ACIT, KOTA vs. SMT. ZAHIDA BANO, KOTA

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 579/JP/2013 fu/kZkj.k o"kZ@Assessment Year : 2005-06 cuke The ACIT, Smt. Zahida Bano, Vs. Circle- 1, 5-B-18, Vigyan Nagar, Kota. Kota. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABSPB6777A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mahendra Gargieya (Adv.) jktLo dh vksj ls@ Revenue by : Shri Ajay Malik (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 25/01/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 31/01/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

This appeal by the Revenue is directed against the order of ld. CIT(A) dated 26.03.2016 for the assessment year 2005-06. The Revenue has raised the following grounds:-

“On the facts and in the circumstances of the case, the ld. CIT(A) has erred in :- (i) deleting the capital gain of Rs. 44,84,675/- assessment in the A.Y. 2005-06;

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

(vi) the appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing.” 2. The assessee filed his return of income on 01.10.2011 declaring

total income Rs. 8,13,460/- which was processed u/s 143(1) of the Act

on 28.02.2006. Subsequently the AO reopened the assessment by

issuing the notice u/s 148 of the Act on 05.06.2009 to assess the capital

gain on a transfer of plot of land for the assessment year under

consideration instead of the capital gain shown by the assessee in the

assessment year 2006-07 and claim the deduction u/s 54F of the Act.

The AO completed the reassessment and assessed the capital gain for

the year under consideration without giving the benefit of section 54F

of the Act. On appeal, the ld. CIT(A) has decided this issue in favour of

the assessee by holding that the capital gain arose on account of

transfer of the plot of land in the assessment year 2006-07 and not in

the assessment year 2005-06.

decided this issue on the ground that the capital gain was assessed for

the assessment year 2006-07 as held by the ld. CIT(A) while deciding

the appeal for the assessment year 2006-07. However, when the

condition of transfer as provided u/s 2(47)(v) r.w.s. 53A of the Transfer

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

of Property Act are satisfied then the transfer of land in question was

completed on the date when the assessee has entered into an

agreement and allowed the developer to construct the flat on the plot

of land. He has submitted that as per the agreement dated 13.09.2004

the assessee allowed the developer company to construct the flat and

may receive the advance for sale of flats so constructed. Therefore,

when the assessee has transferred the possession and received more

than 50% of the consideration during the year under consideration

then, as per the provisions of Section 2(47) (v) of the Income Tax Act

the transfer is completed and long term capital gain arising the said

transfer is liable to be assessed in the year under consideration. The ld.

DR has pointed out that the assessee received Rs. 40,11,000/- out of

total consideration of Rs. 75,11,000/- during the year under

consideration and therefore, the transaction of transfer will be deemed

to have been completed in the year under consideration. He has relied

upon the orders of the Assessing Officer.

agreement dated 13.09.2004 the assessee has only granted licence to

the developer to carrying out of the construction of flats and only after

receipt of the entire sale consideration the assessee has handed over 3

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

the possession of the plot of land in question. He has referred to the

terms and conditions of the agreement and submitted that it is

specifically mentioned in the agreement that only after the entire sale

consideration is received the possession of the land will be handed over

to the developer. He has further pointed out that for the assessment

year 2006-07 the assessment was completed u/s 143(3) where in the

AO held that the capital gain was to be considered in the assessment

year 2005-06 only. However, the ld. CIT(A) decided this issue for the

assessment year 2006-07 in favour of the assessee and allowed the

deduction u/s 54F which was not challenged by the Department. Thus,

once the Department has accepted the order of the ld. CIT(A) for the

assessment year 2006-07 then the contrary stand cannot be taken by

the Department. He has further submitted that even in the case of the

husband of the assessee this issue was decided in favour of the

assessee by holding that the capital gain has to be considered for the

assessment year 2006-07 and not for the assessment year 2005-06 and

Revenue has not challenged the order of the ld. CIT(A) dated

29.12.2008 in the case of namely Mr. Mohd. Mian. Even the decision of

the ld. CIT(A) for the assessment year 2005-06 in case Mohd. Mian has

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

not been challenged by the Revenue. He has supported the order of the

ld. CIT(A).

material on record. At the outset we note that the assessee declared

long term capital gain from sale of the land in question for the

assessment year 2006-07 and also claimed deduction u/s 54F of the

Income Tax Act. The Assessing Officer while passing the assessment

order u/s 143(3) of the Act held that the capital gains were assessable

for the assessment year 2005-06 and not for the assessment year 2006-

assessee vide order dated 30.06.2010 and also allowed the claim of

deduction u/s 54F of the Act for the said assessment year 2006-07. It is

not in disputed that the Revenue has not challenged the said order of

the ld. CIT(A) for the assessment year 2006-07. The ld. CIT(A) after

considering all these facts has given the concluding finding in para 6.3

as under:-

“ I have considered the the contentions of the appellant as well as assessment order. It is seen that it has been pointed out by the appellant that assessee has shown the capital gains in sale of the property in question in A.Y. 2006-07. The AO held that capital gains were assessable in A.Y. 2005-06 and not in A.Y. 2006-07. The matter went to the CIT(A) who decided vide Appeal No' 5

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

509/2008-09 by order dated 30.06.2010 that long term capital gains arising from sale of the property would be taxed in A.Y. 2006-07 and not in A.Y. 2005-06. The operative part of the decision is as under: " In given facts and circumstances, I hold that 665, Pratap Nagar, Dadabari was a residential property and that the correct date for its transfer was 19.03.2006, when through a samarpan nama the appellant transferred unconditional possession and full rights after receiving entire payment from the purchaser. Consequently, long term capital gains arising from such sale would be taxed in AY 2006-07, and not AY 05-06 as proposed by the assessing officer. As the appellant had invested the proceeds from sale of 665, Pratap Nagar, Dadabari in 113, Shakti Nagar, Kota purchased from Rajendra Kumar Mittal and Nawal Kishore Mittal as stipulated in section 54 of the Act, 1961 were satisfied, the appellant was entitled for benefit of section 54 of the IT Act, 1961. Grounds No. 2 and 3 of the appeal are accepted.” From above, it is apparent that the order of the AO has merged with that of ld.CIT(A). It has been also pointed out by the assessee that this matter has attained finality as no appeal has been filed against the said order though on tax effect. However, it is a fact that as far as assesee is concerned this matter has attained finality in A.Y. 2006-07. In view of above discussion, the same income cannot be brought to tax again in A.Y. 2005-06 as it has already been held to be assessable in A.Y. 2006-07 as discussed above. Further, it has been pointed out by the appellant that in the similar circumstances in case of husband of appellant Mr. Mohd. Mian, capital gains were assessed in A.Y. 2005-06 by the AO after reopening the case while the Hon’ble CIT(A) in order dated 29.12.2011 has held that long term capital gains from the sale of the property would be taxable in A.Y. 2006-07.

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

In view of above discussion, both the above grounds of appeal are allowed.“ Thus, it is clear that the ld. CIT(A) for the assessment year 2006-07 has

decided this issue by holding that the capital gain was to be considered

for the assessment year 2006-07 and not for the assessment year

2005-06. Similarly in the case of Mohd. Mian the husband of the

assessee the ld. CIT(A) held that the long term capital gain from the

sale of the property would be taxable in the assessment year 2006-07.

Neither in the case of the assessee nor in the case of the husband of

the assessee the Revenue challenged the order of ld. CIT(A) for the

assessment year 2006-07. Therefore, the appeal of the Revenue is not

maintainable on this ground alone.

u/s 54F of the Income Tax Act for the assessment year 2006-07 which

was allowed by the ld. CIT(A) then the said claim is also allowable for

the assessment year under consideration particularly in view of the fact

that the investment in the new house has been made by the assessee

within time prescribed under the provisions of Section 54F of the Act. It

was brought to our notice that the assessee purchased the new

property on 26.12.2005 and therefore the investment in new property

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

was made within prescribed time under the provisions of section 54F of

the Act. Though the Revenue can raised an objection about the

allowability of deducting u/s 54F of the Act as the assessee has not

deposited the net consideration in the capital gain account however,

when the assessee has not received the entire sale consideration during

the year under consideration then the question of depositing the same

does no arise. The condition of depositing the amount in capital gain

accounts scheme presupposes that the assessee has already received

the entire sale consideration. In the case in hand when the assessee did

not receive the sale consideration during the year under consideration

then, the said condition cannot be thrust upon the assessee. Further,

the assessee has invested the amount within the time period provided

u/s 54F of the Act and we find that the Hon’ble Karnataka High Court in

case of Principal CIT vs. C. Gopalaswamy 384 ITR 307 has held that the

condition precedent for claiming the benefit u/s 54/54F of the Act is

that capital gain realized from capital asset should have been invested

either in purchase of residential house or in constructing the residential

house. If it is established that the consideration was received on

alienation property has been invested for purchase of residential house,

the assessee would be entitled to benefit of section 54F of the Act

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

irrespective of the fact that the transfer was not completed in all

respect. In case of CIT vs. Sambandam Udaykumar 345ITR 389 the

Hon’ble High Court has in para 10 and 11 as under:-

“10. A reading of the aforesaid provision makes it very clear that if a capital gain arises from the transfer of any long term capital asset, not being a residential house and the assessee has within the period of one year before or two years after the date on which transfer took place purchased or has within a period of three years after that date constructed a residential house, if the cost of the new asset is not less than the net consideration in respect of the original asset the whole such capital gain shall not be charged under section 45 of the Act. However, if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to be whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration shall not be charged under section 45 of the Act. 11. Section 45 of the Act makes it very clear that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save or otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H is chargeable to income tax under the head 'capital gains' and shall be deemed to be income of the previous year in which the transfer took place. The aforesaid sections which form part of section 54 of the Act are cases where capital gain on transfer of capital asset not to be charged in those cases. Section 54F of the Act is a beneficial provision of promoting the construction of residential house. Therefore, the said provision has to be construed liberally for achieving the purpose for which it was incorporated in the statute. The intention of the Legislature was to encourage investments in the acquisition of a residential house and completion of construction or occupation is not the requirement 9

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota

of law. The words used in the section are 'purchased' or 'constructed'. For such purpose, the capital gain realized should have been invested in a residential house. The condition precedent for claiming benefit under the said prevision is the capital gain realized from sale of capital asset should have been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. If after making the entire payment, merely because a registered sale deed had not been executed and registered in favour of the assessee before the period stipulated, he cannot be denied the benefit of section 54F of the Act. Similarly, if he has invested the money in construction of a residential house, merely because the construction was not complete in all respects and it was not in a fit condition to be occupied within the period stipulated, that would not disentitle the assessee from claiming the benefit under section 54F of the Act. The essence of the said provision is whether the assessee who received capital gains has invested in a residential house. Once it is demonstrated that the consideration received on transfer has been invested either in purchasing a residential house or in construction of a residential house even though the transactions are not complete in all respects and as requited under the law, that would not disentitle the assessee from the said benefit.” Therefore, in view of the facts and circumstances of the case when the

investment was made within the time period even counted from the

date of transfer to be considered on the date of agreement dated

13.09.2004 then the assessment of capital gain tax either for the

assessment year 2006-07 or for the assessment year 2005-06 would be

Revenue neutral as the benefit of section 54F is available to the

ITA No. 579/JP/2013 ACIT vs. Smt. Zahida Bano, Kota assessee. In view of the above discussion, we do not find any reason to interfere with the impugned order of the ld. CIT(A).

In the result, the Revenue appeal is dismissed.

Order pronounced in the open court on 31/01/2018

Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 31/01/2018. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- ACIT, Circle-1, Kota. 2. izR;FkhZ@ The Respondent- Smt. Zahida Bano, Kota. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 579/JP/2013} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत