Smt. Bhagwati Devi, Haryana v. ITO, Karnal

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) SHRI R.P. TOLANI JM AND SHRI A.K. GARODIA AM ITA NO.3750/DEL./2009 (ASSESSMENT YEAR : 2006-07) LATE SMT. BHAGWATI DEVI VS. ITO WARD 2 THROUGH LEGAL HEIR SHRI SUSHIL GUPTA KARNAL. HOUSE NO.145 SECTOR 14 URBAN ESTATE KARNAL (HARYANA) (PAN : AHAPG5499G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT GUPTA CA REVENUE BY : MS. PRATIMA KAUSHIK SENIOR DR ORDER PER R.P. TOLANI JUDICIAL MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDE R OF CIT (APPEALS) FOR THE ASSESSMENT YEAR 2006-07. THE FOLLOWING GRO UNDS OF APPEAL ARE TAKEN BY THE ASSESSEE :- 1. THAT THE ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT 1961 BY THE HON'BLE CIT (APPEALS) IS AGAINST THE LA W AND FACTS OF THE CASE. 2. THAT THE LD. CIT (A) HAS ERRED IN NOT ALLOWING T HE DEDUCTION U/S 54F OF THE INCOME TAX ACT ALTHOUGH T HE FACT THAT THE RESIDENTIAL HOUSE WAS ACTUALLY CONSTRUCTED WAS CONFIRMED BY THE INSPECTOR APPOINTED FOR ENQUIRY AND THE SAME HA S NOT BEEN DISPUTED EITHER BY THE A.O. OR THE CIT (A). 3. THE DISALLOWANCE MADE MERELY ON THE GROUND THAT CONSTRUCTION WAS UNAUTHORIZED IS NOT SUSTAINABLE IN LAW AS SECTION 54F DOES NOT LAY ANY SUCH CONDITION. ITA NO.3750/DEL./2009 2 4. THAT THE LD. CIT (A) HAS GROSSLY ERRED IN NOT AL LOWING THE ADJUSTMENT OF CAPITAL LOSS FROM CAPITAL GAINS A ND HIGHER EXEMPTION LIMIT AVAILABLE TO SENIOR CITIZEN WHEREAS THE SAME WAS ALLOWED BY THE A.O. VIDE ORDER U/S 154. 2. BRIEF FACTS ARE THAT THE ASSESSEE SOLD A PLOT OF LAND SITUATED AT VILLAGE KAMBOPURA TEHSIL & DISTRICT KARNAL (SITUATED INSID E KARNAL MUNICIPALITY) FOR RS.7 30 000/- BY SALE DEED DATED 20.1.2006. LO NG TERM CAPITAL GAIN OF RS.5 04 172/- WAS SHOWN AFTER DEDUCTING THE INDEXED COST OF ACQUISITION AND THEREAFTER ASSESSEE FURTHER CLAIMED DEDUCTION U/S 5 4F WHICH WAS FOUND TO BE PAID FOR PURCHASE OF ONE BIGHA 3 BISWA LAND SITUATE D AT KARNAL FOR RS.8.53 LACS ON 20.1.2006 ITSELF. DURING THE COURSE OF ASS ESSMENT ASSESSING OFFICER FOUND THAT THE PIECE OF LAND PURCHASED WAS ONLY A P LOT AND NOT A RESIDENTIAL HOUSE HENCE DEDUCTION WAS NOT ALLOWED U/S 54F AND TAXED THE ASSESSEE ACCORDINGLY. AGGRIEVED ASSESSEE PREFERRED FIRST AP PEAL. 3. THE EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE CIT (APPEALS) WAS FORWARDED TO A.O. FOR REMAND REPORT WHICH WAS REPL IED ON 6.5.2009 AND IS PRODUCED IN CIT (A)S ORDER. IT IS CLAIMED THAT TH E CONSTRUCTION OF HOUSE STARTED ON 13.11.2008 AND WAS COMPLETED ON 1.1.2009 . THE ASSESSEE SMT. BHAGWATI DEVI EXPIRED ON 5.11.2007 WHICH IS MENTION ED IN THE AFFIDAVIT FILED BY THE LEGAL HEIR. CIT (A) AFTER CONSIDERAT ION OF THE ASSESSEES EVIDENCE A.O.S REMAND REPORT AND ASSESSEES REJOI NDER UPHELD THE ORDER OF A.O. BY FOLLOWING OBSERVATIONS : ITA NO.3750/DEL./2009 3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE. IT IS UNDISPUTED THAT THE ASSESSEE SOLD THE PLOT OF LAND WHICH RESULTED IN LONG TERM C