SHRI. MAKAM ADINARAYANA SRIDHAR,BANGALORE vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 3(2)(1), BANGALORE

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ITA 333/BANG/2020Status: DisposedITAT Bangalore31 August 2021AY 2013-147 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) had denied the exemption based on surmises without proper verification. The case was remanded to the CIT(A) to verify the assessee's submissions and documents regarding the purchase of a new site for exemption under Section 54F.

What were the facts?

The assessee sold 12 plots carved out from agricultural land, claiming the profit as long-term capital gain and seeking exemption under Section 54F. The AO reclassified the gains as business income and denied the exemption. The CIT(A) agreed with the reclassification but denied the exemption based on non-compliance with Section 54F requirements.

What were the issues?

Whether the assessee complied with the conditions for claiming exemption under Section 54F for the purchase of a new asset after the sale of plots, and whether the CIT(A) properly verified the assessee's submissions.

Which sections of the Income-tax Act were involved?

Section 54F,Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE

Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI

For Appellant: Shri Suresh Muthukrishnan
For Respondent: Shri Kannan Narayanan, JCIT(DR)

PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order dated 13/01/2020 passed by the Ld.CIT(A)-3, Bangalore for assessment year 2013-14 on following grounds of appeal:

1.

“1. The order of the Authorities below in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the appellant's case.

2.

The learned A.O. is not justified in denying the deduction claimed by the appellant u/s. 54F of the Act under the facts and in the circumstances of the appellant's case.

3.

The appellant craves leave of your Honour to add, alter, amend, rectify, and delete any of the grounds urged above. 4. For the above and other grounds that may be urged at the time of hearing of the appeal, the appellant humbly prays that the appeal may be allowed and Justice rendered.” Brief facts of the case are as under: 2. The assessee is a retail trader of cement filed its return of income for year under consideration on 25/09/2013 declaring total income of Rs.36,16,000/-. The return was processed under section 143(1) of the Act and case was selected for scrutiny. Notice under section 143(2) was issued along with notice under section 142(1) of the Act, calling for various details. In response to the statutory notices, the representative of assessee appeared before the Ld.AO and filed requisite details as called for. 3. During the assessment proceedings Ld. AO observed that, assessee purchased agricultural land of 3 Acres and 39 Guntas at the Doddaballapura taluk on 02/05/1986. The assessee applied for conversion of the land from agricultural to residential within 2 years of purchase of land. She was issued the land conversion certificate on 27/06/1988. The Ld.AO observed that the land was developed into residential layout of approximately 60 sites after convergent at the sites were sold from 1991 onwards till 2011. The balance 12 sites were sold during financial year relevant to assessment year under consideration.

4.

The assessee claimed profit on sale of approximately 12 sites amounting to Rs.61,00,000/- as long term capital gain, the details of which are as under: Sl.No. Date of Sale Site No Size Name of the Amount Purchaser 1 04-06-2012 34 60 X 40 Vision Developers 7,80,000/-

2 04-06-2012 9 60 X 40 Smt. K.S.Lakshmi 7,80,000/- 48,49,50 60 X 85 Vision Developers 18,24,000/- 3 06-03-2013 12,16,000/- 4 45,46,47 40 X 85 Vision Developers 06-03-2013

9,75,000/- 100 X 30 5 06-03-2013 43,52 Smt.Meena D Lakhani 44, 51 97,75,000/- 06-03-2013 100 X 30 6 S m t . M e e n a D L a k h a n i f •

5.

The Ld.AO rejected the submissions by holding that assessee claimed long term capital gain on sale of plots which were developed in 1990 and the sale commenced from 1990-91. He observed that total of 120 plots were carved out from the agricultural land and sold over the years which amounts to business carried out by assessee and the sale of plots during the year was brought to tax as business income.

6.

The Ld.AO further denied the exemption claimed by assessee under section 54F due to reclassification of long term capital gains as business income.

7.

Aggrieved by the order of Ld.AO, assessee was in appeal before the Ld.CIT(A). 8. The Ld.CIT(A) after considering the submissions of assessee granted the sale proceeds for Rs.61 Lacs received on sale of 12 plots to be computed as LTCG. However, for considering the claim of exemption under section 54F the Ld.CIT(A) was of the view that assessee did not comply with the requirement of provisions to be eligible to claim deduction under section 54F. 9. Aggrieved by the order of Ld.CIT(A) assessee is in appeal before us now. The only issue that is alleged by the Ld.AR is in respect of denial of claim of exemption under section 54F in respect of investment in purchase of flat made by assessee on sale of the 12 residential plots. 10. It has been submitted by the Ld.AR that assessee had advanced payments of Rs.50 Lacs towards purchase of 2 flats that did not materialise and the amount was invested in purchase of site. He submitted that the cancellation agreement was entered into between the parties on 24/06/2014. It was also submitted that the purchase of new site took place after one year after the date of transfer of original asset and no construction commenced till the date. It has been submitted that assessee had invested the sum towards purchase of site within the live period of limitation which cannot be overlooked.

11.

On the contrary the Ld.Sr.DR submitted that assessee has failed to comply with the requirements of section 54F and therefore has been rightly denied by the authorities below.

12.

We have perused submissions advanced by both sides in light of records placed before us. 13. We note that Ld.CIT(A) has not verified the submissions made by assessee in respect of purchase of site. Merely on surmises, the deduction is denied. In our opinion it is a fit case to be remanded to Ld.CIT(A) to carry out necessary verification. Assessee is directed to file all relevant documents in respect of purchase of site in support of its claim. The Ld.CIT(A) is directed to verify all the relevant documents and to consider the claim in accordance with law. Accordingly this ground raised by assessee stands allowed for statistical purposes. In the result appeal filed by assessee stands allowed for statistical purposes. Order pronounced in the open court on 31st August, 2021

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