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Income Tax Appellate Tribunal, BANGALORE BENCHES “SMC-A”, BANGALORE
Before: Shri George George K
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “SMC-A”, BANGALORE Before Shri George George K, Judicial Member ITA No.1056/Bang/2019 : Asst.Year 2014-2015 Sri.G.B.Shivarajappa The Income Tax Officer No.114, Gunjur via Varthur Ward 4(2)(4) v. Bangalore – 560 087. Bangalore. PAN : FAYPS0250R. (Appellant) (Respondent) Appellant by : Sri.Ravishankar S.V., Advocate Respondent by : Sri.Ganesh B.Ghale, Standing Counsel Date of Date of Hearing : 12.04.2021 Pronouncement : 16.04.2021 O R D E R This appeal at the instance of the assessee is directed against CIT(A)’s order dated 28.02.2019. The relevant assessment year is 2014-2015.
There is a delay of 4 days in filing this appeal. The assessee has filed a petition for condonation of delay and also an Affidavit stating therein the reason for the belated filing of this appeal. I have perused the reasons stated in the Affidavit. I am of the view that the delay cannot be attributed to any latches on the part of the assessee and there is sufficient reason for condonation of delay. Hence, I condone the delay of 4 days in filing this appeal and proceeded to dispose of the appeal on merits.
The grounds raised read as follows:-
“(1) The order of the learned Commissioner of Income-tax (Appeals), 12 Bangalore passed under section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and
2 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa. circumstances of the Appellant's case. 2. The appellant denies himself liable to be assessed to a total income of Rs.32,68,390/- as against the returned income of Rs. 2,57,770/- on the facts and circumstances of the case. 3. The learned CIT(A) failed to appreciate that the appellant has utilized the capital gains for acquiring a house property, by making payments to the seller of the house property and has made a proper claim of deduction under section 54F of the Act, on the facts and circumstances of the case. 4. The learned CIT(A) was not justified in law and on facts in appreciating that the appellant has acquired possession of the house property and was enjoying the rents from the new asset, thereby acquired the house property within the time prescribed under section 54F of the Act and thereby made a valid claim, on the facts and circumstances of the case. 5. The authorities below failed to appreciate that the payments made to the vendor was a commercial transaction for sale of property with a consideration and not one out of love and affection, on the facts and circumstances of the case. 6. The learned CIT(A) was not justified in law and on facts in drawing a parity of reasoning on authorities which were rendered in respect to interpretation of rate of tax, whereas, there was no dispute as to whether the appellant was eligible to claim the deduction under section 54F of the Act, on the facts and circumstances of the case. 7. The learned CIT(A) was not justified in appreciating that the provisions of section 54 of the Act, were to be construed liberally and in favour of the assessee as held by several authorities, on the facts- and circumstances of the case. 8. The appellant denies itself liable to be charged interest under section 234D and withdrawal of interest 244A of the Act on the facts and circumstances of the case. 9. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal. 10. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.
The assessee has also raised additional grounds, which read as follows:-
3 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa.
“1. Without prejudice, the appellant is eligible for deduction under section 54F of the Act, since the consideration received out of his share of original asset has been utilized and invested in purchase of a new house property in the name of his son, Sri. Jagadeesh, on the facts and circumstances of the case. 2. The appellant craves leave to add, alter, modify, delete or substitute any or all of the grounds at the time of hearing the appeal. 3. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed and appropriate relief may be granted in the interest of justice and equity.” 5. The brief facts of the case are as follow. The assessee is an individual. For the assessment year 2014-2015, the return of income was filed on 19.07.2014 declaring total income of Rs.2,57,770 comprising of income from capital gains. The assessee for the relevant assessment year along with other co-owners had sold an ancestral property being land measuring 0.13 guntas situated in Gunjur Village, Varthur Hobli, Bangalore East Taluk for a total consideration of Rs.72,39,375. The share of sale consideration received by the assessee was declared at Rs.42,62,500. The assessee had claimed deduction u/s 54 / 54F of the I.T.Act for investment made in a new property. With regard to investment in a new property, the assessee furnished sale agreement on e-stamp paper dated 22.04.2014 executed between the assessee and his son Dr.Jagadeesha for purchase of a house situated at Attur Village, Yalahanka for a consideration of Rs.30,00,000. The sale consideration is claimed to have been made as under:-
(i) Rs.10,00,000 by cheque No.904151 dated 24.04.2014
4 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa. (ii) Rs.10,00,000 by cheque No.904152 dated 25.04.2014 (iii) Rs.3,50,000 by cheque No.904153 dated 25.04.2014 (iv) Rs.6,50,000 by cash.
