Smt. M Seethamma, Guntur, Visakhapatnam v. The ITO, Ward-2(1), Guntur

ITA 360/VIZ/2009 | 2005-2006
Pronouncement Date: 07-01-2010 | Result: Dismissed

Appeal Details

RSA Number 36025314 RSA 2009
Assessee PAN AGDPM3794L
Bench Visakhapatnam
Appeal Number ITA 360/VIZ/2009
Duration Of Justice 6 month(s) 19 day(s)
Appellant Smt. M Seethamma, Guntur, Visakhapatnam
Respondent The ITO, Ward-2(1), Guntur
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 07-01-2010
Assessment Year 2005-2006
Appeal Filed On 18-06-2009
Judgment Text
PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 360/VIZAG/2009 ASSESSMENT YEAR: 2005-06 SMT. M. SEETHAMMA GUNTUR VS. ITO WARD-2(1) GUNTUR (APPELLANT) (RESPONDENT) PAN NO.AGDPM 3794 L APPELLANT BY: SHRI C. KAMESWARA RAO CA RESPONDENT BY: SHRI R.K. SINGH DR ORDER PER SHRI B R BASKARAN ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13.3.2009 PASSED BY LD CIT (A) GUNTUR AND IT RELATES TO THE A SSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED BY THE ASSESSEE GIVE RISE TO THE FOLLOWING TWO ISSUES: A) REJECTION OF DEDUCTION U/S 54 OF THE ACT. B) COMPUTATION OF CAPITAL GAIN ON SALE OF RESIDENT IAL HOUSE PROPERTY 3. THE FACTS OF THE CASE ARE STATED IN BRIEF. DURIN G THE YEAR CONSIDERATION THE ASSESSEE SOLD A HOUSE PROPERTY FOR A SUM OF RS.20 7 0 000/-. IN THE RETURN OF INCOME THE ASSESSEE OFFERED LONG TERM CAPITAL GAIN OF RS.83 980/- AFTER AVAILING EXEMPTION OF RS.10 66 000/- U/S 54 OF THE ACT. DURI NG THE SCRUTINY PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD PAID A SUM OF RS.10 66 000/- TO A CONCERN NAMED M/S G.S. ARTERIORS BANGALORE FOR PURCHASE OF A FLAT. THE SAID FIRM BELONGED TO THE SONS OF THE ASSESSEE. HOWEVER BEFO RE THE ASSESSING OFFICER THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SHOW THA T THE SAID FLAT WAS TAKEN POSSESSION WITHIN THE PERIOD PRESCRIBED U/S 54 OF T HE ACT. HENCE THE AO REJECTED THE CLAIM FOR EXEMPTION U/S 54 OF THE ACT. THE ASSE SSEE WHILE COMPUTING THE CAPITAL GAIN HAD ADOPTED THE COST OF CONSTRUCTION OF THE HOUSE THAT WAS SOLD BY HER AT RS.1 85 000/-. HOWEVER THE ASSESSEE COULD N OT PRODUCE ANY EVIDENCE TO PAGE 2 OF 4 SUBSTANTIATE THE SAID CLAIM. HENCE THE AO AFTER OB TAINING INFORMATION FROM THE JT. SUB REGISTRAR GUNTUR DETERMINED THE VALUE OF T HE PROPERTY AS ON 1.4.1981 AND ACCORDINGLY RECOMPUTED THE CAPITAL GAIN. AGGRIE VED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT (A) BUT COULD N OT WIN. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD AR SUBMITTED THAT THE ASSESSEE HAD INVEST ED THE SALE CONSIDERATION TO THE EXTENT OF RS.10 66 000/- FOR P URCHASE OF FLAT AND IN SUPPORT OF THE SAID PAYMENT THE ASSESSEE FILED A COPY OF T HE SALE AGREEMENT RECEIPTS ETC. BEFORE THE AO. HOWEVER THE BUILDER OF THE FL AT COULD NOT COMPLETE THE CONSTRUCTION DUE TO CHANGE IN THE GOVERNMENT POLICY OF BANGALORE MAHA NAGAR PALIKA AND HENCE THE ASSESSEE COULD NOT TAKE POSSES SION OF THE FLAT. ACCORDING TO LD AR SINCE THE ASSESSEE HAD PAID THE MAJOR PORTIO N OF THE SALE CONSIDERATION PRIOR TO THE REGISTRATION OF SALE DEED THE OBJECT OF THE PROVISIONS OF SECTION 54 IS FULFILLED AND HENCE THE ASSESSEE SHOULD BE GIVEN EX EMPTION U/S 54 OF THE ACT. THE LD AR ALSO CONTENDED THAT ASSESSEE SHOULD NOT B E PUT IN WORST POSITION FOR NO FAULT ON HER PART SINCE THE BUILDER COULD NOT CO MPLETE THE CONSTRUCTION DUE TO THE CHANGE IN THE GOVERNMENT POLICY. THE LD AR RELI ED UPON THE FOLLOWING CASE LAW: A) MRS.SHAHZADA BEGUM VS. ITO (1983) (5 ITD (HYD) 2 92) ITAT HYDERABAD BENCH B) CIT VS. R.L. SOOD - HIGH COURT OF DELHI (2001) ( 165 CTR (DEL) 458: (2000) (245 ITR 727 (DEL): (2000) 108 TAXMAN 227 (D EL) C) CIT VS. BHARATI C. KOTHARI HIGH COURT OF CALCU TTA (2000) 160 CTR (CAL) 165: (2000) 244 ITR 352 (CAL): (2001) 117 TAX MAN 538 (CAL). D) JAGANNADH