASSET TRANSFERRED SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE O F THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO TH E NET CONSIDERATION SHALL NOT BE CHARGED U/S 54F. NOWHERE DOES IT MENTION CONSIDE RATION AS PER SECTION 50C. THE FICTION U/S 50C IS EXTENDED ONLY TO THE AS PECT OF COMPUTATION OF CAPITAL GAINS AND THE SAME DOES NOT EXTEND TO THE C HARGING SECTION OR THE EXEMPTIONS TO THE CHARGING SECTION. THE LEGISLATURE CONSCIOUSLY INTENDED TO APPLY THE FICTION UNDER SECTION 50C ONLY TO THE EXP RESSION USED IN SECTION 48 AND NOT IN ANY OTHER PLACE. SECTION 50C HAS NO EFFE CT FOR CALCULATING EXEMPTION U/S 54F. THE LONG TERM CAPITAL GAIN EXEMPTION IS AD MISSIBLE U/S 54F(1)(B) OF THE ACT AS PER WORKING PROVIDED BY THE ASSESSEE WHE REIN TOTAL TAXABLE GAIN IS RS.2 68 830/- ONLY. DEEMING FICTION CREATED IN SECT ION 50C IS LIMITED ONLY TO THE EXTENT AND FOR THE PURPOSE OF SECTION 48 AND TH IS DEEMING FICTION CANNOT BE EXTENDED OR INTERPRETED AS MEANT FOR THE PURPOSE OF OTHER PROVISIONS OF THE ACT INCLUDING SECTION 54F. THE PROCESS OF ARRIVING AT C APITAL GAINS AND EXEMPTIONS ARE DISTINCT AND SEPARATE AND ONE DOES NOT OVERRIDE THE OTHER. SECTION 54F IS 5 I.T.A NO. 2235/DEL/2016 AN EXEMPTION PROVISIONS AND A COMPLETE CODE IN ITSE LF AND SINCE IT IS A COMPLETE CODE IN ITSELF COMPUTATION OF ELIGIBLE EXEMPTION H AS TO BE WORKED OUT WITHIN ITS FRAMEWORK AS FAR AS POSSIBLE AND DEEMING FICTION CO NTAINED IN ANY OTHER PROVISION CANNOT BE BROUGHT INTO SECTION 54F. SECTI ON 54F HAS TO BE APPLIED ONLY FOR THE DEFINITE AND LIMITED PURPOSE FOR WHICH IT IS CREATED. THE LD. AR SUBMITTED THAT IT IS NOT PERMISSIBLE TO SUB-JOIN OR TRACK A FICTION UPON FICTION. THUS THE LD. AR SUBMITTED THAT AS FAR AS THE EXEMP TION ALLOWABLE U/S 54F ONE HAS TO STRICTLY FOLLOW THE PROVISIONS OF THE PA RTICULAR SECTION AND COMPUTE THE EXEMPTION ACCORDINGLY WITHOUT IMPOSING ANY SECT ION CREATING A LEGAL FICTION INTO THE SECTION. THE LD. AR RELIED UPON THE FOLLOW ING DECISIONS: I. SMT. SABITA DEVI AGARWAL VS. ITO WARD-2(3) SIL IGURI [2019] 69 ITR(T) 231 (KOLKATA TRIB.) II. ANANT CHETAN AGARWAL VS. CIT [2018] 172 ITD 52 5 (LUCKNOW TRIB.) III. ITO VS. RAJ KUMAR PARASHAR [2017] 167 ITD 237 (JAIPUR TRIB.) IV. DCIT VS. DR. CHALASANI MALLIKARJUNA RAO (2016) 161 ITD 721 (VISAKHAPATNAM TRIB.) V. NAND LAL SHARMA VS. ITO [2015] 40 ITR(T) 518 (JA IPUR TRIB.) VI. DHANVEER SINGH GAMBHIR VS. ITO 3(2) INDORE [2 015] 56 TAXMANN.COM 205 (INDORE TRIB.) VII. PRAKASH KARNAWAT VS. ITO (2011) 16 TAXMANN.COM 357 (JAIPUR) VIII. GYAN CHAND BATRA VS. ITO [2010] 6 ITR(T) 147 (JAIPUR) IX. RAJ BABBAR VS. ITO (2013) 29 TAXMANN.COM 11 (MU MBAI TRIB.) X. COMMISSIONER OF INCOME TAX VS. GEORGE HENDERSON AND CO. LTD. [1967] 66 ITR 622 (SC) XI. CIT VS. SMT. NILOFER I. SINGH (2008) 309 ITR 23 3 (DELHI HC) XII. ITO VS. MANJIT SINGH [2010] 128 TTJ 82 (CHANDI GARH) (UO) XIII. CIT PANJI VS. V. S. DEMPO COMPANY LTD. [2016 ] 387 ITR 354 (SC) XIV. CIT VS. ACE BUILDERS (P.) LTD. (2005) 281 ITR 210 (BOM. HC) XV. CIT VS. ASSAM PETROLEUM INDUSTRIES (P.) LTD. (2 003) 262 ITR 587 (GAU. HC) 6 I.T.A NO. 2235/DEL/2016 6. THE LD. AR FURTHER SUBMITTED THAT THE CASE LAWS RELIED BY THE ASSESSING OFFICER IS NOT APPLICABLE TO THE FACTS OF THE ASSES SEES CASE AS JUDGMENT STATES THAT SECTION 50C WILL BE APPLICABLE TO DETERMINE SA LE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN AND NOT FOR PURPOSE OF EXEMPTION. THE JUDGMENT IS NOT IN RESPECT OF APPLICABILITY OF SECT ION 50C ON EXEMPTION CLAIMED ON CAPITAL GAIN. THE LD. AR FURTHER SUBMITTED THAT THE CASE LAWS RELIED BY THE CIT(A) ONLY SUPPORTS THE CASE OF THE ASSESSEE WHERE BY IT IS HELD THAT THE DEEMING FICTION CREATED BY VIRTUE OF SECTION 50C IN DETERMINING THE CAPITAL GAIN CANNOT BE EXTENDED TO SECTION 54F AND THE CAPITAL G AINS ARISING FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSETS FOR THE PU RPOSES OF SECTION 54F HAS TO BE WORKED OUT THE APPLYING SECTION 48 WITHOUT IMPOS ING SECTION 50C INTO IT. 7. THE LD. DR RELIED UPON THE ORDER OF CIT(A) AND S UBMITTED THAT THE CIT(A) HAS TAKEN THE COGNIZANCE OF THE HONBLE KARNATAKA H IGH COURTS DECISION IN CASE OF M/S. GAULI MAHADEVAPPA VS. ITO 259 CTR 579. THE LD. DR SUBMITTED THAT THE ENHANCEMENT IS PROPERLY JUSTIFIED BY THE C ALCULATION GIVEN BY THE CIT(A) IN THE ORDER. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORDS. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER ADMITTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54F(1)( B) IN RESPECT OF INVESTMENT ON LONG TERM CAPITAL GAIN BUT INSTEAD OF TAKING ACT UAL SALE CONSIDERATION RECEIVED HAS ADOPTED THE FIGURE OF SALE CONSIDERAT ION BY INVOKING SECTION 50C. THIS IS NOT IN ACCORDANCE WITH THE PROVISION OF SEC TION 50C WHICH HAS CREATED A DEEMING FICTION. SECTION 54F IS AN EXEMPTION PROVIS ION AND IT HAS GIVEN ITS APPLICABILITY IN ITSELF THEREFORE SECTION 50C WIL L NOT COME UNDER PICTURE. THE LONG TERM CAPITAL GAIN EXEMPTION IS ADMISSIBLE U/S 54F(1)(B) OF THE INCOME TAX ACT 1961 WHEREIN TOTAL TAXABLE GAIN COMES TO R S.2 68 830/- ONLY AS THE INVESTMENT MADE BY THE ASSESSEE ADOPTING THE FIGURE OF THE ACTUAL SALE CONSIDERATION RECEIVED IN CONSEQUENCE WITH SECTION 54F OF THE INCOME TAX ACT. THEREFORE THE CIT(A) WHILE ENHANCING THE ADDITION HAS IGNORED THE VERY EFFECT OF THE PROVISIONS OF SECTION 54F. BESIDES THIS THE CI T(A) WHILE ENHANCEMENT HAS NOT GIVEN ANY REASONS AS TO WHY THE ENHANCEMENT IS NECESSARY AND WHY THE 7 I.T.A NO. 2235/DEL/2016 ASSESSEE IS NOT JUSTIFIED IN ADOPTING THE FIGURE OF THE ACTUAL SALE CONSIDERATION RECEIVED. THUS THE ASSESSING OFFICER AS WELL AS CIT (A) FAILED TO JUSTIFY THE STAND BY MAKING ADDITION OF RS.30 17 456/- IN RESPECT OF LONG TERM CAPITAL GAIN WITHOUT GRANTING EXEMPTION U/S 54F OF THE INCOME TA X ACT. THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF NOVEMBER 2019 . SD/- SD/- (O. P. MEENA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 18/11/2019 PRITI YADAV SR. PS * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI