SMT.PUSHPAKALA HARIRAJAN vs. THE INCOME TAX OFFICER

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TCA/357/2018HC Madras16 December 2020Bench: Hon`ble Mr Justice T. S. SIVAGNANAM8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court decided not to adjudicate the substantial questions of law framed for consideration due to subsequent developments. The Court noted the enactment of the Direct Tax Vivad Se Vishwas Act, 2020, which provides a mechanism for resolving tax disputes. The assessee had availed the benefit of this Act by filing a declaration and obtaining Form III. Consequently, the Court found no useful purpose in keeping the appeal pending. The Tax Case Appeal was disposed of on the ground that the assessee had filed a declaration under the Vivad Se Vishwas Act. The Department was directed to process the application at the earliest and communicate the decision to the assessee. The assessee was granted liberty to restore the appeal if the ultimate decision under the Vivad Se Vishwas Act was not in their favour. The substantial questions of law were left open.

What were the facts?

The appeal was filed by the assessee, Smt. Pushpakala Harirajan, against the order of the Income Tax Appellate Tribunal, 'C' Bench, Chennai, dated June 12, 2017, for the Assessment Year 2013-2014. The appeal was admitted by the High Court on December 19, 2018, on substantial questions of law concerning the denial of deduction under Section 54 of the Income Tax Act on long-term capital gains and the habitability of a constructed dwelling unit. The High Court noted that the Direct Tax Vivad Se Vishwas Act, 2020, had been enacted, providing an option for resolution of disputed tax cases. The assessee had filed a declaration under this Act, and Form III had been issued.

What were the issues?

1. Whether, on the facts and circumstances, the Appellate Tribunal was right in law in denying the Appellant the benefit of deduction of Rs. 55,25,000/- under Section 54 of the Income Tax Act on Long Term Capital Gain from the sale of a residential property? 2. Whether, on the facts and circumstances, the Appellate Tribunal was right in law in holding that the Dwelling Unit constructed by the Appellant is not habitable for human residence, and therefore, the Appellant is not entitled to claim exemption under Section 54? Assessee's Contentions: The assessee argued that they were entitled to the deduction under Section 54 of the Income Tax Act. The assessee had filed a declaration under the Direct Tax Vivad Se Vishwas Act, 2020, and had been issued Form III. Revenue's Contentions: The judgment does not record specific contentions from the revenue regarding the substantial questions of law. However, the revenue was represented by learned Senior Standing Counsel.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 54,Section 4

AI-generated summary — verify with the full judgment below

T.C.A.No.357 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 16.12.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.357 of 2018

Smt.Pushpakala Harirajan ... Appellant Vs. The Income Tax Officer Non Corporate Ward - 17 (3) Chennai - 600 034. ... Respondent Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, 'C' Bench, Chennai, dated 12.06.2017 made in I.T.A.No.64/Mds/2017 relating to the Assessment Year 2013 - 2014. For Appellant : Mr.R.Sivaraman For Respondent : M/s.R.Hemalatha Senior Standing Counsel

1/8 https://www.mhc.tn.gov.in/judis/ T.C.A.No.357 of 2018 JUDGMENT [Order of the Court was made by

T.S.SIVAGNANAM

, J.]

This appeal has been filed by the Assessee under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity), challenging the order dated 12.06.2017 passed by the Income Tax Appellate Tribunal, 'C' Bench ('the Tribunal' for brevity) in I.T.A.No.64/Mds/2017 for the Assessment Year 2013 - 2014. The appeal was admitted on 19.12.2018 on the following Substantial Questions of Law : “i. Whether on the facts and the circumstances of the case the Appellate Tribunal was right in law in denying the Appellant the benefit of deduction of Rs.55,25,000/- u/s 54 of the Income Tax Act, on Long Term Capital Gain on sale of the residential property?

ii. Whether on the facts and the circumstances of the case the Appellate Tribunal was right in law in holding that the Dwelling Unit constructed by the Appellant is not habitable for human residence and therefore the Appellant is not entitled for claim of exemption u/s 54?”

2/8 https://www.mhc.tn.gov.in/judis/ T.C.A.No.357 of 2018 2. We have heard Mr.R.Sivaraman, learned counsel appearing for the appellant/assessee and M/s.R.Hemalatha, Learned Senior Standing Counsel for the respondent/revenue. 3. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020.

4.

In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India. Under Section 2(j) “disputed tax” has been defined. In terms of Section 3, where a declarant means a person, who files a declaration under Section 4 on or before the last date files a declaration to the designated authority in 3/8 https://www.mhc.tn.gov.in/judis/ T.C.A.No.357 of 2018 accordance with the provisions of Section 4 in respect of tax arrears, then, notwithstanding anything contained in the Income Tax Act or any other law for the time being in force, the amount payable by the declarant shall be determined in terms of Section 3(a-c) thereunder. 5. The First Proviso to Section 3 states that in case, where an Appeal or Writ Petition or Special Leave Petition is filed by the Income Tax authority on any issue before the Appellate Forum, the amount payable shall be one-half of the amount in the table stipulated in Section 3 calculated on such issue, in such a manner as may be prescribed. The second proviso deals with the cases, where the matter is before the Commissioner (Appeals) or before the Dispute Resolution Panel. The third proviso deals with cases, where the issue is pending before the Income Tax Appellate Tribunal. The filing of the declaration is as per Section 4 of the Act and the particulars to be furnished are also mentioned in the Sub Sections of Section 4. Section 5 of the Act deals with the time and manner of the payment and Section 6 deals with Immunity from initiation of proceedings in respect of offence and imposition of penalty in certain cases. Section 9 of the Act deals with cases, where the Act 3 of 2020 will not be applicable. 4/8 https://www.mhc.tn.gov.in/judis/ T.C.A.No.357 of 2018 6. We are informed by the learned counsel for the appellant/assessee that already the declaration has been filed by the assessee and Form III has been issued. 7. In the light of the fact that the assessee has already availed the benefit under the Act, no useful purpose would be served in keeping this appeal pending. At the same time, safeguarding the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already filed a declaration and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declarations filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition 5/8 https://www.mhc.tn.gov.in/judis/ T.C.A.No.357 of 2018 for Restoration, the Registry shall place such petition before the Division Bench for orders. 8. With this observation, the Tax Case Appeal stands disposed of with the aforementioned liberty and Consequently, the Substantial Questions of Law are left open. No costs.

(T.S.S.,J) (V.B.S.,J) 16.12.2020 Ssd Index: Yes / No Internet: Yes / No Speaking Order/Non-Speaking Order To The Income Tax Appellate Tribunal, 'C' Bench, Chennai. 6/8 https://www.mhc.tn.gov.in/judis/ T.C.A.No.357 of 2018 7/8 https://www.mhc.tn.gov.in/judis/ T.C.A.No.357 of 2018 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. Ssd T.C.A.No.357 of 2018 16.12.2020 8/8 https://www.mhc.tn.gov.in/judis/

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