Bhadra Rama Reddy, v. ACIT,

ITA 914/BANG/2013 | 2007-2008
Pronouncement Date: 31-07-2014 | Result: Allowed

Appeal Details

RSA Number 91421114 RSA 2013
Assessee PAN AAKPR1010K
Bench Bangalore
Appeal Number ITA 914/BANG/2013
Duration Of Justice 1 year(s) 1 month(s) 23 day(s)
Appellant Bhadra Rama Reddy,
Respondent ACIT,
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-07-2014
Assessment Year 2007-2008
Appeal Filed On 07-06-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER I.T.A. NO. 914 /BANG/20 1 3 (ASSESSMENT YEAR : 200 7 - 08 ) SHRI BHADRA RAMA REDDY NO.18C 1 ST B MAIN ROAD SECTOR C MCHS COLONY HSR LAYOUT BANGALORE - 560 102 PAN AAKPR 1010K VS. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE 7(1) BANGALORE. APPELLANT RESPONDENT. APPELLANT BY : SHRI BALARAM R RAO ADVOCATE. RESPONDENT BY : SHRI L.V. BHASKAR REDDY JCIT. DATE OF H EARING : 28.5.2014 . DATE OF P RONOUNCEMENT : 31.5. 2014 . O R D E R PER SHRI JASON P. BOAZ A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) LTU BANGALORE DT.28.3.2013 FOR ASSESSMENT YEAR 2 007 - 08. 2. THE FACTS OF THE CASE BRIEFLY ARE AS UNDER : 2.1 THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2007 - 08 ON 31.7.2007 DECLARING AN INCOME OF RS.26 09 840 COMPRISING OF INCOME FROM SALARY CAPITAL GAINS AND O THER SOURCES. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT 'THE ACT') BY ORDER DT.26.11.2009 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.46 53 270 ON ACCOUNT OF THE DENIAL OF THE ASSESSEE'S CLAIM FOR EXEMPTION OF RS.20 43 430 UNDER SECTION 54 OF THE ACT. 2 ITA NO. 914 /BANG/ 2013 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2007 - 08 DT.26.11.2009 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (APPEALS) LTU WHO DISM ISSED THE ASSESSEE'S APPEAL BY ORDER DT.28.3.2013 . 3. AGGRIEVED BYTHE ORDER OF THE CIT (APPEALS) DT.28.2.2013 FOR ASSESSMENT YEAR 2007 - 08 T HE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL RA ISING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE ORDER OF ASSESSING OFFICER IN THE MANNER IN WHICH HE DID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE LOCATION OF THE RESIDENTIAL HOUSE CONSTRUCTED BY THE APPELLANT WAS IN A VILLAGE AWAY FORM BANGALORE CITY AND CONSTRUCTION WAS MADE KEEPING IN MIND THE LOCATION BEING AWAY FROM CITY AND BEING A REMOTE VILLAGE. 3. THE LEARNED CIT (APPEALS) OUGHT TO HA VE APPRECIATED THE FACT THAT IT WAS THE APPELLANT S SON WHO WAS LOOKING AFTER THE CONSTRUCTION ON ACCOUNT OF THE APPELLANT BEING AN AGED PERSON AND THEREFORE HE SHOULD HAVE EXAMINED THE APPELLANT S SON INSTEAD OF RECORDING THE STATEMENT OF THE APPELLANT. 