MURUGESAN BALAKRISHNAN, CHENNAI v. ITO NON CORPORATE WARD 8(5), CHENNAI

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI . BEFORE SHRI DUVVURU RL REDDY JUDICIAL MEMBER AND SHRI S. JAYARAMAN ACCOUNTANT MEMBER ./ ITA NO.2949/CHNY/2018 [ [ /ASSESSMENT YEAR: 2015-16 SHRI MURUGESAN BALAKRISHNAN NO.1/89 PILLAIYAR KOIL STREET KATTUPAKKAM CHENNAI 600 056. VS. THE INCOME TAX OFFICER NON-CORPORATE WARD 8(5) CHENNAI 34. PAN: BIKPB 0222N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI G. RAMAKRISHNAN SHRI SANJIV KUMAR SHAH CA /RESPONDENT BY : SHRI CLEMENT RAMESH KUMAR ADDL.CIT /DATE OF HEARING : 19.08.2019 /DATE OF PRONOUNCEMENT : 15.11.2019 / O R D E R PER SHRI S. JAYARAMAN ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-9 CHENNAI IN ITA NO.42/CIT(A)-9/2017-18 DATED 27.08.2018 FOR THE ASSESSMENT YEAR 2015-16. ITA NO.2949/CHNY/2018 :- 2 -: 2. SHRI MURUGESAN BALAKRISHNAN THE ASSESSEE FILED RETURN CLAIMING RS.1 28 48 750/- AS AN EXEMPT INCOME. DURING THE COURSE OF THE ASSESSMENT THE ASSESSEE CLAIMED THAT HIS FATHER INHERITED 3 ACRES 68 CENTS OF LAND. AFTER HIS DEATH THE ASSESSEES MOTHER SETTLED THE PROPERTY AMONG THE ASSESSEE HIS BROTHERS AND ONE SISTER OF WHICH 93 CENTS WAS SETTLED ON HIM. HE HAS ENTERED INTO AN AGREEMENT OF SALE FOR THE PORTION OF THE LAND SETTLED ON HIM I.E. 93 CENTS WITH M/S. ASHOK NANDAVANAM PROPERTIES PVT. LTD. FOR RS.6 51 00 000/- WHICH WAS REGISTERED VIDE DOC.NO.16099/2013 DATED 25.11.2013 AND NO.11541/2014 AND HE RECEIVED RS.4 92 50 000/- TILL THE END OF THE YEAR RELEVANT TO THIS ASSESSMENT YEAR WHICH WAS DISTRIBUTED TO THE ASSESSEE HIS WIFE DAUGHTER AND SON AT RS.123.49 LAKHS EACH. THE ASSESSEE PLEADED THAT BEING A HUF PROPERTY HIS SHARE OF SALE CONSIDERATION RECEIVED AT RS.123.49 LAKHS IS CLAIMED AS AN EXEMPT INCOME U/S.47(1). THE ASSESSING OFFICER FOUND FROM THE REGISTERED SALE AGREEMENT DATED 25.11.2013 THE GPA REGISTERED IN DOC.NO.11541/2014 DATED 10.07.2014 AND FROM THE COPY OF PATTA AND CHITTA ADANGAL ISSUED BY THE TAHSILDHAR OF ALANDUR TALUK ETC THAT THE ASSESSEE IS AN ABSOLUTE OWNER OF THE LAND AND IT WAS HELD IN HIS ITA NO.2949/CHNY/2018 :- 3 -: INDIVIDUAL CAPACITY. THEREFORE THE ASSESSING OFFICER HELD THAT THE IMPUGNED TRANSFER IS NOT A TOTAL OR PARTIAL PARTITION OF HUF IT IS A SALE ON THE FIRST INSTANCE TO AN OUTSIDER. HE HAS ALSO HELD THAT THE ASSESSEE HAS NOT LET ANY EVIDENCE ON RECORD TO SHOW THAT SHRI MURUGESAN BALAKRISHNAN HUF EVER EXISTED WITH THE ASSESSEE AS KARTHA. NEITHER THE SALE AGREEMENT NOR THE GENERAL POWER OF ATTORNEY (GPA) WAS EXECUTED WITH THE STATUS OF HUF. FURTHER THE ASSESSEES CLAIM OF EXEMPTION IN RETURN OF INCOME IN THE STATUS OF INDIVIDUAL ITSELF PROVED THAT THERE IS NO