PRATAP CHAND KHANNA & SONS(HUF),DELHI vs. ACIT, NEW DELHI

(A) This appeal by Assessee is filed against the impugned appellate order dated 29.07.2016 of Learned Commissioner of Income Tax (Appeals)-12, New Delhi, [“Ld. CIT(A)”, for short], for Assessment Year 2013-14. Grounds taken in this appeal of Assessee are as under:

“1. That the sustaining of disallowance of exemption claimed by the assessee under Section 54/54F of the Act by the ld. CIT(Appeals) in respect of the additional compensation received on account of compulsory acquisition in respect of immovable property no. 13 Page 1 of 11 ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). Shamnath Marg, Civil Lines, Delhi, for the purpose of the Delhi Metro Rail Corporation (DMRC) is arbitrary, unjust and unwarranted on facts and law.

2. That the AO/CIT (Appeals) ought to have allowed the exemption claimed by the assessee under Section 54/ 54 F in accordance with law and not considered by them.

(B) The main issue in this appeal is regarding allowability of the assessee’s claim for exemption under Section 54 / 54F of the Income Tax Act, 1961 (“I.T. Act”, for short).

From perusal of the aforesaid impugned appellate order dated 29.07.2016 of the Ld. CIT(A), we find that the facts of this case are identical to the facts in the cases of Praveen Chand Khanna & Sons HUF in appeal No. 60/14-15 and Naveen Chand Khanna & Sons HUF in appeal No. 59/14-15. In paragraph 9.6 of her aforesaid impugned appellate order dated 29.07.2016, the Ld. CIT(A) has stated that she was following the orders dated 29.02.2016, in the cases of Praveen Chand Khanna & Sons HUF and Naveen Chand Khanna & Sons HUF. The relevant portion of the aforesaid impugned appellate order dated 29.07.2016 of the Ld. CIT(A) is reproduced below, for the ease of reference:

ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). “ ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF).

”

(C) Revenue has filed this present appeal against the aforesaid impugned appellate order dated 29.07.2016 of the Ld. CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short), a Paper Book containing following particulars was filed from assessee’s side:

“1. Written submissions dated 31.05.2016.

ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). (D) At the time of hearing before us, the Ld. Counsel for assessee submitted, at the outset, that the issue in dispute is squarely covered by orders of Co-ordinate Bench of ITAT, Delhi in the cases of Praveen Chand Khanna & Sons HUF and Naveen Chand Khanna & Sons HUF, vide order dated 23.11.2017 in and 1913/Del/2016. She further submitted that the facts of the present appeal are identical to the facts of the aforesaid appeals vide ITA Nos. 1912/Del/2016 and 1913/Del/2016 in the aforesaid cases namely Praveen Chand Khanna & Sons HUF and Naveen Chand Khanna & Sons HUF. She further drew our attention to the relevant portion of the aforesaid order dated 23.11.2017 of Co-ordinate Bench of ITAT, Delhi, which is reproduced below for the ease of reference:

“2. Relevant facts for the disposal of these appeals are that while scrutinizing the return of income of the assessees, the AO found that during the year 2003-04 the property of the assessees was compulsorily acquired, and during the financial year -20,11-12 the assessees has, received enhanced amount of compensation on account of such compulsory acquisition. Assessees claimed exemption under Section 54/54F of the Act in respect of such enhanced compensation in the AY 2012-13. Ld. AO held that the provisions under Section 45 read with section 54 deal with the exemption to be claimed in respect of compensation but not the enhanced compensation and inasmuch as the exemption under Section 54 is available only in respect of the' compensation, the claim of the assessees in respect of enhanced compensation was not acceptable. He recorded a finding that in this case, transfer by way of compulsory acquisition had to be considered in the year when the compensation was first received by the assessees i.e.. in the financial year 2003-04, On this premise, the AO rejected the claim for deduction under Section ,54 of the Act and added the amount of enhanced, compensation.

3. In the appeals preferred by the assessees, learned CIT(A) considered the case law on this aspect and while following the decision of the Hon’ble Andhra Pradesh High Court in Chakiri Ashok Kumar vs. ITO 50 taxmann.com 108 held that the benefit Of Section- 54H is to be extended to the amount of compensation as enhanced by the High Court, therefore, the claim of the assessees on that count was tenable. However, learned CIT(A) denied the relief to the assessees on the ground that what was acquired in this matter' was not a residential house nor the land appurtenant thereto, but it is only a vacant plot with boundary wall and gate. According -to him there was no residential building and he stated that according to the Award no one was residing in the land under reference- therefore learned ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). CIT(A) had returned a finding that no relief could be granted under Section 5.4 (1) of the Act unless there was any superior structure in the land that was acquired. He also rejected the contention of the assessees that the time frames under Section 54 of the Act are relevant only when the relief under Section 54 of the Act was granted to the assessees. Hence challenging such finding by the learned C!T(A). the assessees have filed these appeals.