SINGH LODHA VS. ITO ITAT JODHPUR BEN CH (2004) (85 TTJ (JD) 173). ON THE OTHER HAND THE LD DR SUPPORTED THE ORDER OF LD CIT (A). PAGE 3 OF 4 5. WE HEARD THE RIVAL CONTENTIONS AND ALSO PERU SED THE RECORD. THE MAIN CLAIM OF THE ASSESSEE IS THAT SHE COULD NOT BE TAKE POSSE SSION OF THE FLAT FOR THE REASON THAT THE BUILDER COULD NOT COMPLETE THE CONSTRUCTIO N DUE TO THE CHANGE IN THE GOVERNMENT POLICY. HOWEVER THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE BEFORE US TO SUBSTANTIATE THE SAID CLAIM DESPITE SU FFICIENT TIME WAS GIVEN TO THE ASSESSEE. THE CASE LAW RELIED UPON BY THE ASSESSEE CANNOT BE APPLIED TO THE PRESENT CASE SINCE IN ALL THOSE CASES THE ASSESSEE S THEREIN HAD OBTAINED THE POSSESSION SUBSEQUENTLY. WE ALSO NOTICE THE FOLLOW ING OBSERVATIONS OF THE LD CIT (A): 9. AS POINTED OUT BY THE ASSESSING OFFICER EVEN WI TH RESPECT TO THE INVESTMENT OF RS.10 60 000/- THE INVESTMENT HAS MA DE IN CASH AND HAS BEEN INVESTED WITH THE FIRM IN WHICH THE APPELL ANTS OWN SONS ARE PARTNERS. THE EXPLANATION GIVEN TO REBUT THE AS SESSING OFFICERS FINDING THAT THE TRANSACTION APPEARS SUSPECT ESPEC IALLY IN VIEW OF THE FACT THAT ALL THE CASH RECEIPTS ISSUED OVER A P ERIOD OF 5 MONTHS ARE SERIALLY NUMBERED IS THAT THIS IS POSSIBLE WHE RE NO OUTSIDERS INVESTMENT IS RECEIVE D SINCE THE FIRM IS A NEW ONE . THIS EXPLANATION ITSELF STRENGTHENS THE PREMISE OF THE ASSESSING OFF ICER THAT THE ENTIRE TRANSACTION COULD BE A SHAM TRANSACTION. HOW EVER EVEN SUPPOSING THAT THE TRANSACTION WAS A GENUINE ONE T HE CONDITIONS SPECIFIED IN THE SECTION FOR THE GRANT OF THE EXEMP TION HAVE NOT BEEN FULFILLED IN THIS CASE. THE CONSTRUCTION HAS N OT BEEN COMPLETED WITHIN THE TIME STIPULATED AS PER THE ACT AND THERE FORE THE EXEMPTION U/S 54 IS NOT AVAILABLE TO THE APPELLANT. THE CASE LAWS RELIED UPON BY THE APPELLANTS AUTHORISED REPRESENT ATIVE ALSO DO NOT GO TO STRENGTHEN THE APPELLANTS CASE. IN ALL THESE CASES THE APPELLANTS WERE FINALLY HANDED OVER POSSESSION OF T HE PROPERTY IN WHICH THE CAPITAL GAINS WAS INVESTED. IN THE CASE O F THE PRESENT APPELLANT IT IS NOT THE ARGUMENT THAT THE SALE CONS IDERATION HAS BEEN INVESTED ELSEWHERE AFTER THE FIRST VENTURE FAILED. SINCE THE TIME SCHEDULE PRESCRIBED U/S 54 FOR COMPLETION OF CONSTR UCTION HAS NOT BEEN COMPLIED WITH IN THIS CASE THE APPELLANT IS N OT ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT. THE ASSESSING OFFICER S ACTION OF DENYING THE EXEMPTION CLAIMED IS UPHELD. IN OUR OPINION THE ASSESSEE HAS MERELY OFFERED CERT AIN EXPLANATIONS WHICH SHE COULD NOT SUBSTANTIATE. LD AR ALSO FAIRLY CONCEDED THAT THE ASSESSEE DID NOT TAKE THE POSSESSION OF THE FLAT TILL DATE AND RECENTLY SHE G OT BACK THE MONEY AND INVESTED THE SAME IN SOME OTHER FLAT. IN THESE CIRCUMSTANCES WE ARE UNABLE TO ACCEPT THE CLAIM THAT THE ASSESSEE HAS FULFILLED THE OBJECT OF THE P ROVISIONS OF SECTION 54 AS THE SUBSEQUENT INVESTMENT MADE IS BEYOND THE PRESCRIBED TIME LIMIT. PAGE 4 OF 4 6. WITH REGARD TO THE SECOND ISSUE ALSO THE AS SESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO SHOW THAT SHE HAD INCURRED A SUM OF RS. 1 85 000/- TOWARDS THE COST OF CONSTRUCTION PRIOR TO 1981. HOWEVER THE AO HAS AD OPTED THE FIGURES OBTAINED FROM THE JT. SUB-REGISTRAR GUNTUR AND HENCE THERE IS A BASIS FOR THE COMPUTATION MADE BY THE AO. IN VIEW OF THE ABOVE WE DO NOT FIND ANY RE ASON TO INTERFERE WITH THE DECISION OF LD CIT(A). 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 07-01-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM 7 TH JANUARY 2010 COPY TO 1 SMT. M. SEETHAMMA C/O SHRI Y.S.N. MURTY D.NO.49 -52-1/3 FLAT NO.202 CHERUKURI ELEGENCY SHANTHIPURAM SHANKARMA T ROAD VISAKHAPATNAM 530 016 2 THE ITO WARD 2(1) GUNTUR 3 THE CIT GUNTUR 4 THE CIT(A) GUNTUR 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM