Gaurav Bawa,, New Delhi v. ACIT, New Delhi

ITA 4279/DEL/2010 | 2006-2007
Pronouncement Date: 04-03-2011 | Result: Allowed

Appeal Details

RSA Number 427920114 RSA 2010
Assessee PAN ACDPB7195E
Bench Delhi
Appeal Number ITA 4279/DEL/2010
Duration Of Justice 5 month(s) 17 day(s)
Appellant Gaurav Bawa,, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 04-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 04-03-2011
Date Of Final Hearing 25-02-2011
Next Hearing Date 25-02-2011
Assessment Year 2006-2007
Appeal Filed On 17-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA VICE PRESIDENT AND SHRI I.P. BANSAL JUDICIAL MEMBER ITA NO. 4279/DEL/2010 ASSESSMENT YEAR: 2006-07 GAURAV BAWA VS. ACIT A-40 1 ST FLOOR CIRCLE 42(1) NEW FRIENDS COLONY NEW DELHI. NEW DELHI. ACDPB7195E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED JAIN CA RESPONDENT BY : SMT. MONA MOHANTY SR. DR ORDER PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST ORDER OF CIT(A) DATED 19.3.10 FOR A.Y. 2006-07. GROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LD. CIT(A) IS BAD BOTH IN THE EYE OF LAW AND ON FAC TS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF AO IN DISALLOWING AN AMOUNT OF RS. 63 21 872/- CLAIMED BY ASSESSEE AS EXEMPTION U/S 54F OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE OBSERVAT ION OF THE AO THAT THE ASSESSEE HAS NOT CONSTRUCTED THE HOUSE WITHIN T HREE YEARS OF THE ITA NO. 4279/D/10 2 TRANSFER OF CAPITAL ASSETS DESPITE THERE BEING CIR CULARS OF THE CBDT DIRECTLY ON THIS ISSUE. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 2. DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E HAD SHOWN LONG TERM CAPITAL GAIN OF RS. 68 10 625/- (RS. 63 72 470 /- ON SALE OF LAND AT FARIDABAD AND RS. 4 38 155/- ON SALE OF SHARES). A GAINST SUCH LONG TERM CAPITAL GAIN EXEMPTION U/S 54F WAS CLAIMED AT RS. 63 21 872/- IN RESPECT OF INVESTMENT MADE IN THE HOUSE AT RS. 80 80 375/- AND IN THIS MANNER TAXABLE LONG TERM CAPITAL GAIN WAS SHOWN AT RS. 4 88 753/- AGAINST TOTAL LONG TERM CAPITAL GAIN OF RS. 68 10 625/-. THE LAND WAS SOLD BY THE ASSESSEE ON 20 TH MAY 2005 AND INVESTMENT IN HOUSE OF RS. 80 80 375/ - WAS MADE ON 12.12.05 THE PAYMENT WAS MADE TOWARDS FLAT NO. ICC- 043/PBC-189 & PBC- 170 THE ASSESSEE MADE FURTHER PAYMENTS FROM TIME T O TIME AFTER 30.12.05 AND THE POSSESSION OF THE HOUSE WAS HANDED OVER ON COMPLETION ON 2 ND SEPTEMBER 2008. THE AO DISPUTED THE EXEMPTION CLA IMED BY THE ASSESSEE ON THE GROUNDS THAT THE ASSESSEE HAS NOT G ET THE POSSESSION WITHIN A PERIOD OF THREE YEARS AND HAS FAILED TO FU LFILL THE CONDITION STIPULATED IN SEC. 54F. CIT(A) HAS CONFIRMED THE ORDER OF AO. IT IS THE CASE OF THE ASSESSEE THAT ASSESSEE HAD INVESTED AN AMOUNT OF RS . 