P.Saranakumari, CHENNAI v. ITO, CHENNAI

ITA 325/CHNY/2017 | 2010-2011
Pronouncement Date: 06-11-2017 | Result: Allowed

Appeal Details

RSA Number 32521714 RSA 2017
Assessee PAN BIFPS3168H
Bench Chennai
Appeal Number ITA 325/CHNY/2017
Duration Of Justice 9 month(s)
Appellant P.Saranakumari, CHENNAI
Respondent ITO, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 06-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 06-11-2017
Last Hearing Date 06-11-2017
First Hearing Date 06-11-2017
Assessment Year 2010-2011
Appeal Filed On 06-02-2017
Judgment Text
B/ SMC IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH CHENNAI . BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER I.T.A.NO.325 /MDS./2017 ( ASSESSMENT YEAR : 2010-11 ) SMT.P.SARANAKUMARI FLAT NO.4 HAMSADWANI NO.11/20 CANAL FIRST CROSS STREET CHENNAI 600 020. VS. THE INCOME TAX OFFICER NON-CORPORATE WARD 15(1) CHENNAI. PAN BIFPS 3168 H ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS.A.SUSHMA HARINI & MS.S.SRINIRANJANI ADVOCATES / RESPONDENT BY : MR.B.SAGADEVAN JCIT D.R ! ' / DATE OF HEARING : 06.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 06.11.2017 / 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 12.12.2016 PERTAINING TO ASSESSMENT YEAR 2010-11. ITA NO. 325/MDS/2017 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS F OR CONSIDERATION. 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N DISMISSING THE APPEAL OF THE APPELLANT HEREIN IN A SUMMARY MANNER. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) WENT WR ONG IN HOLDING THAT EXEMPTION U/S 54 CAN BE AVAILED ONLY IN RESPECT OF THE ENTIRE CAPITAL GAINS UTILIZED WITHIN THE TIME PRESCRIBED U/S 139(1 ) AND NOT 139(4). 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO NOTE THAT THE APPELLANT ACQUIRED THE FLAT WITHIN ONE YEAR PRIOR T O THE TRANSFER AND PAYMENTS MADE OVER A PERIOD OF TIME. 4. IN ANY EVENT THE COMMISSIONER OF INCOME-TAX (AP PEALS) ERRED IN NOT GRANTING EXEMPTION U/S. 54F IN RESPECT OF THE PAYME NTS MADE AT LEAST UP TO DUE DATE FOR FILING THE RETURN OF INCOME U/S. 139(1) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE ALONG WITH OTHER TWO CO-OWNERS HAD SOLD A VACANT LAND ON 03/02 /2010 FOR A TOTAL CONSIDERATION OF ` 75 00 000/-AND HER SHARE OF CONSIDERATION WAS AT ` 25 50 000/-. THE ASSESSEE WAS ASKED BY THE CONCERNE D ASSESSING AUTHORITY TO PRODUCE THE RELEVANT RETURN OF INCOME. IN RESPONSE IT WAS SUBMITTED BY THE ASSESSEE THAT SHE HAD NOT FURNISHE D HER RETURN OF INCOME FOR THE RELEVANT YEAR UNDER CONSIDERATION. H OWEVER IT WAS ITA NO. 325/MDS/2017 3 CONTENDED BY THE ASSESSEE THAT SHE HAD INVESTED THE ENTIRE SALE CONSIDERATION OF ` 25 50 000/- IN THE PURCHASE AND CONSTRUCTION OF NEW RESIDENTIAL PROPERTY. IN THE MEANTIME THE ASSE SSEE E-FILED RETURN OF INCOME ON 22/11/2012 ADMITTING INCOME FROM LONG TERM CAPITAL GAIN AT ` 1 81 870/-. HOWEVER THE RETURN WAS NOT FILED WITHI N THE EXTENDED DUE DATE AND HENCE WAS NON EST. PERUSAL O F THE RELEVANT DETAILS REVEALED THAT THE ASSESSEE HAD INVESTED IN THE PROPERTY ONLY AFTER THE DUE DATE FOR FILING OF HER RETURN OF INCO ME U/S139(1) I.E. 31/07/2010 AND THE NET SALE CONSIDERATION WAS ALSO NOT DEPOSITED IN THE CAPITAL GAIN ACCOUNT SCHEME AS ENVISAGED IN SEC TION 54F. HENCE IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE; THE CASE WAS REOPENED U/S.147 BY ISSUANCE OF NOTICE U/S .148 ON 13/12/2012 WHICH WAS DULY SERVED ON THE ASSESSEE. T HE ASSESSEE FILED A LETTER DATED 07/01/2013 STATING TO TREAT TH E RETURN FILED ON 22/11/2012 AS RETURN FILED IN RESPONSE TO NOTICE U/ S 148 OF THE ACT. IT WAS SUBMITTED BY THE ASSESSEE THAT THE NET SALE CONSIDERATION WAS INVESTED BY HER TOWARDS CONSTRUCTION OF RESIDENTIAL HOUSE THROUGH M/S. VASAVI BUILDERS AND EXEMPTION OF ` 19 74 569/-WAS CLAIMED U/S 54F. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE AO ON THE ITA NO. 325/MDS/2017 4 GROUND THAT THE ASSESSEE HAD FAILED TO QUALIFY THE CONDITIONS AS ENUMERATOR UNDER SUBSECTION (1) AND (4) OF SECTION 54F. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 3.1 ON APPEAL THE LD.CIT(A) ENDORSED THE VIEW OF T HE LD. ASSESSING OFFICER IN REJECTING THE CLAIM OF THE ASS ESSEE U/S 54F. FOR JUSTIFYING THE ACTION OF THE AO THE LD.CIT(A) OBS ERVED THAT AS STIPULATED U/S 54F THE ASSESSEE WAS REQUIRED TO FI LE THE RELEVANT RETURN OF INCOME WITHIN THE DUE DATE OR WITHIN THE EXTENDED DUE DATE AS BELATED RETURN OF INCOME TO CLAIM THE BENEFIT OF SECTION 54F. HOWEVER THE ASSESSEE DID NOT FILE HER RETURN OF IN COME. THE RETURN OF INCOME FILED ON 22.11.2012 WAS NON EST. ACCORDINGLY THE ASSESSEE HAD FAILED TO QUALIFY FOR THE DEDUCTION. FURTHER LD.CIT(A) OBSERVED THAT THE NET SALE CONSIDERATION WAS REQUIRED TO BE UTILIZED EITHER TOWARDS PURCHASE OR CONSTRUCTION OF NEW PROPERTY WI THIN THE DUE DATE FOR FILING OF RETURN OF INCOME U/S.139(1). AND THE UNUTILIZED NET SALE CONSIDERATION WAS TO BE DEPOSITED IN CAPITAL GAIN A CCOUNT SCHEME AS ENVISAGED IN SECTION 54F. IN THE PRESENT CASE OF THE ASSESSEE NEITHER THE NET SALE CONSIDERATION WAS UTILISED TOW ARDS CONSTRUCTION OF ITA NO. 325/MDS/2017 5 NEW PROPERTY NOR WAS THE SAME KEPT IN THE CAPITAL G AIN ACCOUNT SCHEME. HENCE ON THIS ACCOUNT ALSO THE ASSESSEE FA ILED TO QUALIFY FOR THE DEDUCTION UNDER SECTION 54F. 3.2 LD.CIT(A) WAS OF THE OPINION THAT THE CONSTRUC TION OF THE NEW HOUSE PROPERTY WAS NOT COMPLETED WITHIN THE PERIOD OF THREE YEARS FROM THE DATE OF SALE OF THE ORIGINAL ASSET. INTERE STINGLY THE CONSTRUCTION OF NEW HOUSE PROPERTY WAS INCOMPLETE O N THE DATE OF PASSING OF THE ASSESSMENT ORDER ON 20/08/2013. THER EFORE ON THIS GROUND ALSO THE ASSESSEE IS FOUND TO BE INELIGIBLE FOR DEDUCTION U/S AS CLAIMED BY THE ASSESSEE SHE HAD INVESTED ` 1 00 000/-ON 24/06/2009 AND ` 3 78 286/-ON 16/11/2009 TOTALING TO ` 4 78 286/- TOWARDS CONSTRUCTION OF NEW ASSET PAID TO THE BUIL DER M/S VASAVI BUILDERS BEFORE THE DUE DATE FOR FILING OF THE RETU RN OF INCOME. SINCE THE PAYMENT OF ` 4 78 286/-WAS MADE PRIOR TO THE SALE OF ORIGINAL ASSET WHICH TOOK PLACE ON 03/02/2010 THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM THE DEDUCTION OF THIS AMOUNT OF ` 4 78 286/- AS WELL. SECTION 54F ENVISAGES THAT THE NEW RESIDENTIAL PROPERTY SHO ULD HAVE BEEN CONSTRUCTED WITHIN THREE YEARS FROM SECTION 54F TH E AMOUNT OF ITA NO. 325/MDS/2017 6 ` 4 78 286/- WHICH WAS UTILISED PRIOR TO THE DATE OF SALE OF ORIGINAL ASSET CANNOT BE CONSIDERED FOR THE DEDUCTION. 3.3 THEREFORE LD.CIT(A) ARRIVED AT A CONCLUSION T HAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT . MOREOVER SINCE THE RELEVANT PROVISIONS OF SECTION 54F ARE CLEAR AND UN AMBIGUOUS AND THE RELEVANT CIRCULARS AND PRESS RELEASES AS DISCU SSED IN THE ASSESSMENT ORDER ALSO SUPPORT THE STAND TAKEN BY T HE AO THE FINDING OF THE AO IS CONFIRMED AND THE ENTIRE CLAIM OF ` 19 74 569/-U/S 54F IS REJECTED. AGAINST THE ORDER OF LD.CIT(A) N OW THE ASSESSEE IS IN APPEAL BEFORE US. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THE PRESENT CASE THE ASSESSEE ALONG WI TH OTHER TWO CO- OWNERS HAD SOLD A VACANT LAND ON 03/02/2010 FOR A T OTAL CONSIDERATION OF ` 75 00 000/-AND HER SHARE WAS AT ` 25 50 000/-. THE ASSESSEE HAS NOT FILED HER RETURN OF INCOME WITHIN THE TIME ALLOTTED U/S.139(1) OF THE ACT I.E. 31.07.2010 ON THE REASON THAT THE INC OME OF ASSESSEE WAS BELOW THE TAXABLE LIMIT. HOWEVER THE ASSESSEE INVESTED THE ENTIRE CONSIDERATION OF ` 25 50 000/- IN THE PURCHASE AND CONSTRUCTION OF A NEW RESIDENTIAL PROPERTY BEFORE THE TIME ALLOT TED TO FILE HER RETURN ITA NO. 325/MDS/2017 7 OF INCOME U/S.139(4) OF THE ACT AND SHE CONTENDED T HAT SHE IS ENTITLED FOR DEDUCTION U/S.54F OF THE ACT. HOWEVER THE LD. ASSESSING OFFICER ISSUED NOTICE U/S.148 FOR REOPENING OF ASSESSMENT U /S.147 DATED 13.12.2012 WHICH WAS DULY SERVED ON THE ASSESSEE. THE ASSESSEE CLAIMED THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.54F OF THE ACT WHICH WAS INVESTED BY HER TOWARDS CONSTRUCTION OF A RESIDENTIAL HOUSE THROUGH THE BUILDER M/S. VASAVI BUILDERS AND CLAIMED AN AMOUNT OF ` 19 74 569/- U/S.54F OF THE ACT. 4.1 ON THE OTHER HAND THE CONTENTION OF THE LD.D. R IS THAT THE ASSESSEE IS NOT ENTITLED U/S.54F OF THE ACT AS THE ASSESSEE NOT FILED HER RETURN EITHER U/S.139(1) OR 139(4) OF THE ACT. IN MY OPINION THE ARGUMENT OF LD.D.R IS HAVING NO MERIT. THE INCOME O F ASSESSEE IF EXCLUDED THE CAPITAL GAIN THAT THE IMPUGNED AMOUNT OF ADDITION IS BELOW THE TAXABLE INCOME. BEING SO THE ASSESSEE IS NOT LIABLE TO FILE HER RETURN U/S.139 OF THE ACT. SINCE THE ASSESSEE H AS INVESTED THE IMPUGNED AMOUNT IN CONSTRUCTION OF A NEW RESIDENTIA L HOUSE WITHIN THE TIME IS ALLOWED U/S.139(4) OF THE ACT THE ASSE SSEE IS ENTITLED U/S.54F OF THE ACT. THIS VIEW OF MYSELF IS FORTIFI ED BY THE ORDER OF CO- ITA NO. 325/MDS/2017 8 ORDINATE BENCH IN THE CASE OF RAJALAKSHMI IN ITA NO .514/MDS./2017 DATED 21.06.2017 WHEREIN HELD THAT:- 4. WE HAVE HEARD BOTH THE.PARTIES AND PERUSED THE MATERIAL ON RECORD AND VARIOUS CASE LAWS CITED BY BOTH THE PARTIES. IN OUR OPINION IF THE ASSESSEE PURCHASES NEW HOUSE WITHIN TWO YEARS FROM THE DATE OF TRANSFER OF CAPITAL ASSET OR IF IT IS A CONSTRUCTIO N WITHIN THREE YEARS FROM DATE OF TRANSFER ASSESSEE IS ENTITLED FOR DEDUCTIO N U/S.54 OF THE ACT. IF THE ASSESSEE INTENT TO CONSTRUCT A RESIDENTIAL HOUS E WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF CAPITAL AS SET U/S. 54(2) OF THE ACT THE AMOUNT HAS TO BE DEPOSITED IN A BANK UNDER CAPITAL GAINS SCHEME AS NOTIFIED BY THE CENTRAL GOVERNMENT WITHIN A TIME LIMIT AVAILABLE TO FILE RETURN OF INCOME U/S. 139(4) OF T HE ACT HAS HELD BY THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F CIT VS. JAGRITI AGGARWAL 339 ITR 610. IF THE ASSESSEE COMPLETES TH E CONSTRUCTION OF A NEW RESIDENTIAL HOUSE WITHIN THREE YEARS FROM THE D ATE OF SALE OF CAPITAL ASSET ASSESSEE IS ENTITLED FOR DEDUCTION U/S.. 54 OF THE ACT. NOW THE CONTENTION OF THE ID. DEPARTMENTAL REPRESENTATIVE I S THAT ASSESSEE HAS NOT APPROPRIATED TOWARDS CONSTRUCTION OF NEW RESIDE NTIAL HOUSE AS IT WAS NOT COMPLETED. IN OUR OPINION AS HELD BY HONBL E KARNATAKA HIGH COURT IN THE CASE OF CIT VS SMT. VS. SHANTHA KUMARI 126 DTR 435 COMPLETION OF CONSTRUCTION WITHIN THREE YEARS WAS N OT MANDATORY AND IT WAS NECESSARY THAT CONSTRUCTION SHOULD BE COMMENCED IT SHOULD BE PROVED BY THE ASSESSEE THAT CONSTRUCTION IS FOR RES IDENTIAL HOUSE. THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF MUNE ER KHAN VS. ITO 41 SOT 504 HAD HELD THAT ASSESSEE MAY USE BORROWED FUNDS FOR CONSTRUCTION OF NEW RESIDENTIAL PROPERTY AND DEDUCT ION U/S.54 OF THE ACT DENIED ON THE REASON THAT ASSESSEE USED SOME FUND O THER THAN CONSIDERATION RECEIVED ON TRANSFER OF CAPITAL ASSET . BEING SO ON THAT ITA NO. 325/MDS/2017 9 REASON DEDUCTION U/S.54 O E ACT CANNOT BE DENIED. H ENCE WE REMIT THE ENTIRE ISSUE IN DISPUTE WITH REGARD TO SEC. 54 OF T HE ACT TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO THE LD. ASSESSING OFFICER TO VERIFY WHETHER ASSESSEE HAS ACTUALLY MADE INVESTMEN TS IN CONSTRUCTION OF NEW RESIDENTIAL PROPERTY THOUGH IT WAS NOT COMP LETED AND DEIDE THEREUPON. 4.2 IN THE PRESENT CASE THERE IS NO DISPUTE REGARD ING INVESTMENT MADE BY THE ASSESSEE IN A NEW RESIDENTIAL HOUSE WIT HIN THE TIME ALLOWED U/S.139(4) OF THE ACT. IN MY OPINION THERE IS NO CASE TO GIVE DIRECTION TO LD. ASSESSING OFFICER TO EXAMINE THE A CTUAL INVESTMENTS IN THE CONSTRUCTION OF A NEW RESIDENTIAL PROPERTY. AC CORDINGLY THIS GROUND OF APPEAL RAISED BY THE ASSESSEE STANDS ALLO WED. 5. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 06 TH NOVEMBER 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI DATED THE 06 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