During the course of assessment proceedings, the assessee was asked to produce the registration details of the new asset. The authorized representative vide letter dated 03.11.2016 submitted that the assessee is unable to execute the sale deed in his favour because of his illness. Further, the AR contended that the sale agreement in which the payments have been indicated is a sufficient proof for the purchase of the property. However, the arguments of the AR was not accepted by the A.O. and he denied the benefit of section 54F of the I.T.Act. The relevant finding of the AO in denying the benefit of section 54F of the I.T.Act, reads as follow:-
“4.4.11 The argument of the Authorised Representative is not acceptable on the following grounds. a. The Authorised Representative has agreed that the cheque was not encashed; b. No proof is available for payment of cash apart from debit entries in the bank account, no corroborative evidence produced to show that the purpose of withdrawal was for payment; c. Instead of bringing on record the investment in its true sense for claiming exemption from capital gains, the Authorised Representative has observed that the Assessing Officer has not brought on record evidence to prove the payments were out of natural love and affection by the assessee. d. The Authorised Representative has made the intention clear that the transaction with the son was made to claim the exemption from capital gains. The transaction was carried out by preparing an agreement for sale, without transferring the right over the property by executing a registered deed. e. The Authorised Representative has relied upon the ratio of decision of the jurisdictional High Court in the case of
5 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa. CIT v. BS Shantakumari in ITA No.165/2014 and Bombay High Court decision in the case of CIT v. Laxmichand Nagpal Nagda [1995[ 78 Taxmann 219). With due respect to the judicial pronouncement in the relied upon cases, I am of the opinion that the facts of the relied upon cases are not applicable to the facts of the assessee. f. The Apex Court has categorically held in Suraj Lamp case in SLP(C) No.13917/2009 that: `a transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of sale deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred. 12. Any contract of sale (agreement to sale) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of section 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, on agreement to sale, whether with possession or without possession, is not a conveyance. Section 54 of the TP Act enacts that the sale of immovable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter. 4.4.12 IN view of the above discussion, I am of the opinion that the assessee has not purchased a residential property within the period specified under section 54F of the Act to make him eligible for deduction under the section 54F of the Act. Therefore, no deduction under section 54F of the Act is allowed to the assessee. 4.5 In view of the above discussion, the income from capital gains is computed as under: Sale consideration – assessee’s share Rs.42,62,500 Less : Indexed cost of acquisition Rs.10,04,730 as per assessee’s computation -------------------- Long term capital gains Rs.32,57,770 Less : Deduction u/s 54F – Nil as Rs. NIL discussed in para 4.4 _____________ Long term capital gains Rs.32,57,770 ===========”
6 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa. 7. Aggrieved by the denial of benefit u/s 54F of the I.T.Act, the assessee preferred appeal to the first appellate authority. The CIT(A) confirmed the view of the Assessing Officer in denying the claim of deduction u/s 54F of the I.T.Act.
Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal. As mentioned earlier, the assessee has filed additional ground. In support of the additional ground, the assessee has filed a petition for admission of additional evidence. The additional ground raised is a fresh claim contending that the proceeds of the original assets was invested in purchase of a house property in the name of the son of the assessee and such investment of sale consideration towards the new residential house property should alternatively be considered in the hands of the son of the assessee. The assessee has also relied on judicial pronouncements for the proposition that the claim of deduction u/s 54F of the I.T.Act should be granted even when investment in new asset is made by the assessee in the name of his son. For admission of additional ground, the assessee had relied on the Hon’ble Apex Court judgment in the case of National Thermal Power Company Limited v. CIT reported in 229 ITR 383 and also the judgment of the Hon’ble Karnataka High Court in the case of Gundathur Thimmappa & Sons v. CIT reported in 70 ITR 70. The reasons stated / the prayer for admission of additional ground, reads as follow:-
“The appellant has received sale proceeds from the sale of ancestral property, which was apportioned among the family members including his son. The appellant on account of his health condition has invested the sale proceeds in a house
7 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa. property, in the hands of his son, who has claimed exemption to the extent he received from the original sale proceeds. That the above details were not filed nor brought to the notice of the AO, during the course of assessment or during the appellate proceedings, either due to the inadvertent belief of the representative or due to pure ignorance, that the investment made was in the hands of the son of the appellant and there was no requirement to file the same. That, the reason for not filing the above mentioned documents before the authorities below was that the details were not available with the appellant, due to the fact that the same pertained to the son of the appellant and was available with him at Mysore, whereas the assessee was living at Bangalore. Further the authorized representative was not aware of the details and documents that were in the possession of the son of the appellant and was also not properly guided in the proceedings before the authorities below, in this regard. Thus, the said details could not be submitted to the learned assessing officer nor the learned Commissioner of Income-tax (Appeals)- 12, Bangalore. The appellant is making a fresh claim of investment in house property, in so far as the investment was made in the name of his son as utilization of capital gains from sale of land.” 9. In support of the admission of additional ground, the assessee has also filed fresh / additional evidence in the form of copy of ITRV of Dr.Jagadeesha for the relevant assessment year 2014-2015, copy of the paper book dated 26.12.2020, etc.
The learned Departmental Representative supported the orders of the Assessing Officer and the CIT(A).
I have heard rival submission and perused the material on record. The assessee has filed additional ground by raising a fresh claim. In the additional ground, it is contended that the proceeds of the original asset was invested in house property in the hands of the son and investment of sale consideration towards the new residential house property should be
8 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa. alternatively be considered in the hands of the son of the assessee. The assessee had relied on judicial pronouncements that deduction u/s 54F of the I.T.Act should be considered in the name of the son of the assessee by filing proof of investment made by the son of the assessee. The assessee in the additional ground has raised totally a fresh claim. The issue raised in the additional ground goes to the root of the issue and for substantial cause and justice, I admit the same.
11.1 The assessee has filed a chart depicting the details of money transfer and the total investments made in the house property in the hands of the son of the assessee. The chart with reference to the proof filed in the paper book by the assessee is furnished below:-
Date Particulars Amount Page No. 27.01.2014 Cash withdrawn, Vijaya Bank 10,00,000 4 990659 26.04.2014 Account payee transfer 10,00,000 4 26904151 28.04.2014 Cash withdrawn, Vijaya Bank 10,00,000 4, 28 990673. Cheque for Rs.10,00,000 returned, 904152 28.04.2014 Account payee transfer, 3,50,000 4 26904153 Total 33,50,000
11.2 In view of the stated position, it is the claim of the assessee that the assessee has transferred the amount of Rs.33,50,000 to his son and the details of investment made in the new property by the son is to the extent of Rs.47,18,150. The assessee in support of the above, has also furnished
9 ITA No.1056/Bang/2019 Sri.G.B.Shivarajappa. additional evidence as mentioned above. Since I have admitted the additional ground, the additional evidence in support of the additional ground is also admitted. Since the additional ground and the additional evidence are taken on record, the matter needs to be considered de novo by the Assessing Officer. Accordingly, the issue raised in the additional ground is restored to the files of the A.O. The A.O. shall consider the claim in the additional grounds. As regards the additional grounds, the assessee shall be entitled to file evidence in support of his case. The assessee is directed to co-operate with the Department and shall not seek unnecessary adjournment. The A.O. shall dispose of the matter after affording a reasonable opportunity of hearing to the assessee.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced on this 16th day of April, 2021. Sd/- (George George K) JUDICIAL MEMBER Bangalore; Dated : 16th April, 2021. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-12, Bangalore. 4. The Pr.CIT-4, Bangalore. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore