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Before: Shri G. Manjunatha & Shri Sonjoy Sarma
आयकर अपीलीय अिधकरण, ’बी’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI �ी जी. मंजुनाथा, लेखा सद� एवं �ी सऺजय सरमा, �ाियक सद� के सम� Before Shri G. Manjunatha, Accountant Member & Shri Sonjoy Sarma, Judicial Member आयकर अपील सं./I.T.A. No.710/Chny/2020 िनधा�रण वष�/Assessment Year: 2015-16 & C.O. No. 3/Chny/2022 [in I.T.A. No. 710/Chny/2020] The Deputy Commissioner of Vs. Shri Sudhakar, Income Tax, No. 11, East Vellalar Street, Non Corporate Circle 19(1), Adambakkam, Chennai 600 088. Chennai 600 034. [PAN:AACPS4146D] (अपीलाथ�/Appellant) (��थ�/Respondent/Cross Objector) Department by : Shri A.S. Sumanth, JCIT Assessee by : Shri A.K. Jain, CA सुनवाई की तारीख/ Date of hearing : 16.08.2022 घोषणा की तारीख /Date of Pronouncement : 24.08.2022 आदेश /O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 14, Chennai, dated 23.01.2020 relevant to the assessment year 2015-16. The Revenue has raised the following grounds: 1) The order of the learned CIT(A) is contrary to law and facts and circumstances of the case. 2) The ld. CIT(A) has erred in allowing assessee's appeal without proper appreciation of facts.
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3) The Ld. CIT(A) erred in not providing an opportunity for admitting the new evidence which has not been done as per Rule 46A of the Income Tax Rule. 4) The Ld. CIT(A) erred in not verifying the genuineness of the claim in complete that the RMO quarters belongs to the firm M/s. S.P. Hospital. 5) The Ld. CIT(A) failed the appreciate the evidences brought in at the stage of assessment where the assessee himself agreed for the addition and paid the entire taxes based on the enquiry carried out. 6) For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer be restored.” 2. The appeal filed by the Revenue is delayed by 126 days in filing the appeal before the Tribunal due to outbreak of COVID-19 pandemic and accordingly, the delay is condoned and admitted the appeal for adjudication.
Brief facts of the case are that the assessee is a Doctor by profession and running a hospital in the name and style of M/s. S.P. Hospital as one of the partners. The assessee has filed his return of income for the assessment year 2015-16 on 28.09.2015 admitting a taxable income of ₹.99,40,884/-. The assessment was completed
under section 143(3) of the Income Tax Act, 1961 [“Act” in short] dated 07.11.2017 and determining total income at ₹.6,12,76,876/- by making
addition towards disallowance of deduction claimed under section 54F
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of the Act against long term capital gains derived from sale of property.
The assessee carried the matter in appeal before the first appellate authority and the ld. CIT(A), for the reasons stated in his appellate order dated 23.01.2020, deleted the addition made by the Assessing Officer towards withdrawal of exemption claimed under section 54F of the Act, on the ground that the property at RMO quarters is belong to the firm M/s. S.P. Hospital and it is used as commercial property for the purpose of hospital run by the assessee. Thus, the assessee is entitled for claiming exemption under section 54F of the Act.
Aggrieved by the said appellate order, the Revenue is in appeal before us and the assessee has filed Cross Objection.
The ld. DR has submitted that the ld. CIT(A) has allowed the relief to the assessee by admitting additional evidence without providing an opportunity to the Assessing Officer in violation of Rule 46A of the Income Tax Rules, 1962 and thus, the issue be set aside to the file of the Assessing Officer for verification and ascertain the nature of property.
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The ld. AR of the assessee, on the other hand, submitted that the assessee has filed certain additional evidence before the ld. CIT(A) to prove his case that the property at RMO quarters does not belong to the assessee and further the same is in the name of M/s. S.P. Hospital. The ld. CIT(A), after considering the elaborate facts, has rightly deleted the addition made by the Assessing Officer and his order should be upheld.
We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. Facts in the impugned order are that the assessee sold an immovable property on 06.06.2014 to M/s. Chellamal Educational Society for a total sale consideration of ₹.5,16,54,000/-. The assessee has computed the long term capital gains towards sale of property and claimed exemption under section 54F of the Act by reinvesting the capital gains by entering into an agreement with M/s. Mantri Technology Constellations Private Limited on 06.09.2013 for purchase of residential house. The Assessing Officer, during the course of assessment proceedings, denied the claim of exemption under section 54F of the Act on the ground that at the time of reinvestment of capital gains, the assessee
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was owner of more than one house property. According to the Assessing Officer, the property at RMO quarters is a residential property and apart from that the assessee was having one more property and thus, not entitled for deduction under section 54F of the Act. The Assessing Officer has disregarded the claim of the assessee that the property at RMO quarters is a commercial property and used for business of M/s. S.P. Hospital on the basis of report of Inspector that the said property is a residential property. Before the ld. CIT(A), the assessee has filed certain additional evidences including financial statements of M/s. S.P. Hospital and argued that the property at RMO quarters is owned by the hospital and not by the assessee and used for hospital, which is commercial property and cannot be considered as residential property to deny the claim of deduction under section 54F of the Act. The ld. CIT(A), by accepting the additional evidences filed by the assessee, allowed relief to the assessee on the ground that the property at RMO quarters is a commercial property and hence the same cannot be considered as a residential house to deny the benefit to the assessee.
In this background, if it is examined the case of the assessee, we find that the reasons given by the Assessing Officer was based on the
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report of the Inspector to deny the benefit under section 54F of the Act, whereas, the assessee was claiming it as commercial property. But, when enquiry was conducted, it was ascertained that the property is a residential house and further, it is in the name of the assessee and his wife, but not in the name of the partner’s firm. On the other hand, the ld. AR of the assessee has submitted that the property is owned by M/s. S.P. Hospital on the basis of certain additional evidences including financial statement of the firm. There are contradictory facts, one side the assessee claims that the property is owned by the firm, whereas, documentary evidence shows that the property is owned by the assessee and his wife as submitted by the Inspector. Therefore, we are of the considered opinion that the issue needs to go back to the Assessing Officer for further verification to ascertain the nature of the property and ownership of the property. In fact, the assessee, through his Cross Objection has raised a ground that the Assessing Officer has not given sufficient time to justify his case with necessary evidences. Hence, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to cause necessary enquiries on the additional evidences filed by the assessee to ascertain the nature of the property. In case, the Assessing Officer finds that if the property is
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accounted in the books of firm M/s. S.P. Hospital as a commercial property and the property is used for the purpose of hospital, then the Assessing Officer is directed to allow deduction under section 54F of the Act.
In the result, the appeal filed by the Revenue and the Cross Objections filed by the assessee are allowed for statistical purposes.
Order pronounced on 24th August, 2022 at Chennai.
Sd/- Sd/- (SONJOY SARMA) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai, Dated, 24.08.2022 Vm/- आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकर आयु� (अपील)/CIT(A), 4. आयकर आयु�/CIT, 5. िवभागीय �ितिनिध/DR & 6. गाड� फाईल/GF.