APITAL GAIN OF RS.5 04 178/-. IT IS ALSO CORRECT THAT AS ON DATE THE ASSESSEE HAS CONSTRUCTED A HOUSE. FURTHER IT IS ALSO UNDISPUTED THAT ASSESSEE NEITHER GOT ANY PLAN SANCTIONED FROM THE DISTT. TOW N PLANNER FOR CONSTRUCTION OF THE HOUSE NOR OBTAINED ANY COMP LETION CERTIFICATE FOR THE HOUSE. FURTHER IT IS ALSO DISP UTED THAT THE HOUSE HAS UNAUTHORISEDLY CONSTRUCTED ON THE LAND ON WHICH NO RESIDENTIAL HOUSE CAN BE CONSTRUCTED AS PER THE STA TE GOVT. PLAN AND THEREFORE THE HOUSE DOES NOT HAVE ANY FACILITY LIKE SEWERAGE ETC. THERE ARE TWO ISSUES WHICH NEEDS TO BE DECIDED FIRST WHETHER THE ASSESSEE CONSTRUCTED THE HOUSE WITHIN THE TIME ALLOWED I.E. UPTO 20.01.2009 OR NOT AND SECON DLY WHETHER SUCH AN UNAUTHORIZED CONSTRUCTION CAN BE CO NSIDERED FOR EXEMPTION U/S 54F. THE ASSESSEE HAS NOT FILED ANY EVIDENCE REGARDING START OF CONSTRUCTION OR SANCTIONED PLAN FROM MUNICIPAL AUTH ORITIES/ DISTT. TOWN PLANNER AND SIMILARLY NO EVIDENCE IS FI LED WITH REGARD TO THE COMPLETION OF THE HOUSE BEFORE 20.01. 2009 OR THE COMPLETION CERTIFICATE FORM THE MUNICIPAL AUTHORITI ES/ DISTT. TOWN PLANNER. WHEREAS AT THE TIME OF ASSESSMENT T HE CONSTRUCTION OF THE HOUSE WAS NOT EVEN STARTED BUT THE ASSESSEE HAS CLAIMED THAT THE HOUSE WAS CONSTRUCTED WITHIN T WO MONTHS. SINCE ASSESSEE HAS NEITHER FILED ANY CONCLUSIVE EVI DENCE FOR COMPLETION OF THE HOUSE BEFORE 20.01.2009 NOR THE CIRCUMSTANCES SUGGEST THAT ASSESSEE COULD COMPLETE THE HOUSE WITHIN LESS THAN TWO MONTHS AT THE SAME TIME THERE IS NO SANCTIONED PLAN OR COMPLETION CERTIFICATE THEREFORE IT IS HELD THAT THE HOUSE WAS NOT CONSTRUCTED WITHIN THE PERIO D ALLOWED AS PER SECTION 54F I.E. UPTO 20.01.2009. HENCE THE A SSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 54F. ASSESSEE HAS CONSTRUCTED THE SAID STRUCTURE UNAUTHORISEDLY ON THE LAND WHICH IS PART OF THE GRE EN BELT AND PROHIBITED FROM CONSTRUCTION OF ANY RESIDENTIAL HOU SES AND THEREFORE THE STRUCTURE IS COMPLETELY UNAUTHORIZED WITHOUT ANY CIVIC FACILITIES AND SUCH AN UNAUTHORIZED STRUCTURE IS NOT ELIGIBLE FOR EXEMPTION U/S 54F BECAUSE UNAUTHORIZED ACTIVITY AND ILLEGAL ACTIVITIES OF THE ASSESSEE CAN NOT ENTITLE HIM FOR ANY BENEFIT UNDER THE INCOME TAX ACT. HENCE THE CLAIM OF THE A SSESSEE U/S ITA NO.3750/DEL./2009 4 54F HAS BEEN RIGHTLY REJECTED BY THE A.O. IN RESUL T THE GROUND OF APPEAL OF THE ASSESSEE IS REJECTED. 4. AGGRIEVED ASSESSEE IS BEFORE US. 5. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE STAND AND CONTENDED THAT AS PER PROVISIONS OF SECTION 54F IF THE SALE PROCEEDS OF A LONG TERM CAPITAL ASSET ARE INVESTED BY ASSESSEE IN CONSTRUCT ION OF A RESIDENTIAL HOUSE DEDUCTION U/S 54F WAS PERMISSIBLE. IN THIS CASE A SSESSEES PROPERTY WAS SOLD ON 20.1.2006 FOR RS.7 30 000/- AND FURTHER THE RESIDENTIAL HOUSE WAS CONSTRUCTED BY 1.1.2009 WHICH WAS WITHIN THREE YEAR S FROM THE DATE OF SALE. MERELY BECAUSE THE HOUSE WAS CONSTRUCTED WITHOUT PR OPER PERMISSION FROM MUNICIPAL AUTHORITIES THE EXEMPTION CANNOT