HUF IN THE ASSESSEES NAME AND ACCORDINGLY THE ASSESSING OFFICER HELD THAT THE IMPUGNED PROPERTY IS ASSESSEES INDIVIDUAL PROPERTY AND REFUSED THE EXEMPTION CLAIM U/S.47(1). THEREAFTER THE ASSESSEE PLEADED TO ASSESS THE RECEIPT OF ACTUAL CONSIDERATION OF RS.4 92 50 000/- ALONE INSTEAD OF THE AGREED CONSIDERATION OF RS.6.51 CRORE. IN THIS REGARD THE ASSESSING OFFICER EXAMINED THIS ISSUE WITH M/S. ASHOK NANDAVANAM PROPERTIES PVT. LTD. AND FOUND FROM THEIR ACCOUNTS ETC. THAT THE SALE CONSIDERATION SHOWN IS RS.6.51 CRORES THE ASSESSEE HANDED OVER POSSESSION AND RECEIVED RS.4 92 50 000/- AND THE BALANCE SUM OF RS.2 51 12 290/- IS SHOWN AS A LIABILITY PAYABLE BY THEM TO THE ASSESSEE. THEREFORE THE ASSESSING OFFICER BROUGHT TO TAX THE SALE CONSIDERATION OF RS.6.5 CRORES. THE ITA NO.2949/CHNY/2018 :- 4 -: ASSESSING OFFICER ALSO HELD THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF INVESTMENT IF ANY FOR THE DEDUCTION CLAIMED U/S.54 INSPITE OF HIS PRE-ASSESSMENT NOTICE DATED 14.12.2017 AND HENCE DID ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.54. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD.CIT(A) INTER-ALIA CONFIRMED THE FINDINGS RECORDED BY THE ASSESSING OFFICER. 2.1 WITH RESPECT TO ASSESSEES CLAIM ON THE COST OF ACQUISITION / FMV AS AT 01.04.1981 INDEXED COST OF ACQUISITION WITH COST INFLATION INDEX ON THE FMV AS ON 01.04.1981 TO THE DATE OF SALE ALONG WITH COST OF IMPROVEMENT THE LD.CIT(A) HELD THAT THE ASSESSEE DID NOT BRING ANY MATERIAL ON RECORD TO ESTABLISH THAT THE PROPERTY WAS ACQUIRED BY THE PREVIOUS OWNER BEFORE 01.04.1981. WITH RESPECT TO ASSESSEES CLAIM U/S.54 THE LD.CIT(A) HELD THAT THE ASSESSEE DID NOT CLAIM SUCH DEDUCTION EITHER IN THE RETURN NOR DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO DID NOT BRING ANY MATERIAL IN SUPPORT OF EXEMPTION DURING THE APPEAL PROCEEDINGS AND HENCE THE LD.CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER THE ASSESSEE FILED THIS APPEAL. ITA NO.2949/CHNY/2018 :- 5 -: 3. THE LD.AR SUBMITTED THAT THE LD.CIT(A) FAILED TO CONSIDER THAT THE TRANSACTION WAS BY WAY OF AGREEMENT FOR SALE AND THE ASSESSEE HAS NOT GIVEN POA FOR SALE OF ENTIRE EXTENT OF LAND BUT ONLY TO THE EXTENT FOR WHICH THE POSSESSION WAS HANDED OVER OR THE CONSIDERATION RECEIVED. HE INVITED OUR ATTENTION TO THE CLAUSE 9 IN PAGE 5 OF THE COPY OF AGREEMENT FOR SALE TO PROVE THAT NO PHYSICAL POSSESSION OF SCHEDULE PROPERTY IS HANDED OVER. THEREFORE THE LD.AR PLEADED THAT SALE CAN BE CONSIDERED TO THE EXTENT OF RECEIPT OF SALE CONSIDERATION ONLY. IN SUPPORT THE LD.AR INVITED OUR ATTENTION TO THE PAPER-BOOK WHEREIN THE SUMMARY OF SALE DEED EXECUTED FOR LAND GIVEN ON POA AND THE STATEMENT OF ACCOUNT OF THE BUYER AGREEMENT OF SALE ENTERED WITH THE BUYER CONSIDERATION RECEIVED IN THE FORM OF LAND POWER OF ATTORNEY EXECUTED IN THE NAME OF THE BUYER PROOF FOR INVESTMENT MADE IN RESIDENTIAL PROPERTY THE PARTICULARS OF POWER OF ATTORNEY DOCUMENT NO. & DATE TOTAL EXTENT OF LAND CONVEYED AS PER POWER OF ATTORNEY DOCUMENT VALUE CONVEYED IN POWER OF ATTORNEY DOCUMENT AS PER SALE AGREEMENT SALE DEED DOCUMENT NO. EXECUTED BY POWER AGENT VALUE AS PER SALE DEED VALUE AS PER SALE DEED FOR BALAKRISHNAN WERE PLACED AND SUBMITTED THAT THE LD.CIT(A) ALSO GROSSLY ERRED IN NOT ALLOWING THE CLAIM MADE U/S.54EC AND 54F AND ERRED IN NOT ADOPTING THE CORRECT ITA NO.2949/CHNY/2018 :- 6 -: COST OF ACQUISITION AS PER PROVISIONS OF LAW AND HENCE THE LD.AR PLEADED TO ALLOW THE APPEAL. PER CONTRA THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL. IT IS CLEAR FROM THE ABOVE THE SALE DEED WERE EXECUTED ON VARIOUS DATES FROM 09.06.2014 TO 21.01.2015. FROM THE MATERIAL FURNISHED BY THE ASSESSEE IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT EXAMINED VARIOUS ASPECTS OF THE TAXATION IN ITS PROPER PERSPECTIVE. THEREFORE WE DEEM IT FIT TO REMIT THIS ISSUE BACK TO THE ASSESSING OFFICER FOR A FRESH EXAMINATION. AS HELD BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. BALBIR SINGH MAINI 398 ITR 531 (SC) THE CAPITAL GAINS ARISING FROM THE SALE OF IMMOVABLE PROPERTY CAN BE ASSESSED IN THE YEAR IN WHICH THE REGISTRATION OF THE PROPERTY IS EXECUTED. THEREFORE WE DIRECT THE ASSESSING OFFICER TO EXAMINE AFRESH AND ASSESS THE CAPITAL GAINS IN THE YEAR IN WHICH THE REGISTRATION WAS EXECUTED. THE ASSESSEE SHALL LAY ALL MATERIALS IN SUPPORT OF HIS CONTENTION BEFORE THE ASSESSING OFFICER AND COMPLY WITH THE REQUIREMENTS OF THE ASSESSING OFFICER IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER IS ALSO FREE TO CONDUCT APPROPRIATE ENQUIRY AS DEEMED FIT HOWEVER HE SHALL FURNISH ITA NO.2949/CHNY/2018 :- 7 -: DUE OPPORTUNITY TO THE ASSESSEE ON THE MATERIALS ETC. TO BE USED AGAINST THE ASSESSEE AND ON DUE CONSIDERATION OF THE ASSESSEES CLARIFICATION / EXPLANATION SHALL PASS THE ORDER IN ACCORDANCE WITH LAW. 4.1 SINCE THE SUBSTANTIAL ISSUE IS REMITTED BACK SUPRA THE OTHER ISSUES RAISED BY THE ASSESSEE VIZ. DEDUCTION CLAIMED U/S.54F ADOPTION OF CORRECT COST OF ACQUISITION ETC. ARE ALSO REMITTED BACK TO THE ASSESSING OFFICER FOR A FRESH EXAMINATION AND DUE CONSIDERATION ON THE ABOVE LINES. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 15 TH NOVEMBER 2019 IN CHENNAI. SD/- SD/- /CHENNAI /DATED 15 TH NOVEMBER 2019 RSR ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER ITA NO.2949/CHNY/2018 :- 8 -: /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF