Vani Madugula, Hyderabad, Hyderabad v. ITO, Ward-14(5), Hyderabad, Hyderabad

ITA 468/HYD/2017 | 2007-2008
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 46822514 RSA 2017
Assessee PAN AHVPM4250G
Bench Hyderabad
Appeal Number ITA 468/HYD/2017
Duration Of Justice 8 month(s) 20 day(s)
Appellant Vani Madugula, Hyderabad, Hyderabad
Respondent ITO, Ward-14(5), Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Last Hearing Date 29-11-2017
First Hearing Date 29-11-2017
Assessment Year 2007-2008
Appeal Filed On 10-03-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC) HYDERABAD BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 468/HYD/17 2015-16 SMT. VANI M HYDERABAD [PAN: AHVPM4250G] INCOME TAX OFFICER WARD-14(5) (I/C) HYDERABAD 469/HYD/17 2007-08 SRI M. DAYAKAR REDDY HYDERABAD [PAN: AARPM4668D] FOR ASSESSEE : SHRI A.V. RAGHU RAM AR FOR REVENUE : SMT. N. SWAPNA DR DATE OF HEARING : 29-11-2017 DATE OF PRONOUNCEMENT : 30-11-2017 O R D E R THESE TWO APPEALS ARE BY TWO ASSESSEES AGAINST THE OR DER(S) OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6 HYDER ABAD. SINCE COMMON ISSUES ARE INVOLVED AND THE ORDER OF CIT(A) B EING COMMON EVEN THOUGH ISSUED SEPARATELY THESE APPEALS ARE HEAR D TOGETHER AND DECIDED BY THIS ORDER. 2. BRIEFLY STATED ASSESSEES HEREIN ALONG WITH OTHERS H AVE ENTERED INTO A DEVELOPMENT AGREEMENT/GPA WITH M/S. CH OICE INFRA PVT. LIMITED FOR CONSTRUCTION OF RESIDENTIAL FLATS VIDE A GREEMENT DT. 07-06-2006. ASSESSEES SHARE IN THE LAND WAS 524.28 SQ. YDS EACH. AS PER THE TERMS OF DEVELOPMENT AGREEMENT ASSESSEE AN D BUILDERS I.T.A. NOS. 468 & 469/HYD/2017 :- 2 - : SHARE WAS IN THE RATIO OF 50:50. THE ASSESSING OFFICE R (AO) ON RECEIPT OF INFORMATION ISSUED NOTICE(S) U/S. 148 OF TH E INCOME TAX ACT [ACT] DT. 05-03-2014 AND COMPLETED THE ASSESSMENT EX-PARTE BRINGING INTO TAX THE CAPITAL GAINS ADOPTING THE FULL VA LUE OF CONSIDERATION AT RS. 52 57 480/- AND DETERMINED THE LO NG TERM CAPITAL GAIN AT RS. 48 83 714/-. 3. BEFORE THE LD.CIT(A) IT WAS CONTENDED THAT ASSESSEE DID IN FACT FILE THE RETURN OF INCOME BUT NOT OFFERED CAPITAL G AINS AS THE SAME WAS EXEMPT ALSO UNDER THE PROVISIONS OF SECTION 5 4/54F OF THE ACT. RELIANCE WAS PLACED ON VARIOUS COURT DECISIO NS VIZ. VITTAL KRISHNA CONJEEVARAM VS ITO (2013) 144 ITD 325 (HYD) CIT VS SYED ALI (2013) 352 ITR 418 (AP). THE RATIO OF THE DECISIONS BEING THAT THE EXEMPTION U/S. 54 ONLY REQUIRED THAT THE PROPER TY PURCHASED BY THE ASSESSEE OUT OF THE SALE PROCEEDS SH OULD BE OF RESIDENTIAL NATURE. THE FACT THAT THE RESIDENTIAL HOUSE CONSISTED OF SEVERAL INDEPENDENT UNITS COULD NOT BE AN IMPEDIMENT FO R GRANTING RELIEF UNDER THE SAID SECTION EVEN IF SUCH INDEPENDE NT UNITS WERE SITUATED ON DIFFERENT FLOORS OR WERE PURCHASED UNDER SEPARATE SALE DEEDS. HENCE ACCORDING TO THE ASSESSEE AS THE CAPI TAL GAINS WOULD WORKED OUT TO NIL THE AO WAS NOT CORRECT IN ASSESSIN G THE LONG TERM CAPITAL GAINS TAX AT RS. 48 83 714/-. 4. LD.CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTIONS AN D HELD AS UNDER: 04.0. ACCORDING TO THE ASSESSEE SHE WAS NOT LIAB LE TO CAPITAL GAINS TAX AS SHE HAD INVESTED THE NET CONSIDERATION RECEI VABLE IN RESPECT OF THE ORIGINAL ASSET (LAND) IN THE NEW ASSET (VIZ. THE 2 FLATS WHICH SHE WAS TO GET FROM THE BUILDER IN CONSIDERATION FOR TRANSFER OF H ER SHARE OF LAND). BEFORE THE ASSESSING OFFICER THE ASSESSEE HAD NOT MADE AN Y CLAIM AND HAD EVEN I.T.A. NOS. 468 & 469/HYD/2017 :- 3 - : NOT FILED ANY RETURN OF INCOME. FOR CLAIM OF EXEMP TION THE ASSESSEE HAS TO SATISFY THAT THE PRESCRIBED CONDITIONS GIVEN UNDER SECTION 54F HAVE BEEN MET FULLY. IT CANNOT BE ASSUMED THAT CLAIM WOULD AU TOMATICALLY BE GRANTED. THE ASSESSEE HAS TO SHOW THAT SHE HAS SATI SFIED ALL THE CONDITIONS MENTIONED IN SECTION 54F. THAT HAS NOT BEEN DONE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE UNDERSIGNED. 04.1. IN VIEW OF IT THE CLAIM OF EXEMPTION U/S. 5 4F CANNOT BE GIVEN AND THE ORDER OF THE ASSESSING OFFICER IS SUTAINED . 5. ASSESSEES HAVE RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-6 HYDERABAD DISMISSING THE APPEAL FILED BY THE APPELLANT IS PERVERSE ILLEGAL AND UNSUSTAINABLE ON FACTS AND IN LAW. 2. THE COMMISSIONER (APPEALS) ERRED IN DECLINING TO GRANT THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE INCOME TAX ACT 1961 MADE BY THE APPELLANT BEFORE HER. 3. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT PURSUANT TO ENTERING INTO DEVELOPMENT AGREEMENT THERE IS A DEE MED INVESTMENT BY THE APPELLANT IN THE FLATS AND THEREFORE WAS ENTIT LED TO THE CLAIM OF DEDUCTION UNDER SECTION 54 F OF THE ACT. THE FINDIN G OF THE COMMISSIONER (APPEALS) THAT THE APPELLANT HAS NOT FILED RETURN O F INCOME NOR HAS CLAIMED DEDUCTION BEFORE THE ASSESSING OFFICER ARE NOT GERM ANE FOR ENTERTAINING THE CLAIM MADE BEFORE HER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E SINCE THE APPELLANT SATISFIED ALL THE REQUIREMENTS OF SECTION 54F OF TH E ACT THE AUTHORITIES BELOW OUGHT TO HAVE GRANTED THE DEDUCTION UNDER THE SAID SECTION BY FOLLOWING THE ORDERS OF THIS HON'BLE TRIBUNAL. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING IT IS PRAYED THAT THE HON'BLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL. THE ABOVE GROUNDS ARE COMMON FOR BOTH THE ASSESSEES. 6. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT AO IS BOU ND TO TO GRANT THE DEDUCTION U/S. 54/54F AS THE AGREEMENT ITS ELF INDICATE 50% SHARE BEING CONSTRUCTION OF RESIDENTIAL A PARTMENTS I.T.A. NOS. 468 & 469/HYD/2017 :- 4 - : THE SALE PROCEEDS ADOPTED BY THE AO HAVE IN FACT DEEMED TO HAVE BEEN INVESTED IN THE RESIDENTIAL HOUSE AND SO THE LONG TERM CAPITAL GAIN GETS EXEMPTED. IT WAS FURTHER SUBMITTED THAT THE CIT(A) WAS NOT CORRECT IN REJECTING THE CLAIM WHEN THE CIT(A) COULD HAVE DIRECTED THE AO TO EXAMINE WHETHER THE CONDITIONS ARE SATISFIED OR NOT? LD. COUNSEL HAS NO OBJECTION IF THE MATTER IS RE- EXAMINED BY THE AO. HOWEVER IT IS FURTHER SUBMITTED THA T ASSESSEE DID IN FACT FILE THE RETURNS AND THAT THE CAPITAL GAINS W ERE NOT OFFERED AS IT WAS EXEMPT. 7. LD.DR HOWEVER RELIED ON THE ORDERS OF THE AO AND CIT(A). 8. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS ON RECORD. EVEN THOUGH NOTICES WERE ISSUED TO ASSESSEES AND ASSESSEES FILED RETURNS IN RESPONSE THERE IS NO MENTION OF RETURNS BEING FILED BY THE ASSESSEES AND AO ASSUMED TH AT ASSESSEES HAVE NOT RESPONDED WHILE COMPLETING THE ASS ESSMENT EX- PARTE. IT IS THE DUTY OF THE AO TO CONSIDER ALL THE ASPECTS OF TH E TRANSACTION. WHEN THE AGREEMENT ITSELF INDICATES THAT THE P ARTIES WERE TO GET CONSTRUCTED HOUSES AT LEAST TO THE EXTENT OF ON E HOUSE HE COULD HAVE GRANTED 54F DEDUCTION RATHER THAN RAISING DEMAND BY ADOPTING VALUES ON HIS OWN. THE REASONING OF TH E CIT(A) IS THAT ASSESSEES HAVE NOT SUBSTANTIATED BEFORE THE AO CANNOT B E ACCEPTED AS AO COMPLETED ASSESSMENT EX-PARTE. WHEN THE CLAIM WAS MADE BEFORE THE CIT(A) IT IS CIT(A) WHO HAS TO A DJUDICATE THE ISSUE BY REFERRING THE MATTER TO THE AO ON REMAND RATHER THAN DISMISSING IT SUMMARILY. I.T.A. NOS. 468 & 469/HYD/2017 :- 5 - : 8.1. BE THAT AS IT MAY THE LAW ON THE ISSUE AS PROPOUN DED BY THE HON'BLE JURISDICTIONAL HIGH COURT IT IS VERY CLEAR THA T ASSESSEES ARE ENTITLED FOR DEDUCTION U/S. 54/54F ON ALL THE UNITS WHI CH ARE FALLING TO HIS/HER SHARE BY VIRTUE OF DEVELOPMENT AGRE EMENT. THEREFORE THE ISSUE OF ALLOWANCE OF DEDUCTION U/S. 5 4/54F IS RESTORED TO THE FILE OF AO TO EXAMINE AND ALLOW THE SA ME AS PER THE PROVISIONS OF LAW. ASSESSEES SHOULD BE GIVEN DUE OPPORTUNITY BY THE AO BEFORE DECIDING THE ISSUE. GROUNDS ARE CONSIDE RED ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD DATED 30 TH NOVEMBER 2017 TNMM I.T.A. NOS. 468 & 469/HYD/2017 :- 6 - : COPY TO : 1. SMT. VANI M. C/O. A.V. RAGHU RAM P. VINOD & M. NEELIMA DEVI ADVOCATES 610 BABUKHAN ESTATE BASHEER BAGH HYDERABAD. 2. SRI M. DAYAKAR REDDY C/O. A.V. RAGHU RAM P. VI NOD & M. NEELIMA DEVI ADVOCATES 610 BABUKHAN ESTATE BASHEER BAGH HYDERABAD. 3. THE INCOME TAX OFFICER WARD-14(5) (I/C) I.T. T OWERS A.C. GUARDS HYDERABAD. 4. CIT (APPEALS)-6 HYDERABAD. 5. PR.CIT-6 HYDERABAD. 6. D.R. ITAT HYDERABAD. 7. GUARD FILE.