4. It is the argument of the learned AR that in this matter it could be seen from the third paragraph of the assessment order, the assessees had claimed exemption not only under Section 54 of the Act but also there was a claim under Section 54F of the Act and when the learned CIT(A) found that there was no residential house in the land that was acquired authority, he was under an obligation to consider the claim of the assessee under Section 54 of the Act, but the learned CIT(A) failed to consider the same. The next contention of the assessees is that the finding of the learned CIT(A) that there was no residential building in the property was factually incorrect inasmuch as the property was assessed to house tax and which is riot possible without there being any building. According to the learned AR there has been a, building and what was acquired is the land appurtenant, thereto and if an opportunity is granted to the assessee, "the assessees are ready to prove the fact of the existence of building in the property that was acquired, Learned DR heavily placed reliance on the orders of the authorities below.

5. We have gone through the orders, of the authorities below. Ld. AO rejected the claim of the assessees holding that the law permits the exemption in respect of the compensation only in the year in which the transfer takes place, but the enhanced compensation, standing on a. different footing* is not qualified for such exemption, learned CIT(A) is perfectly legal in accepting the contention of the assessees that in view of the decision of Chakiri Ashok KumUr vs., JTO (Supra) the benefit of Section 54(H), has to be extended to the 'amount of compensation as enhanced by the Courts.

6. However, in so far as the findings of the learned CIT(A) that there was residential structure in the land -under acquisition concerned, record does not reveal that the learned CIT(A) had undertaken any enquiry on this aspect. He placed reliance, on the award to say that no one was residing in the land under reference and it was a vacant land. We are unable to see any basis for the learned CIT(A) to observe so. What was acquired was vacant land, as such it is but natural that reference would ‘read only about the vacant land. But the question that falls for consideration under Section 54 of the Act is whether such vacant land is appurtenant it; any residential house or not. Recitals of Award need not be the final source on that aspect. Inasmuch as learned AM stated in that the property was assessed to house tax and there is evidence to show that house lax was collected, we find that this requires to verification, there was no occasion for the assessee to produce such evidence before the Ld. AO.

ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). acquisition was the land appurtenant to a residential house or not and dependent upon the outcome he may grant the relief, under Section 54 or Section 54P of the Act, as the case may be. We, therefore, set aside the issue to the file of the AO for compliance with the above direction after giving; an opportunity to the assessees to produce relevant evidence.”

(D.1) The Learned Departmental Representative (“Ld. DR”, for short) agreed with the contention of the Ld. Counsel for the assessee that the issue in dispute in the present appeal is squarely covered by the aforesaid impugned appellate order dated 23.11.2017 of Co-ordinate Bench of ITAT, Delhi.

(E) We have heard both sides. We have perused the materials available on record.

We find that the Ld. CIT(A), vide her aforesaid impugned appellate order dated 29.07.2016 has followed her own orders dated 29.02.2016 in the cases of Praveen Chand Khanna & Sons HUF and Naveen Chand Khanna & Sons HUF. The Ld. CIT(A) has also observed that the facts of this case are identical to the facts of the aforesaid cases namely Praveen Chand Khanna & Sons HUF and Naveen Chand Khanna & Sons HUF. We further find that the Co-ordinate Bench of ITAT, Delhi has already decided the issue in dispute vide aforesaid order dated 23.11.2017 in and 1913/Del/2016. At the time of hearing before us, both sides were in agreement that facts of the present appeal are identical to facts of the aforesaid cases namely Praveen Chand Khanna & Sons HUF and Naveen Chand Khanna & Sons HUF; and further, that the issue in dispute is squarely covered by the aforesaid order dated 23.11.2017 of Co-ordinate Bench of ITAT, Delhi. Neither side has brought any distinguishing facts and circumstances to our notice to persuade us to take a view

ITA- 5174/Del/2016. Pratap Chand Khanna & Sons (HUF). different from the view taken in identical facts and circumstances, by Co-ordinate Bench of ITAT, Delhi in the aforesaid order dated 23.11.2017 in the cases of Praveen Chand Khanna & Sons HUF and Naveen Chand Khanna & Sons HUF. Therefore, in view of the foregoing and respectfully following aforesaid order dated 23.11.2017 of Co-ordinate Bench of ITAT, Delhi; we set aside the issue regarding assessee’s claim for exemption under Section 54 / 54F of I.T. Act to the file of the Assessing Officer to pass fresh order after verifying whether the land under acquisition was the land appurtenant to a residential house and accordingly decide the dispute regarding assessee’s claim under Section 54 / 54F of the I.T. Act; after giving opportunity to the assessee to produce relevant evidences. As far as the ground of appeal regarding interest under Section 234B of I.T. Act is concerned; this is consequential in nature. The Assessing officer is directed to levy interest under Section 234B of I.T. Act, in accordance with law, at the time of giving effect to this order.

(F) In the result, appeal of the Assessee is partly allowed for statistical purposes.

Order is pronounced in Open Court on 20/12/19.