4 . THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE VILLAGE PANCHAYAT S CERTIFICATION DT.27.11.2009 WAS CORRECT AND IN ACCORDANCE WITH LAW. 5. THE LEARNED CIT (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT HAD OBTAINED THE N ECESSARY PERMISSION FOR CONSTRUCTION OF HOUSE FROM COMPETENT AND DESIGNATED AUTHORITY NAMELY (NGP) AND NOT FORM THE AUTHORITY AS CONTENDED BY THE CIT (APPEALS) IN HIS ORDER. 6. WITHOUT PREJUDICE THE ADDITION AS SUSTAINED BY THE LEARNED CIT (APPEALS) I S ARBITRARY EXCESSIVE AND OUGHT TO BE DELETED IN TOTO. 7. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE INTEREST LEVIED UNDER SECTION 234A 234B AND 234C BY THE ASSESSING AUTHORITY. 8. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAYBE ALLOWED. 4 . ON PERUSAL WE FIND THAT SINCE THE GROUNDS RAISED AT S.NOS.1 6 & 8 ARE GENERAL IN NATURE NO ADJUDICATION IS CALLED FOR THEREON. 5 . THE GROUND AT S.NO.7 CHALLENGES THE CHARGING OF INTEREST UNDER SECTION 234A 234B AND 234C OF THE ACT. THE CHARGING OF INTEREST IS CONSEQUENTIAL AND MANDATORY AND THE ASSESSING OFFICER HAS NO DISCRETION IN THE MATTER AND WE THEREFORE UPHOLD HIS ACTION IN CHARGING THE SAME. THE ASSESSING OFFICER IS HOWEVER DIRECTED TO RECOMPUTE THE INTEREST CHARGEABLE UNDER SECTION 234A 234B AND 234C OF THE ACT WHILE GIVING EFFECT TO THIS ORDER. 3 ITA NO. 914 /BANG/ 2013 6 . EXEMPTION UNDER SECTION 54 OF THE ACT. 6 .1 THE GROUNDS RAISED AT S.NOS.2 TO 5 CHALL ENGES THE ACTION OF THE LOWER AUTHORITIES IN DENYING THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 54 OF THE ACT. 6 .2.1 AS PER THE FACTS THAT EMERGE FROM THE RECORD THE ASSESSEE IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2007 - 08 HAD SOLD TWO IMMOVA BLE PROPERTIES; (I) AT VISHVESHWARAIAH LAYOUT BANGALORE WHICH WAS ACQUIRED BY HIM ON 2.4.2004 AND SOLD ON 18.12.2006 FOR SALE CONSIDERATION OF RS.30 LAKHS AND ON WHICH HE ADMITTED SHORT TERM CAPITAL GAINS (STCG). (II) AT 126 KSRTC LAYOUT 11 MAIN II P HASE JP NAGAR BANGALORE (HEREINAFTER REFERRED TO AS JP NAGAR PROPERTY) WHICH WAS ACQUIRED ON 12.11.1984 AND SOLD ON 6.11.2006 FOR SALE CONSIDERATION OF RS.27 LAKHS. 6 .2.2 THE LONG TERM CAPITAL GAINS (LTCG) ON THIS SALE OF THE PROPERTY AT J.P. NAGAR BANGALORE WAS COMPUTED AT RS.20 43 430 AND THE ASSESSEE HAD CLAIMED THE ENTIRE LTCG OF RS.20 43 430 AS EXEMPT UNDER SECTION 54 OF THE ACT ON ACCOUNT OF INVESTMENT IN PURCHASE OF SITE FOR CONSTRUCTION OF A RESIDENTIAL HOUSE AT NO.110 UPKAR SPRING FIELDS SY. NO.109/9 NE R ALUR VILL AGE ATTIBELE HOBLI ANEKAL TALUK BANGALORE. IN ORDER TO CLAIM EXEMPTION UNDER SECTION 54 OF THE ACT THE ASSESSEE WAS REQUIRED TO MAKE THE INVESTMENT IN THE CONSTRUCTION OF A RESIDENTIAL HOUSE ON OR BEFORE 5.11.2009 AS THE TRAN SFER / SALE OF THE PROPERTY IN QUESTION TOOK PLACE ON 6.11.2006. IT IS THE CLAIM OF THE ASSESSEE THAT HE HAS CONSTRUCTED A RESIDENTIAL PROPERTY IN THE PROPERTY SITUATED AT 110 UPKAR SPRING FIELDS NE R ALUR VILLAGE ATTIBELE HOBLI ANEKAL TALUK BANGALORE ( HEREIN AFTER CALLED ANEKAL PROPERTY ) WITHIN THE PERIOD OF THREE YEARS ENDING 5.11.2009. 5 .2.3 IN ASSESSMENT PROCEEDINGS SINCE THE ASSESSEE REPORTEDLY FAILED TO FURNISH ANY COMPLETION CERTIFICATE IN RESPECT OF CONSTRUCTION OF THE RESIDENTIAL HOUSE AT ANEKAL THE ASSESSING OFFICER GOT AN ENQUIRY CONDUCTED BY THE INSPECT OR OF HIS OFFICE. THE INSPECTOR VISITED THE ANEKAL PROPERTY ON 10.11.2009 AND REPORTED THAT THERE WAS ONLY A TEMPORARY STRUCTURE MEASURING 300 SQ. FT. WITH ASBESTOS SHEET ROOF WITHOUT ANY WATER OR ELECTRICITY CONNECTION. PURSUANT THERETO THE ASSESSING OFFICER SUMMONED THE ASSESSEE UNDER SECTION 131 OF THE ACT AND RECORDED HIS STATEMENT IN THE MATTER ON 20.11.2009. ON THE BASIS OF 4 ITA NO. 914 /BANG/ 2013 THE INSPECTOR S REPORT ON HIS VISIT TO THE RESIDENTIAL S ITE AT ANEKAL AND THE ASSESSEE'S STATEMENT RECORDED UNDER SECTION 131 OF THE ACT THE ASSESSING OFFICER CONCLUDED THAT THE STRUCTURE STANDING ON THE SAID SITE IS ONLY A TEMPORARY ONE AND NOT A RESIDENTIAL HOUSE AND DENIED THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 54 OF THE ACT. 6 .3 THE LEARNED CIT (APPEALS) IN THE APPELLATE ORDER DT.28.2.2013 UPHELD THE DECISION OF THE ASSESSING OFFICER IN DENYING THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 54 OF THE ACT RENDERING THE FOLLOWING OBSERVATIONS / FINDINGS IN THE MATTER : (I) THE ANEKAL PROPERTY IS SITUATED IN AN URBAN LOCATION AND THEREFORE THE CONTENTION OF THE ASSESSEE THAT THE CONSTRUCTION CARRIED OUT AT THE SITE IS IN LINE WITH THE REMOTENESS OF THE LOCATION IS NOT ACCEPTABLE. (II) THE ASSES SEE DID NOT FURNISH ANY BUILDING PLAN TO THE DEVELOPER OF THE PROPERTY AS WAS REQUIRED. (III) THE APPROVAL GIVEN BY THE PANCHAYAT CARRIES NO LEGAL AUTHORITY AS THE PROPERTY LIES IN A RESIDENTIAL LAYOUT DEVELOPED BY A DEVELOPER AFTER OBTAINING APPROVAL FR OM THE BANGALORE METROPOLITAN REGION DEVELOPMENT AUTHORITY ( BMRDA ). (IV) AS THE ALLEGED RESIDENTIAL HOUSE OF THE ASSESSEE AT ANEKAL HAS NO ELECTRICITY AND WATER CONNECTION AND ALSO NO APPROVAL FROM ANEKAL PLANNING AUTHORITY ( APA ) IT RAISES SERIOUS DO UBTS ABOUT THE RESIDENTIAL INTENT BEHIND THE TEMPORARY STRUCTURE CONSTRUCTED. 6 .4 IN THE PROCEEDINGS BEFORE US THE LEARNED AUTHORISED REPRESENTATIVE REITERATED THE CLAIMS FOR EXEMPTION UNDER SECTION 54 OF THE ACT IN THE GROUNDS RAISED AT S.NOS.2 TO 5 (SUPRA) AND ALSO THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. IN SUPPORT OF THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 54 OF THE ACT THE LEARNED AUTHORISED REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUN AL IN THE CASE OF DR. R. BALAJI IN ITA NO.164/BANG/2012 DT.5.10.2012 WHICH IN TURN HAD RELIED ON THE DECISION OF ANOTHER CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M.A. PATEL IN ITA NO.182(BANG)/2011 DT.29.6.2012. THE LEARNED AUTHORISED REPRESENTAT IVE VEHEMENTLY URGED THAT THE FACT S OF THESE TWO CITED CASES AND THE DECISION S THEREIN WERE SQUARELY APPLICABLE TO THE ASSESSEE IN THE CASE ON HAND. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN VIEW OF THIS THE FINDINGS OF THE AUTHORITIES BEL OW WAS LIABLE TO BE 5 ITA NO. 914 /BANG/ 2013 REVERSED AS IT WAS NOT SUSTAINABLE AND THE ASSESSEE'S APPEAL ON THE ISSUE OF CLAIM OF EXEMPTION UNDER SECTION 54 OF THE ACT IS TO BE ALLOWED. 6 .5 PER CONTRA THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AUTHORIT IES BELOW AND SOUGHT THE UPHOLDING OF THEIR ORDERS DENYING THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 54 OF THE ACT. THE LEARNED DEPARTMENTAL REPRESENTATIVE INTER ALIA PLACED RELIANCE ON THE DECISION IN THE CASE OF SMT. ROHINI REDDY (2010) 122 I TD 1 OF THE ITAT HYDERABAD. 6 .6.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED AND CONSIDERED THE MATERIAL ON RECORD INCLUDING THE JUDICIAL DECISIONS RELIED ON. THE BASIC FACTS OF THE CASE ARE NOT IN DISPUTE. THAT THE ASSESSEE HAS PURCHASED THE ANEKAL PROPERTY IS NOT IN QUESTION AND THAT A STRUCTURE WAS PUT UP ON THE SAID SITE IS NOT IN DISPUTE. THE DOCUMENTS BROUGHT ON RECORD BY THE ASSESSEE SHOW THAT THE ASSESSEE HAS PAID THE LOCAL TAXES NAMELY HOUSE TAX LAND TAX WATER TAX AND ELECTRICITY TAX IN RESPECT OF THIS RESIDENTIAL PROPERTY. THE DETAILS SUBMITTED WOULD SHOW THAT THE SAID PROPERTY CONSISTED OF A DWELLING / HOUSE STRUCTURE AND IT IS ALSO NOT IN DISPUTE THAT THE ANEKAL SITE IS LOCATED IN A DESIGNATED RESIDENTIAL AREA APP ROVED BY BMRDA. IN THE LIGHT OF THE ABOVE EVIDENCE THE QUESTION THAT NEEDS TO BE DECIDED IS AS TO WHETHER THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL HOUSE SO AS TO ENABLE TO CLAIM EXEMPTION UNDER SECTION 54 OF THE ACT. 6 .6.2 ON THIS ISSUE THE ASSE SSING OFFICER HAS CONCLUDED THAT THE STRUCTURE PUT UP ON THE ANEKAL SITE IS ONLY A TEMPORARY STRUCTURE THAT IS NOT FIT FOR RESIDENTIAL PURPOSES AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 54 OF THE ACT. IN OUR VIEW THIS C AN HARDLY BE THE BASIS ON WHICH ONE CAN CONCLUDE THAT THE ASSESSEE DID NOT CONSTRUCT A RESIDENTIAL HOUSE. THE INSP ECTOR S REPORT ADMITS THAT A BUILDING STRUCTURE OF 300 SQ. FT. EXISTS WHICH WAS COMPLETED ABOUT 20 DAYS BEFORE HIS VISIT ON 10.11.2009 WHI CH IS ALSO WITHIN THE THREE YEAR PERIOD FOR CONSTRUCTION WHICH ENDED ON 5.11.2009. THE LEARNED CIT (APPEALS) PROCEEDED ON THE BASIS OF VARIOUS CIRCUMSTANTIAL EVIDENCE TO CONCLUDE THAT THE RESIDENTIAL HOUSE WAS NOT FIT FOR HABITATION AND WAS NEVER INTENDE D FOR RESIDENTIAL PURPOSE. WE ARE UNABLE TO AGREE WITH THE REASONING GIVEN BY THE LEARNED CIT (APPEALS). IF THE RESIDENTIAL PLOT LAYOUT AT ANEKAL IS APPROVED BY THE BMRDA IT DOES NOT 6 ITA NO. 914 /BANG/ 2013 BY ITSELF NEGATE THE APPROVALS GIVEN TO THE ASSESSEE BY THE N ERALUR GR AM PANCHAYAT FOR CONSTRUCTION OF THE HOUSE THE COMPLETION CERTIFICATE FOR THE HOUSE ISSUED BY THEM OR THE HOUSE TAX RECEIPTS ETC. ISSUED TO THE ASSESSEE IN RESPECT OF THE PROPERTY. FURTHER THERE IS NO REQUIREMENT IN LAW THAT THE RESIDENTIAL HOUSE PLAN H AS TO BE APPROVED BY APA FOR CLAIMING EXEMPTION UNDER SECTION 54 OF THE ACT. SECTION 54 OF THE ACT WHICH WE ARE DEALING WITH IN THE CASE ON HAND TALKS OF THE PURCHASE / CONSTRUCTION OF A RESIDENTIAL HOUSE WHICH HAS ADMITTEDLY TAKEN PLACE AND THERE ARE NO CONDITIONS STIPULATED THEREIN THAT THE HOUSE SHOULD BE OF A PARTICULAR QUALITY SIZE NATURE ETC. OR THAT IT SHOULD GENERATE INCOME FROM HOUSE PROPERTY ETC. 6 .6.3 AS ALREADY DISCUSSED IN PARAS 6 .1 TO 6 .6.2 OF THIS ORDER WE HAVE ALREADY HAD OCCASI ON TO PERUSE AND EXAMINE THE EVIDENCE ON RECORD AND THIS IN OUR CONSIDERED OPINION JUSTIFIES THE EXISTENCE OF A HOUSE / RESIDENTIAL STRUCTURE OF 300 SQ. FT. (10 FT. X 30 FT.) WITH CEMENT FLOOR. THE CLAIM OF THE ASSESSEE IS THAT THE HOUSE WAS HABITABLE AND THERE IS NO MATERIAL EVIDENCE BROUGHT ON RECORD BY THE LOWER AUTHORITIES TO CONTROVERT THE AVERMENTS OF THE ASSESSEE OR TO DISBELIEVE THE ASSESSEE'S CLAIM. AT THIS POINT OF TIME I.E. 5 YEARS AFTER THE CONSTRUCTION IN 2009 IT WOULD NOT BE POSSIBLE TO V ERIFY THE CONDITION OF THE BUILDING OR WHETHER IT WAS INHABITABLE AT THAT POINT IN TIME. ON THE BASIS OF THE MATERIAL ON RECORD WE ARE SATISFIED THAT THE ASSESSEE HAS FULFILLED THE CONDITIONS FOR GRANT OF EXEMPTION UNDER SECTION 54 OF THE ACT. INCOMING TO THIS FINDING WE DRAW SUPPORT FROM THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M.A. PATEL (SUPRA) WHICH HAS BEEN FOLLOWED BY ANOTHER CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DR. R. BALAJI (SUPRA) RELIED ON BY THE LEAR NED AUTHORISED REPRESENTATIVE WHEREIN ON SIMILAR FACTS THE TRIBUNAL HELD THAT THE ASSESSEE WOULD BE ENTITLED TO EXEMPTION UNDER SECTION 54 OF THE ACT. FOLLOWING THE AFORESAID DECISION OF THE CO - ORDINATE BENCHES OF THIS 7 ITA NO. 914 /BANG/ 2013 TRIBUNAL (SUPRA) WE DIRECT THE ASSESSING OFFICER TO ALLOW THE ASSESSEE EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT. 6. IN THE RESULT THE ASSESSEE'S APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T J U L Y 201 4 . S D / - S D / - ( N.V. VASUDEVAN ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR - B BENCH. 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT BANGALORE