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Before: Shri Ramit Kochar & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
The appeal order passed by ld. Judicial Member was, though concurred, the ld. Accountant Member passed his separate concurring order forming part of the appeal order are placed for pronouncement. Both the orders pronounced on the 2nd January, 2020 in Chennai. (RAMIT KOCHAR) JUDICIAL MEMBER Chennai, Dated, 02.01.2020 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.
आयकर अपीलीय अिधकरण, ‘बी’ "ायपीठ, चे"ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI "ी रिमत कोचर, लेखा सद" एवं "ी धु"ु" आर.एल रे"ी, "ाियक सद" के सम" Before Shri Ramit Kochar, Accountant Member & Shri Duvvuru RL Reddy, Judicial Member आयकर अपील सं./ Year: 2011-12 Shri T. Prethvisekhar, The Joint Commissioner of Vs. No. 9, Old No. 5, Gandhi Street, Income Tax, Range XIV, Shenoy Nagar, Chennai 600 030. Chennai. [PAN:AKWPT8056F] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant by : Shri A. Satyaseelan, Advocate ""थ" की ओर से/Respondent by : Shri Guru Bashyam, Addl. CIT सुनवाई की तारीख/ Date of hearing : 25.11.2019 घोषणा की तारीख /Date of Pronouncement : .12.2019 आदेश /O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 12, Chennai, dated 20.02.2018 relevant to the assessment year 2011-12. In the grounds appeal, the assessee has raised following grounds:
• The learned Commissioner of Income Tax had failed to consider the provisions of S.54 and had restricted the benefit to 2 residential units without considering the fact that the entire investment is eligible for deduction u/s 54. • The learned Commissioner of Income Tax had failed to consider that S.54(1)(i) of the Income Tax Act provides that for the purpose of computing Capital Gain in respect of new asset, arising on its transfer within a period of 3 years, the cost shall be taken as nil and hence the 3. I.T.A. No. 1245/Chny/18 subsequent sale should be considered only in Assessment Year 2012- 13 and Assessment Year 2013-14. • The Commissioner of Income tax ought to-have considered the tutorial issued by Income Tax department especially the paragraph relating "Consequences if the new house is transferred" detailed in Pages 5 and 6, it is clearly stated that on the sale of new house property, the cost shall be taken as nil. • The Commissioner of Income Tax should have been guided by CBDT Circular No 14 (XL)- 35 dated 11.04.1955 wherein the CBDT had observed that officers of the department "must not take advantage of ignorance of the assessee to his rights. It is one of his duties to assist the tax payer in every way particularly in matter of claiming and securing the release .... " The above principle has been held by the 3 member bench of Chennai Tribunal in the case of R Natarajan vs. ACIT, [TS386-ITAT-2012(Chny)] and held that the authority to collect tax by the state also carries the powers to rectify any proceedings which has resulted in double taxation. For these and other reasons it is prayed that the Honourable Income Tax Appellate Tribunal may be pleased to direct the Assessing Officer to consider the claim of the assessee u/s 54, thus render justice.
Brief facts of the case are that the assessee is an individual and filed his return of income for the assessment year 2011-12 admitting total income of ₹.71,00,720/-. The case of the assessee was selected for scrutiny and against the statutory notices, the assessee furnished the details as called for. After verification of the details furnished by the assessee, the assessment under section 143(3) of the Act was completed by assessing total income of the assessee at ₹.1,54,54,221/- after disallowing ₹.1,54,50,684/- towards excess claim of exemption under section 54 of the Income Tax Act, 1961 [“Act” in short] and admitting ₹.3,537/- towards income from other sources. On appeal, the ld. CIT(A) partly allowed the ground by directing the Assessing Officer to allow the 4 benefit under section 54 of the Act to the extent of cost of undivided share of two flats of ₹.65,77,972/-.
On being aggrieved, the assessee is in appeal before the Tribunal. By reiterating the plea raised in the grounds of appeal, the ld. Counsel for the assessee has submitted that the assessee is entitled to claim deduction under section 54 of the Act for the entire investment made against the sale consideration towards transfer of property. On the other hand, the ld. DR supported the order passed by the ld. CIT(A).
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. The assessee along with two of his cousins decided to sell the property in the financial year 2009-10, wherein they had entered into a sale agreement dated 16.12.2009 with M/s. Sreerosh Properties Pvt. Ltd. for the consideration of ₹.6 crores. The actual handing over of the possession of the property was done on 28.05.2010 through a General Power of Attorney executed in favour of M/s. Sreerosh Properties Pvt. Ltd. by the assessee along with his cousins. While executing the general power of attorney, the assessee had received only ₹.1,90,00,004/- towards his 1/3rd share of the property. To substantiate this, the copy of receipt dated 28.05.2010 was submitted by the assessee during the course of assessment proceedings. By considering this the total sale consideration received for transfer of 1/3rd share of the property was 5 taken as ₹.1,90,00,004/-. After the sale of his 1/3rd share of the property, the assessee purchased a land at 131, 3rd Main Road, Natesan Nagar, Virugambakkam, Chennai for total consideration of ₹.1,96,20,180/- on 30.06.2010. The total extent of the land purchased is 4140 sq. ft. The Sale deed coy of the land purchased was submitted during the course of assessment proceedings. On the purchase of land at Virugambakkam, the assessee had gone to CMDA for seeking approval for construction of six flats with a built-up area of 8829 sq. ft. with stilt and three floors (2 flats per floor). The CMDA had given its approval on 15.11.2010. On receipt of the approval from CMDA, the assessee had planned to construct six flats on the land at Virugambakkam an sell 4 flats and retain the remaining 2 flats with him. To this effect, the assessee had started selling the undivided share of land towards the four flats which are to be sold and also received the sale consideration towards 3 flats undivided share in the financial year 2011-12. The undivided share of one more flat was also sold in the next financial year 2012-13. For the construction of the flats, the assessee had entered into a construction agreement with three of the four buyers of the flats, wherein he had received consideration towards construction of the flats and one buyer had entered into agreement with assessee’s father for construction of the flat. The details of the transfer of undivided share of land and construction agreement, the Assessing Officer was of the opinion that the assessee had commenced the construction activity at the property after September, 2011 only and also observed that the 6 I.T.A. No. 1245/Chny/18 assessee had invested the entire sale consideration received from the transfer of his 1/3rd share of the property for the purchase of land at Virugambakkam. While computing long term capital gains, the Assessing Officer noted that the assessee has claimed ₹.6,51,752/- towards cost of acquisition. The assessee himself had taken the cost of acquisition based on the value as on 01.04.1981 of ₹.91,666/- for his 1/3rd share. During the course of assessment proceedings, the assessee had submitted a letter from the Sub-