80 80 375/- I.E. ENTIRE SALE PROCEEDS ON 12.12.05 (WITHIN SEVEN MONT HS OF THE SALE) THEREFORE IT HAD SUBSTANTIALLY COMPLIED WITH THE C ONDITIONS AND EXEMPTION CANNOT BE DENIED. FOR THIS PURPOSE RELIANCE HAS BE EN PLACED ON THE FOLLOWING DECISIONS: - ITA NO. 4279/D/10 3 (I) CIT VS. R.L. SOOD 245 ITR 727 (DEL) (II) CIT VS. SARDARMAL LOTNARIO 302 ITR 286 (MAD) (III) SMT. SHASHI VERMA V. CIT 224 ITR 106 (M.P.) (IV) MRS. SEETHA SUBRAMANIAM V. ACIT 59 ITD 94 (ITA T MAD) (V) ACIT VS. SMT. SURINDER KAUR 3 SOT 206 (MUM) (VI) CIT V. AJIT SINGH KHAJANCHI 297 ITR 95 (M.P.) 3. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY TH E LD. AR THAT AFOREMENTIONED FACTS ARE NOT DISPUTED. HE HAS ALSO SUBMITTED THE COPIES OF THE DECISIONS RELIED UPON. HE SUBMITTED THAT JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT VS. R.L. SOOD (SUPRA) IN SIMILAR CIRCU MSTANCES HAS ALLOWED THE CLAIM OF THE ASSESSEE. READING FROM THE DECISION HE SUBMITTED THAT THE SAID CASE WAS A CASE OF BUILDER OTHER THAN DDA FOR WHICH THE ASSESSEE HAD MADE PAYMENT OF TOTAL CONSIDERATION BEFORE THE DUE PRESCRIBED PERIOD AND POSSESSION WAS GIVEN TO THE ASSESSEE AT A MUCH LATE R DATE AND IT WAS HELD THAT TRIBUNAL HAS RIGHTLY GRANTED THE BENEFIT TO TH E ASSESSEE. HE ALSO REFERS TO THE OTHER DECISIONS AND CONTENDED THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE AFOREMENTIONED DECISION. 4. ON THE OTHER HAND LD. DR SUBMITTED THAT THE CIR CULAR NO. 471 DATED 15.10.06 AND CIRCULAR NO. 672 DATED 16.12.1993 WERE NOT APPLICABLE TO THE ASSESSEES CASE AS THOSE CIRCULARS RELATED TO PAYME NTS MADE TO DDA. SHE SUBMITTED THAT CIRCULAR NO. 672 ALSO HAS STATED THA T THE PROVISIONS WILL BE APPLICABLE ONLY IF TERMS OF THE SCHEMES OF ALLOTMEN T AND CONSTRUCTION ITA NO. 4279/D/10 4 FLATS/HOUSES BY COOPERATIVE SOCIETIES OR OTHER INST ITUTIONS ARE SIMILAR TO THOSE MENTIONED IN PARA 2 OF CIRCULAR NO. 471 DATED 15 TH OCTOBER 1986 SUCH CASES WILL ALSO BE TREATED AS CASES OF CONSTRU CTION FOR THE PURPOSES OF SEC. 54 AND 54F OF THE ACT. THUS SHE SUBMITTED TH AT UNLESS IT IS SHOWN THAT THE TERMS OF THE BUILDER OF THE ASSESSEE ARE LIKE T HE TERMS OF THE DDA RELIEF CANNOT BE GRANTED TO THE ASSESSEE. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE FACTS STATED BY THE LD. AR ARE NOT DISPUTED BY LD. DR. IF IT IS SO THEN THE CASE OF THE ASSES SEE IS COVERED BY AFOREMENTIONED DECISION OF HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT V. R.L. SOOD (SUPRA) FOR THE SAKE OF COMPLETENE SS AND CLARITY OF FACTS THAT THE SAID DECISION IS REPRODUCED BELOW: - BY THIS PETITION U/S 256(2) OF THE I.T. ACT 1961 (FOR SHORT THE ACT) PERTAINING TO THE ASST. YR.1982-83 THE REVENUE SEEKS A DIRECTION TO THE TRIBUNAL TO STATE THE CASE AND REFER THE FOLLOWING QUESTION FOR THE OPINION OF THIS COUR T: WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE TRIBUNAL IS CORRECT IN LAW IN HOLDING THAT FOR THE PURPOSE OF SEC. 54 OF THE I.T. ACT 1961 THE DATE OF AGREEMEN T TO PURCHASE SHOULD BE TAKEN AS THE DATE OF PURCHASE AN D THE DATE OF REGISTRATION OF SALE DEED FOR PURCHASE IS N OT RELEVANT. 2. THE ASSESSEE WAS THE OWNER OF A RESIDENTIAL HOUSE W HICH HE SOLD ON 22 ND SEPTEMBER 1981 FOR A TOTAL CONSIDERATION OF RS. 2 75 000/-. ON 25 TH SEP. 1981 HE ENTERED INTO AN AGREEMENT FOR PURCHASE OF A RESIDENTIAL FLAT AND BY SEPTEMBER 1982 PAID A SUM OF RS. 2 39 850 TO THE BUILDER OF THE SAID FLAT. THE ACTUAL POSSESSION WAS DELIVE RED TO THE ITA NO. 4279/D/10 5 ASSESSEE ON 17 TH FEBRUARY 1983 AND THE SALE DEED IN HIS FAVOUR WAS REGISTERED ON 26 TH FEBRUARY 1985 . 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEAR THE AO BROUGHT THE DIFFER ENCE BETWEEN THE SALE PRICE OF THE RESIDENTIAL FLAT SOLD BY THE ASSESSEE AND THE COST OF ACQUISITION OF THE SAID HO USE TO TAX AS CAPITAL GAINS ON THE GROUND THAT THE ASSESSEE HA D FAILED TO SATISFY THE CONDITIONS LAID DOWN IN S. 54(1) OF THE ACT INASMUCH AS HE HAD FAILED TO PURCHASE THE FLAT WITH IN THE STIPULATED PERIOD OF ONE YEAR. THE ASSESSEES APPE AL TO THE CIT(A) WAS UNSUCCESSFUL. 4. THE ASSESSEE TOOK THE MATTER IN FURTHER APPEAL TO T HE TRIBUNAL WHO TOOK THE VIEW THAT THE ASSESSE HAVING PURCHASED THE NEW FLAT WITHIN ONE YEAR OF THE SALE OF HIS OLD RESIDENTIAL HOUSE THE PROVISIONS OF S. 54(1) OF TH E ACT STOOD SATISFIED AND THEREFORE NO INCOME BY WAY OF CAPIT AL GAINS COULD BE TAXED IN THE HANDS OF THE ASSESSEE. THE R EVENUES APPLICATION U/S 256(1) HAVING BEEN DISMISSED BY THE TRIBUNAL THE PRESENT PETITION HAD BEEN FILED. 5. WE HAVE HEARD MR. SANJIV KHANNA THE LD. SENIOR STANDING COUNSEL ON BEHALF OF THE REVENUE. 6. IN OUR VIEW THE TRIBUNAL WAS JUSTIFIED IN DECLINI NG TO MAKE A REFERENCE ON THE PROPOSED QUESTION TO THIS COURT. ADMITTEDLY THE ASSESSEE HAD PAID A SUM OF RS. 2 39 850/- OUT OF THE TOTAL SALE CONSIDERATION OF RS. 2 75 000 /- FOR PURCHASE OF FLAT WITHIN THE PERIOD OF ONE YEAR FROM THE DATE OF SALE OF HIS OLD RESIDENTIAL HOUSE. THUS ON PAYMEN T OF A SUBSTANTIAL AMOUNT IN TERMS OF THE AGREEMENT OF PUR CHASE DT. 25 TH SEPTEMBER 1981 I.E. WITHIN FOUR DAYS OF THE SAL E OF HIS OLD PROPERTY THE ASSESSEE ACQUIRED SUBSTANTIAL DOMAIN OVER THE NEW RESIDENTIAL FLAT WITHIN THE SPECIFIED PERIO D OF ONE YEAR AND COMPLIED WITH THE REQUIREMENTS OF S. 54. MERELY ITA NO. 4279/D/10 6 BECAUSE THE BUILDER FAILED TO HAND OVER POSSESSION OF THE FLAT TO THE ASSESSEE WITHIN THE PERIOD OF ONE YEAR THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF THE SAID BENEVOLENT PROVISION. THIS WOULD NOT BE IN CONSONANCE WITH TH E SPIRIT OF S. 54 OF THE ACT. 7. WE MAY NOTE THAT REALIZING THE PRACTICAL DIFFICUL TY FACED BY THE ASSESSEE IN SUCH SITUATIONS THE CBDT ISSUED A CIRCULAR NO. 471 DT. 15 TH OCTOBER 1986 CLARIFYING THAT WHEN THE DDA ISSUES THE ALLOTMENT LETTER TO AN ALLOTTEE UNDER IT S SELF- FINANCING SCHEME ON PAYMENT OF FIRST INSTALMENT OF COST OF CONSTRUCTION THE ALLOTTEE GETS TITLE TO THE PROPER TY AND SUCH ALLOTMENT SHOULD BE TREATED AS COST OF CONSTRUCTION FOR THE PURPOSE OF CAPITAL GAINS. ON THE SAME ANALOGY THE ASSESSEE HAVING BEEN ALLOTTED THE FLAT HE HAVING P AID A SUBSTANTIAL AMOUNT TOWARDS ITS COST WITHIN THE STIP ULATE PERIOD OF ONE YEAR HE CANNOT BE DENIED THE BENEFIT OF THE SAID SECTION BECAUSE THE FLAT PURCHASED BY HIM HAD COME INTO HIS FULL DOMAIN WITHIN THE PERIOD OF ONE YEAR THOUGH THE SALE DEED IN HIS FAVOUR WAS REGISTERED SUBSEQUENTLY . 8. IN THE LIGHT OF THE SAID CIRCULAR AND KEEPING IN VIEW THE SPIRIT OF S. 54 OF THE ACT WE DECLINE THE REQUEST OF THE REVENUE TO CALL FOR A REFERENCE ON THE PROPOSED QUE STION. 6. IF THE FACTS OF THAT CASE ARE SEEN THE ASSESSEE HAD SOLD THE HOUSE ON 22 ND SEPTEMBER 1981 FOR RS. 2 75 000/-. ON 25 TH SEPTEMBER 1981 HE ENTERED INTO AN AGREEMENT OF PURCHASE OF RESIDENTIA L FLAT AND BY SEPTEMBER 1982 A SUM OF RS. 2 39 850/- WAS PAID TO THE BUILDE R OF THE SAID FLAT. THE ACTUAL POSSESSION WAS DELIVERED TO THE ASSESSEE ON 17.2.1983 (I.E. AFTER THE STIPULATED PERIOD OF ONE YEAR) AND SALE DEED WAS EX ECUTED ON 26.2.1985 AND IN THE CIRCUMSTANCES AFTER REFERRING TO CIRCULA R NO. 471 DATED 15 TH ITA NO. 4279/D/10 7 OCTOBER 1986 HONBLE HIGH COURT HAS UPHELD THE ORD ER OF THE TRIBUNAL VIDE WHICH THE EXEMPTION WAS GRANTED TO THE ASSESSEE. I N THE PRESENT CASE LAND WAS SOLD BY THE ASSESSEE ON 20/5/05 AND BY 12/12/05 THE PAYMENT OF RS. 80 80 375/- WAS MADE TO THE BUILDER WHICH IS WITHI N SEVEN MONTHS OF THE SALE OF LAND. THE ENTIRE PAYMENT HAVING BEEN MADE WITHIN THE STIPULATED PERIOD FOLLOWING THE RATIO OF AFOREMENTIONED DECIS ION IN THE CASE OF CIT V. R.L. SOOD (SUPRA) IT HAS TO BE HELD THAT THE ASSES SEE IS ENTITLED FOR EXEMPTION U/S 54F. THEREFORE WE DIRECT THE AO TO GIVE THE EXEMPTION TO THE ASSESSEE. THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 4.3.11 (G.E. VEERABHADRAPPA) (I.P. BANSAL) VICE PRESIDENT JUDICIAL MEMBER * KAVITA DATED: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT