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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A)-1, Noida dated 29.11.2018 for Assessment Year 2011-12 wherein, the appeal filed by the assessee against the order passed by ITO-Ward-1(2), Noida u/s 143(3) of the Act was partly allowed. The assessee is aggrieved by that order and has preferred the following grounds of appeal:- “1. (a) That the order passed by the learned CIT(A) is perverse in natureas the same is not in accordance with the directions given by the Hon’ble IT AT. (b) That the learned CIT(A) has erred in adjudicating the appeal only on two grounds as against three grounds raised by the appellant before the learned CIT(A) which is evident from Form 35 as well as written submissions filed before the learned CIT(A).
2. (a) That the learned CIT(A) has misinterpreted the provisions of section 50C(2) of the Act by restricting the appellant’s right to contestthe stamp duty value adopted by the learned Assessing Officer without giving credence to the fact that the appellant had not disputed the said value before any authority. (b) That in this connection, the learned CIT(A) has erred in law in passing his order, by considering the stamp duty value of the property amounting to Rs. 1,59,31,035/- as deemed sale consideration,prior to the receipt of Valuation Report of the District Valuation Officer (DVO) which was pending as on the date of his order and as per which the value of the property was Rs. 1,48,10,000/-.
(a) That the learned CIT(A) has erred in not adjudicating the ground of appeal
of the appellant wherein the learned Assessing Officer had restrictedthe deduction under section 54 of the Act to Rs. 15,48,136/- (being investment in one residential unitjas against the totalinvestment made by the appellant in twoadjoining residential units. (b) That in this connection, once the sale consideration is accepted at Rs. 1,48,10,000/- (being the value determined by DVO), the appellant is entitled to a deduction of Rs. 27,25,936/- under section 54 of the Act (being investment made by her in 2 adjoining residential units upto the due date of filing the return).
4. That the learned CIT(A) has erred in law and in facts in sustaining the addition of Rs. 50,000/- under section 69 of the Act on account of unexplained investmentson an adhoc basis merely on assumptions and without considering the documents filed by the appellant in this behalf.
5. That the learned CIT(A) has erred in sustaining the order of the learned Assessing Officer wherein he has inadvertently considered the indexed cost of acquisition at Rs. 69,21,021/- instead of Rs. 69,91,206/- (as per the Income Tax Return filed by the appellant for the year under consideration) without there being any disallowance in this respect.”
2. The brief facts of the case shows that the assessee is an individual who filed her return of income on 07.07.2011 at Rs. 1,17,163/- against which the assessment was framed by the ld AO assessing the total income of the assessee at Rs. 2,17,163/- and also determined long term capital gain at Rs. 24,61,878/-.
3. During the course of assessment proceedings it was found that the assessee has sold a property at D-135, Sector-40, Noida at Rs. 1,45,00,000/- on 12.08.2016. The ld AO noted that as per provision of section 50C of the Act the value of the property is Rs. 1,59,41,035/. Ld AO questioned the same and the assessee submitted that the assessee has declared sales consideration as per the sale deed entered into which is the fair market value of the property. It was further stated that the difference between the contractual consideration and the circle rate is only 8.98%. The assessee submitted that even if sale consideration is taken at circle rate the index cost of acquisition is Rs. 69,21,021/- resulting into a long term capital gain of Rs. 90,10,040/- out of which the assessee invested Rs. 50 lakhs in REC Bond and further made an investment into two adjoining residential units having the cost of Rs. 41,96,684/- and thus total investment u/s 54 and 54 EC of the Act amounting to Rs. 91,96,684/- and even then no capital gain is chargeable to tax. The ld AO took the sale consideration according to section 50C at Rs. 1,59,41,035/-. During the course of assessment proceedings the assessee objected to the adoption of stamp duty valuation. The ld AO noted that the assessee has objected at a very late stage and there is no sufficient time left to refer the matter to the District Valuation Officer for valuation. He further held that the assessee has made investment in two properties i.e. LM-508 and 509 at Eco CITI whereas the assessee is eligible to get deduction only for one property and up to the extent of investment made upto the due date of filing. He collected the information from the Builder M/s. Suptertech Ltd. He found that up to 31/08/2011 i.e. the due date of filing of the return, the assessee invested Rs. 15,48,136/- in property LM-508 and Rs. 11,77,798/- in property LM-509 and balance amount has not been deposited in to the capital gain account scheme. He then granted the assessee the deduction u/s 54(1) of the Act for LM-508 of Rs. 15,48,136/-. The assessee also contested that this issue is covered in favour of the assessee by decision of the Hon'ble Delhi High Court in case of CIT Vs. Gita Duggal 257 CTR 208. Further, the ld AO distinguished the same as there is no agreement between builder and the assessee and therefore, he held that the assessee is not legally bound to invest long term capital gain in two properties. He further questioned the amount of investment made by the assessee with the builder found that assessee has made investment on 15.03.2011 of Rs. 1 lakh in cash . The source of this sum was questioned. The assessee submitted that the assessee and her husband has kept withdrawal at home and source of Rs. 1 lakh is withdrwal from Punjab National Bank withdrawan on 13.03.2010. The ld AO noted that such withdrawal could have used by the assessee for health expenditure and therefore, same could not have been available with the assessee for investment in the house. Therefore, he did not grant the credit for the same. Consequently, the ld AO computed the capital gain considering the sale consideration as per section 50C of Rs. 1,59,31,035/- and granted deduction of index cost of acquisition of Rs. 69,21,021/- and thus computed long term capital gain of Rs. 90,10,014/-. The assessee was also granted deduction u/s 54EC of Rs. 50 lakhs, however, deduction u/s 54 was restricted to Rs. 15,48,136/-. Thus, long term capital gain chargeable to tax computed at Rs. 24,61,878/-. The sum of Rs. 1 lakhs was added in the hands of the assessee u/s 69C of the Act. Thus, the assessment order was passed on 21.03.2014.
4. The assessee preferred appeal before the ld CIT(A) wherein, deemed sale consideration u/s 50C was upheld and further without giving any finding whether the assessee is eligible for deduction u/s 54 of more than one house the computation of long term capital gain made by the ld AO was upheld. With respect to the investment made at Rs. 1 lakhs added by the ld AO u/s 69C of the Act was reduced to Rs. 50,000/-. Thus, the assessee is aggrieved with that order has preferred this appeal.
At the time of hearing the assessee raised an additional ground and requested that the same may be admitted stating that 3rd proviso to section 50C of the Act is curative in nature and accorded retrospective application from the date of introduction of section 50C of the Act. It was submitted that the above ground is legal ground and, no fresh facts are required to be investigated, therefore, we admit this ground of appeal
. On the additional ground of appeal she submitted that the difference of actual consideration and the stamp duty value is less than 10% and therefore, the amendment of section 50C(1) of the Act by way of insertion of 3rd proviso should be considered retrospective in nature. For this proposition the ld AR submitted that the above issue is squarely covered by the various decision of the coordinate bench and therefore, same should be followed.
6. The ld DR vehemently objected to the same.
7. We have carefully considered the rival contention and perused the additional ground raised by the assessee. We find that by this additional ground the assessee is challenging the adoption of the deemed sales consideration according to the provisions of Section 50 C of the income tax act. We find that assessee has already challenged the adoption of fair market value as per provisions of Section 50 C of the income tax act before the learned assessing officer. Now by this additional ground assessee is merely changed challenging the fact that when the difference between the fair market value as per the provisions of Section 50 C of the income tax act and the actual sale consideration is less than 10%, the actual sale consideration cannot be disturbed. This is merely a legal argument, therefore we admit the additional ground.
8. Coming to the additional ground admitted by us, We have carefully considered the rival contentions and find that the introduction of the 3rd proviso to section 50C has been held by three different coordinate benches as retrospective in nature. The coordinate benches in Maria Fernandes Cherly v. ITO (IT )(2021) 187 ITD 738/ 123 Taxmann.com 252 /209 TTJ 850 /198 DTR 137/ 85 ITR 674 (Mum)(Trib), Chadra Prakash Jhunjhunwala Vs. DCIT 113 Taxmann.com 246 and Sandeep Patil Vs. ITO in has held so. Therefore, we find that issue is squarely covered in favour of the assessee, accordingly, we hold that as the difference between stamp duty valuation u/s Page | 4 50C is just 8.98 % higher than the actual sale consideration. Only actual sale consideration should be taken for working out capital gain. Accordingly, additional ground raised by the assessee is allowed.
9. Ground No. 1 is general in nature and therefore, it is dismissed.
10. Ground No. 2 is with respect to the adoption of stamp duty value as sale consideration has already been decided by us in the additional ground raised by the assessee in favour therefore, this ground do not survive, hence dismissed.
11. Ground No. 3 is with respect to the fact that whether the deduction u/s 54 of the Act is to be restricted to only one residential unit against the total investment made by the assessee in two adjoining residential unit. The ld AR submitted that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in CIT Vs. Gita Duggal 357 ITR 153, Hon‟ble Madras High Court in Tilokchand and Sons v. ITO (2019) 413 ITR 189 / 308 CTR 364/ 263 Taxman 713/ 177 DTR 165(Mad) (HC), Hon‟ble Karnataka High Court in Arun K. Thiagarajan v. CIT(Appeals) (2020) 427 ITR 190 /193 DTR 153/ 272 Taxman 235 (Karn)(HC) and CIT Vs. Rukmaniamma 331 ITR 211. The ld DR submitted that investment in two units is not permissible and the decision of the Hon'ble Delhi High Court has been distinguished by the ld AO.
12. We have carefully considered the rival contentions. We find that the assessee has purchased two adjacent units of house property and claimed deduction u/s 54 of the Act. For the impugned assessment year section 54 provided exemption in investment in „a‟ residential house and which is amended by Finance Act, 2014 wherein, word „a‟ has been replaced by word „one ‟. This amendment is prospective in nature cannot be given a retrospective effect. In view of this, in the facts and circumstances of the case whether the assessee has purchased two adjacent residential houses, according to us the assessee is entitled to deduction u/s 54 of the Act on the amount invested in both the houses. Further, the various judicial precedents of the Hon‟ble High Courts also supports the contention of the ld AR. Thus, ground No. 3 of the appeal is allowed.
13. Ground No. 4 is with respect to ad hoc addition of Rs. 50,000/- u/s 69 of the Act upheld by the ld CIT(A). The fact shows that the assessee has made an investment in cash of Rs. 1 lakhs as a payment to M/s. Supertech builder on 15.03.2011 and for this the assessee has shown that she has withdrawn the above sum from the bank account No. 6959 of the Punjab National Bank. The assessee has withdrawn of Rs. 60,000/- on 01.02.2010 and Rs. 1 lakh on 03.03.2010. Out of the above sum , on 15.03.2011 the assessee has deposited Page | 5 Rs.1 lakhs with the builder. The ld AO made an addition u/s 69 of the Act whereas, the ld CIT(A) reduced it to Rs. 50,000/-. The ld AR contested that the assessee kept money at home to meet medical emergency of her husband, which was not utilized , therefore, as the cash was available same was deposited with the builder for purchase of property. The ld AR further stated that the medical expenditure of the husband of the assessee are meet by Govt under CGHS Scheme, however, the said cash was not utilized for any other purposes and kept at home, so was used for paying to builder. She also submitted the details of family member of the assessee. It was also stated that out of Rs. 1,60,000/- available with the assessee only Rs. 1 lakh was used for payment to the builder and therefore, the assessee has enough cash on hand and hence addition should not have been made at all. The learned authorised representative further submitted that the learned CIT – A has also confirmed the addition to the extent of ₹ 50,000 without any basis.
The ld DR supported the orders of the lower authorities.
We have carefully considered the rival contentions and perused the orders of the lower authorities. The fact shows that the assessee has withdrawn Rs. 1,60,000/- from her bank account, undisputedly, Out of the above sum only Rs. 1 lakh has been utilized for payment to the builder for purchase of house property. In absence of any evidence that the assessee has spent the whole sum of Rs. 1,60,000/- for any other purpose, only on the presumption, the addition cannot be made in the hands of the assessee holding that such cash is not available with her. In view of this, we hold that the source of the fund is available with the assessee for payment to the builder and further the medical exigencies are meet by the Govt is not denied, We found that in absence of any other evidences contrary , benefit of cash available on hand should be granted four source of investment of Rs. 1 lakh with the builder. Accordingly, we direct the ld AO to delete the addition u/s 69C of the Act of Rs. 50,000/- confirmed by the ld CIT(A). Accordingly, ground NO. 4 of the appeal is allowed.
Ground No. 5 is contesting error in adopting indexed cost of acquisition shown by the assessee of Rs. 69,91,206/- which is taken by the ld AO as Rs. 69,24,021/- without any reason. We find that the learned assessing officer has considered the indexed cost of acquisition at ₹ 6,924,021/– without giving any reason that why he is not agreeing with the indexed cost of acquisition shown by the assessee of ₹ 6,991,206 as shown in the computation of income. Therefore we agree with the argument of the learned authorised representative. We direct Page | 6