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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
Per Shri D.S.Sunder Singh, Accountant Member :
This appeal is filed by the assessee against the order of the Pr.Commissioner of Income Tax (Pr.CIT), Vijayawada vide order dated 27.03.2018 for the Assessment Year (A.Y.) 2008-09.
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All the grounds of appeal are related to the order passed by Pr.CIT, Vijayawada u/s 263 of the Income Tax Act, 1961 (in short ‘Act’). For the Assessment year(A.Y.) under consideration, the assessee did not file the return of income. Since the department is in possession of information with regard to sale of property, the ITO had issued the notice u/s 148 and in response to the notice issued, the assessee filed the return of income admitting total income of Rs. Nil on 02.04.2015. After verification of the documents and the information produced by the assessee, the assessment was completed u/s 143(3) r.w.s. 147 of the Act accepting the returned income. Subsequently, the Pr.CIT, Vijayawada has taken up the case for revision u/s 263 and found that during the assessment year, the assessee had entered into development agreement on 12.04.2007 with Shri K.Venkata Narsaiah for the property located at Sy.No.31/2, Ward No.28, Patamata, Vijayawada admeasuring 599 sq.yds. As per the development agreement, the assessee was entitled to receive 4 flats for transfer of the vacant land claimed the deduction u/s 54F for all the 4 residential flats and the AO has allowed the deduction. However, according to the Pr.CIT, the assessee is entitled for exemption of only one residential flat u/s 54F of the Act. Since the AO had allowed exemption of 4 flats
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against the entitlement of one flat, the Pr.CIT was of the view that the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue. Accordingly issued show cause notice u/s 263 directing the assessee as to why the excess deduction of 3 flats allowed by the AO should not be disallowed and the assessment order be revised accordingly.
In response to the notice issued u/s 263, the assessee filed explanation before the Ld.Pr.CIT stating that as per the development agreement, she got 4 flats in GMV Residency and the same were partitioned among the family members who are the coparceners of the HUF. She further stated that the entire property of 0.22 cents is a subject matter of dispute in OS No.813/2007 in the file of V Additional Senior Civil Judge, Vijayawada and the same was pending. Hence, she submitted that the property transferred by her is the HUF property of her husband G.Madhusudana Rao and all the co-parceners consisting of herself and her children are having the right, title and possession in the said property and claimed that she is entitled for deduction u/s 54F. The Ld.Pr.CIT considered the explanation of the assessee and viewed that the assessee is entitled for only one flat and not more than one flat as held by the Hon’ble
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High Court of Andhra Pradesh in the case of K.Siva Reddy, L/R of K.Lalitha in ITTA No.76/2000 dated 11.08.2006. The Ld.Pr.CIT further observed that while delivering the judgement in CIT Vs. Syed Ali Adil in ITTA No.410 of 2012, Hon’ble High Court of Andhra Pradesh has not considered the decision of Shri K.Siva Reddy and the same was not brought to of Hon’ble High Court of Andhra Pradesh. Similarly, the Ld.Pr.CIT further observed that the Hon’ble ITAT, Visakhapatnam also was not apprised of decision of K.Siva Reddy and in later cases like ITO Vs. Ravuri Sai Chaitanya in ITA No.498/Vizag/2013 dt.28/03/2017, Smt.Sona Hulda & Others in ITA No.497, 502 to 505/Viz/2013, CO No.s23 to 27/Viz/2017 dated 31/05/2017 Hon’ble ITAT, Visakhapatnam gave the decision in favour of the revenue. Therefore, held that the assessment order passed by the AO u/s 143(3) r.w.s. 147 of the Act is erroneous and prejudicial to the interest of the revenue, hence, set aside the assessment with a direction to redo the assessment after giving opportunity to the assessee.
Aggrieved by the order of the Pr.CIT, the assessee filed appeal before this Tribunal.
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We have heard both the parties and perused the material placed on record. In the instant case, the assessment was reopened for the purpose of verification of the capital gains for sale of property. The Income Tax Officer, Ward-2(2), Vijayawada has issued notice on 29.05.2014 to the assessee calling for explanation as to why the capital gains should not be assessed at Rs.54,07,000/- for transfer of the property. The AO had issued notice u/s 148 on 29.012015 for the same reason of assessment of capital gains for transfer of the property in respect of the development agreement entered in to by the assessee with K.Venkata Narsaiah and R.Venkata Rama Rao located at Patamatalanka, Vijayawada. The assessee filed return of income admitting Nil income. Later on, the AO issued the notice u/s142(1) dated 23.04.2014 calling for the information with regard to consideration received and the assessment of capital gains in relation to development agreement vide letter dated 12.04.2007. Subsequently, on 12.06.2015 also, the AO had issued the notice u/s 142(1) asking the assessee as to why capital gains should not be computed and brought to tax. The AO also filed information with regard to amounts spent by the assessee on each flat. The assessee filed letter before AO on 16.02.2014 explaining that she had executed the development agreement cum GPA 1979/2007 dated
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12.04.2007 in favour of K.Venkata Narsaiah and R.V. Rama Rao for apartment construction. As per the development agreement, she got 4 flats in GMV Residency and she had also stated that the said flats were partitioned among her family. She further stated that the property transferred by her was a co-parcenary property of her husband and all the co-parceners of her husband’s HUF have right, title and possession in the property. From the above details, it is found that the case was reopened for the purpose of assessment of capital gains in respect of development agreement and receipt of the 4 constructed residential flats in exchange of the land. The required details were filed by the assessee before the AO and the AO had examined the issue in detail and after examination of the details furnished by the assessee, the AO satisfied that the assessee was entitled for deduction u/s 54F for all the 4 flats received by her in exchange of the land and accordingly allowed the deduction u/s 54F of the Act. As observed by the Ld.Pr.CIT, though the Hon’ble High Court of Andhra Pradesh in the case of K.Siva Reddy supra held that the assessee is not entitled for deduction u/s 54F for multiple flats, in the later judgement of Hon’ble High Court of AP in CIT Vs.Syed Ali Adil in ITTA No.410 of 2012 dated 20.12.2012, the Hon’ble High Court held that the assessee is entitled
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for deduction u/s 54F for more than one residential house. In the instant case, as per the information available on record, the AO had examined the issue and after having satisfied that the assessee is entitled for deduction u/s 54F for more than one flat he had allowed deduction. This view is also supported by the decision of Hon’ble AP High Court in the case of CIT Vs. Syed Ali Adil. Therefore, view of the Pr.CIT is difference of opinion and there is no error in the assessment order passed by the AO. Similarly, ITAT Hyderabad Bench in the case of Income Tax Officer, Ward-8(2), Hyderabad Vs. Smt. Krishna Bai, Hyderabad also taken the view that the assessee is entitled for deduction u/s 54F for more than one flat after considering the decision of Hon’ble High Court of Andhra Pradesh in the case of K Siva Reddy and Syed Ali Adil (supra). From the above, facts, the AO has taken one of the possible views after considering the material placed before him. Therefore, we hold that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the revenue, accordingly, we set aside the order u/s 263 and restore the assessment order passed u/s 143(3) r.w.s 147 . 8. In the result, appeal of the assessee is allowed.
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Order pronounced in the open court on 3rd July 2019.
Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर धसंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBERलेखा सदस्य/ACCOUNTANT MEMBER नवशधखधपटणम /Visakhapatnam नदनधंक /Dated : 03.07.2019 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee- Smt.Garikipati Vijaya Lakshmi, D.No.40-25-35 Masjid Street, Patamatalanka, Vijayawada 2. रधजस्व /The Revenue – Income Tax Officer, Ward-2(2), Vijayawada 3. The Pr.Commissioner of Income Tax, Vijayawada 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, तिशाखािटणम/DR, ITAT, Visakhapatnam 5. गार्ड फ़ाईि / Guard file आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, Visakhapatnam