BE DENIE D. 6. LEARNED DR ON THE OTHER HAND VEHEMENTLY ARGUED THAT THE ASSESSEE SOLD HOUSE ON 20.1.2006 AND DIED ON 5.11.2007. DUR ING THE LIFETIME OF ASSESSEE EXCEPT PURCHASING THE CONSTRUCTION OF HO USE DID NOT START. THE SALE PROCEEDS WERE TOTALLY INVESTED IN THE PURCHASE OF P LOT. THEREFORE DURING THE LIFETIME OF ASSESSEE NO AMOUNT REMAINS IN BALANCE FOR CONSTRUCTION OF HOUSE. THE HOUSE HAS BEEN SUBSEQUENTLY CONSTRUCTED BY THE LEGAL HEIR IN HIS PERSONAL CAPACITY ON SUCCESSION OF PLOT FROM THE DE CEASED ASSESSEE TO HIM. IT CANNOT BE SAID THAT THE HOUSE WAS CONSTRUCTED BY THE DECEASED ASSESSEE AS THE AMOUNT HAS BEEN INVESTED BY THE LEGAL HEIR FROM HIS OWN FUNDS AND THE IMPUGNED RESIDENTIAL HOUSE BEING CONSTRUCTED BY LEG AL HEIR AS HIS OWN HOUSE ITA NO.3750/DEL./2009 5 CANNOT BE ASSUMED TO BE HOUSE OF DECEASED ASSESSEE. BESIDES THE HOUSE WAS ILLEGALLY CONSTRUCTED WITHOUT SANCTIONING OF MAP. THE ORDERS OF LOWER AUTHORITIES WERE RELIED ON BOTH THE COUNTS. 7. IN REJOINDER ON A QUERY ASKED BY THE BENCH LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EXCEPT THIS PLOT THE DECEA SED ASSESSEE DID NOT LEAVE ANY OTHER AMOUNT. 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. FACTS HAVE BEEN MENTIONED ABOVE IT HAS NOT BEEN DI SPUTED THAT THE CONSTRUCTION OF RESIDENTIAL HOUSE COMMENCED ON 13.1 1.2008 AND COMPLETED ON 1.1.2009 BY THE LEGAL HEIR AND NOT THE DECEASED ASSESSEE WHO DIED ON 5.11.2007. THE CLARIFICATION GIVEN BY THE LEARNED COUNSEL THAT THE LADY DID NOT LEAVE ANY OTHER AMOUNT EXCEPT THIS PLOT MAKES T HE THING VERY CLEAR THAT WHAT DECEASED ASSESSEE LEFT IN HER LIFETIME WAS A P LOT OF LAND ON WHICH THERE WAS NO CONSTRUCTION AT ALL. DEDUCTION U/S 54F IS A LLOWABLE TO AN ASSESSEE WHO SELLS ANY LONG TERM CAPITAL ASSET AND INVESTED THE AMOUNT IN THE CONSTRUCTION OF RESIDENTIAL HOUSE. IN THE INSTANT CASE THE ASSESSEE DID NOT INVEST ANY AMOUNT TOWARDS CONSTRUCTION OF RESIDENTI AL HOUSE IN HER LIFETIME AND INCIDENTALLY NO FURTHER AMOUNT WAS LEFT BY HER. THEREFORE THE CONSTRUCTION OF HOUSE IS ATTRIBUTABLE TO THE LEGAL HEIR WHO SUCCEEDED TO PLOT AND CONSTRUCTED HIS HOUSE. THE BILLS ADDUCED FOR C ONSTRUCTION OF HOUSE ARE ITA NO.3750/DEL./2009 6 ALSO IN THE NAME OF SHRI SUSHIL KUMAR GUPTA. THERE FORE THE RESIDENTIAL HOUSE HAS NOT BEEN CONSTRUCTED BY THE DECEASED ASSE SSEE. IN OUR VIEW DEDUCTION U/S 54F HAS BEEN RIGHTLY DENIED AND THE O RDERS OF LOWER AUTHORITIES ON THIS ISSUE ARE UPHELD. 9. APROPOS GROUND NO.4 NO ARGUMENTS WERE RAISED AN D IN ANY CASE THE ASSESSEE CONTENDS THAT THE RELIEF HAS BEEN ALLOWED BY A.O. U/S 154 AND THEREFORE NO GRIEVANCE SURVIVES. IN VIEW THEREOF WE UPHOLD THE ORDER OF THE LOWER AUTHORITIES ON THIS ISSUE. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JANUARY 2010. SD/- SD/- (A.K. GARODIA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF JANUARY 2010 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A) KARNAL. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.