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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A)-5, Bangalore dated 01.09.2017 for Assessment Year 2014-15.
The grounds raised by the assessee are as under. “1) The honourable CIT has erred in denying our claim for deduction u/s 54F. 2) The learned CIT has erred in concluding that the sale proceeds of the capital asset is not deposited in specified bank. 3) a. The learned CIT has erred in not appreciating the fact that a sum of Rs.62,88,820/- is invested in the residential house before the completion of previous year i.e., 01.04.2013 to 31.03.2014 b. The learned CIT has erred in not appreciating that a further sum of Rs.24,08,250/- is invested before the completion of relevant A.Y. i.e., 01.04.2014 to 31.03.2015
Page 2 of 6 4) a. The learned CIT has erred in concluding that the new property was purchased on 22.03.2010 which is beyond one year from the sale of property. b. The learned CIT has erred in not appreciating that the following sums were invested in Constructing residential house on the plot purchased on 22.03.2010. a) During F.Y 2013-14 -Rs. 62,88,820 b) During F.Y 2014-15 -Rs. 24,08,250 Rs. 86,97,070 5) a. The learned CIT has erred in denying our claim for deduction u/s 54F on the ground that the new property is purchased as a co-owner along with four others. b. The learned CIT failed to appreciate that the co-owners are none other than the spouse, son and daughter-in-law. 6) a. The learned CIT ought to have appreciated the observations of Madras High Court in Commissioner of Income Tax Vs V.Natarajan (2006) 287 ITR 271 (Mad). b. The court observes that "the assessee has purchased a house in the name of his wife after selling the property at Bangalore. But the same was assessed in the hands of assessee. Hence, as correctly held by the Commissioner (Appeals) as well as by the Tribunal. The assessee was entitled to exemption u/s 54." 7) The learned CIT ought to have appreciated the following evidence in support of our claim towards our investment in residential house.
SUNKU PADMANABHA INDEX SL NO PARTICULARS PAGE NO 1 BSK House ledger A/c 2013-14 3 2 BSK House Ledger A/c 2014-15 4 3 Housing Loan Interest 5 4 Capital First LTD - Loan A/c 6 5 Karur Vysya Bank Housing Loan A/c 7-9 6 Karur Vysya Bank SB A/c 10-12 7 Capital First Repayment schedule 13-14 8 Capital first Sanction letter 15-17 9 ITO Assessment Order 18-24 10 Form 35 25-32 11 CIT Appeals orders 33-36
12 Form 36 37-42 Judgement Copy 13 43-48 CIT Vs V Natarajan (2006) 287 ITR 271 (Mad) 8) For these and such other ground that may be urged at the time of hearing, it is prayed that the appeal may be allowed.”
It was submitted by ld. AR of assessee that although various grounds are raised by the assessee but the only dispute is regarding rejection of assessee’s claim for deduction u/s. 54 of IT Act.
Briefly stated, the facts are that it is noted by the AO in para 2 of the assessment order that assessee has sold property bearing no. 37, measuring 1300 sq.ft for a consideration of Rs. 80 Lakhs and also his share of property for a consideration of Rs. 22 Lakhs for the property situated at Lavelle Road, Bangalore. Thereafter in para 3 of the assessment order, it is noted that the total consideration received from sale of properties amounts to Rs. 102 Lakhs but in the return of income filed by the assessee, the assessee has reflected sale of property to the extent of Rs. 80 Lakhs only and claimed exemption u/s. 54F for investment in residential property to the extent of Rs. 160 Lakhs arriving at Capital Gain Tax as Nil. In course of assessment proceedings, the AO asked the assessee to explain the nature of deduction, and the assessee was asked to produce the documentary evidences in this regard. Thereafter, the AO noted in para 5 of the assessment order that the AR of the assessee explained that assessee has sold two properties and total consideration received is Rs. 102 Lakhs and this consideration is utilized for construction of new house on the property bearing no. 3049, 8th Main, Banashankari II Stage, Bangalore. The AO has also noted that as per ld. AR of assessee, this property was purchased by assessee on 22.03.2010 for a consideration of Rs. 140 Lakhs wherein the assessee is a co-owner along with 4 others. The property documents were also produced and examined by the AO. Thereafter, the AO has come to the conclusion that the assessee is not eligible for deduction u/s. 54. In this regard, in Para 10 of the assessment order, the AO has stated that the assessee has furnished the purchase deed copy dated 22.03.2010 and Page 4 of 6 explained that the sale proceeds received is invested in this house and claimed exemption u/s. 54, which is beyond one year from the date of sale of property. Being aggrieved, the assessee carried the matter in appeal before CIT (A) but without success and now the assessee is in further appeal before us.
The ld. AR of assessee reiterated the same contentions which were raised before CIT(A). He submitted that on page nos. 30 to 32 of paper book are the submissions filed by the assessee before CIT(A). He also submitted that on page no. 3 of the paper book is the copy of ledger account in the name of B S K HOUSE for the present year and page no. 4 is the copy of ledger account for the next year. It is also submitted that on page no. 6 is the copy of Housing Loan Account taken from Capital First Ltd. and on page no. 7 of the paper book is the copy of Housing loan in the name KVB HOUSING LOAN for the present year and on pages 8 to 10 is the copy of bank statement of bank account with The Karur Vysya Bank Ltd. and on page nos. 13 and 14 is the repayment schedule in respect of housing loan from Capital First Ltd. At this juncture, a query was made by the bench that as per the ledger account of BSK HOUSE on page no. 3 of the paper book, there is opening balance of Rs. 99,04,349.40 and the closing balance is Rs. 1,62,93,169.98 having various dates with the narration Karur Vysya Bank Ltd., cash and Capital First Ltd.-loan for various amounts on various dates. The bench wanted to know as to how on the basis of these details, it can be said that these amounts were incurred for construction of a new house. The bench observed that when the original house was purchased in March 2010, these expenses can be in respect of repairs and renovations of the said house or its extension. In reply, the ld. AR of assessee had nothing to say. The ld. DR of revenue supported the orders of authorities below.
We have considered the rival submissions. We find that for claim of deduction u/s. 54, the assessee has to show that either any new house was purchased within one year before the date of sale or within two years after or new house was constructed within 3 years after the sale of old property. In the present case, the old property was sold during present year although
Page 5 of 6 its date of sale is not noted in the assessment order or in the order of CIT (A). No evidence in this regard has been brought on record before us. Be it as it may because this is not in dispute that old property was sold in the present year and the income arising on such sale is long term capital gain. The only question before us to be decided is whether assessee is eligible for deduction u/s. 54 of IT Act or not. For claiming such deduction, the assessee should establish that he has constructed the residential house in India within 3 years after the date on which the transfer took place. Before us, no evidence has been filed in this regard that new house was constructed within 3 years from the date of sale of old property. As per page no. 3 of the paper book, an amount of Rs. 62,88,820/- has been paid by the assessee from bank account with KVB Ltd. or out of cash or out of Capital First Ltd.-LOAN on various dates in the present year. The assessee is claiming deduction u/s. 54 on account of such payments. This is the submission of the assessee that the old property was purchased on 22.03.2010 and this amount has been invested for constructing a residential house on that old property purchased on 22.03.2010. But there is no evidence brought on record before us in this regard. But at the same time, there is no finding of any of the authorities below that such amount was not invested in construction of new residential house and the claim was rejected on this basis alone that the said old property was purchased on 22.03.2010. If the assessee claimed deduction in respect of cost of purchase on 22.03.2010 in the present year i.e. Assessment Year 2014-15, then obviously, the same is not allowable because for purchasing of a property in Assessment Year 2009-10, deduction cannot be claimed u/s. 54F of IT Act in Assessment Year 2014-15. But if only land was purchased in Assessment Year 2009-10 or an old property was purchased in that year and in the present year, new construction has been made by investing this amount of Rs. 62,88,820/- then the assessee is eligible for deduction for such investment in the present year if other requirements of claim of such deduction are fulfilled. In the absence of necessary evidence before us in this regard and also in the absence of lack of any finding whatsoever of the lower authorities on these vital factual aspects, we feel it proper to restore
Page 6 of 6 this matter back to the file of AO for fresh decision after providing adequate opportunity of being heard to the assessee. If the assessee can establish that this amount of Rs. 62,88,820/- was invested in the present year for construction of a new residential house by bringing evidences on record, then this should be held that the assessee is eligible for deduction u/s. 54 if other requirements u/s. 54 are fulfilled by the assessee. With these observations, we set aside the order of CIT (A) and restore the matter back to the file of AO for fresh decision in the light of above discussion after providing adequate opportunity of being heard to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.