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Income Tax Appellate Tribunal, ‘D’ (SMC
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO]
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER
This is an appeal filed by the Assessee directed against the order of the Commissioner of Income Tax (Appeals)-2, Chennai
ITA No.1038/2018 :- 2 -: (‘CIT(A)’ for short) dated 26.12.2017 for the Assessment Year (AY) 2012-2013. The Assessee raised the following grounds of appeal: 2. ‘’1. The Ld Commissioner has wholly misunderstood the facts of the case.
The Ld. Commissioner has failed to appreciate that the entire sale consideration of Rs. 1,00,00,000 received by the Appellant upon sale of vacant lands on 2.9.2011 was utilized for the purpose of construction of a residential house upon the plot at Sholinganallur.
3. The Ld Commissioner has failed to consider the ledger account of the Appellant maintained by Sinmak Foundations India Pvt Ltd, the contractor, in which it is clear that the Appellant made remittances towards construction expenses well until August, 2013, i.e. much after the sale consideration of Rs.1,00,00,000 was received by the Appellant on 2.9.2011.
The ld Commissioner has failed to appreciate that the construction upon the plot at Sholinganallur was completed only after the sale consideration of Rs.1,00,00,000 was received by the Appellant upon the sale of vacant lands admeasuring 3,37() square feet at Plot No. 17 Thoriaipakkam Village on 2.9.20 11.
The ld. Commissioner has altogether disregarded the bank statements and loan account of the Appellant with Bank of Barada. On a plain perusal of these documents, it would be clear that the entirety of the consideration amounting to Rs. 1,00,00,000 by way of the sale on 0.9.2011 was utilized by the Appellant towards the construction of a residential house upon the plot at Sholinganallur.
The ld. Commissioner has failed to appreciate that even possession of the residential house upon the plot at Sholinganallur was taken over l)y the Appellant only after the sale on 2.9.2011.
ITA No.1038/2018 :- 3 -:
The judgments relied upon by the Ed. Commissioner are wholly distinguishable from the facts of the present case.
The Ed. Commissioner has failed to follow the decision of’ the Hon’ble High Court, Madras in CIT V Sardarinal Kothari 302 ITR 286, wherein the Hon’ble High Court, Madras has held that section 54F of’ the Income Tax Act has to be liberally construed to benefit the assessees’’.
The brief facts of the case are as under:
The appellant is an individual. The return of income for the Asst.
Year 2012-2013 was filed on 26.07.2012 disclosing total income of �4,34,578/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Non Corporate Ward 1(1), Chennai vide order dated 12.03.2015 passed u/s. 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) at total income of �14,48,241/-. While doing so, the AO assessed capital gains arising on sale of vacant land measuring 3370 sq.ft. at Thoraipakkam Village.
On 02.09.2011 assessee sold the land for total consideration of �1,00,00,000/- and claimed capital gain exemption u/s.54F of the Act by investing in new house situated at Plot Nos.8A, 9A & 10, Anna Enclave, Injambakkam Village, Sholinganallur Taluk, Chengai MGR District for a sum of �1,05,01,000/-. It was stated that the above plots were brought by the assessee on 02.12.2010 and constructed new house property before 31.03.2012 and in support of this he filed
ITA No.1038/2018 :- 4 -: house tax receipt. The Assessing Officer noting that out of 3370 sq.f.t of vacant land sold, assessee had acquired 1552.5 sq.ft of land by the settlement deed dated 22.09.2011 from her spouse Shri. K.
Chandrasekaran. Therefore holding period in respect of this property was treated as short term, accordingly, assessee earned short term capital gains. Therefore not allowed exemption u/s.54F of the Act.
Being aggrieved, an appeal was preferred before ld. CIT(A), 4. who vide impugned order held that the property settled in favour of the assessee cannot be treated as short term, but long term in view of sub section 2 of Section 47 (v) of the Act. However, the ld. CIT(A) had made enhancement of assessment by issuing show cause notice u/s.251 of the Act on the ground that assessee is not eligible for claiming exemption u/s.54F of the Act since the new house was constructed before the sale of original asset.
Being aggrieved by the order of the ld. CIT(A), the appellant 5. is in appeal before us in the present appeal.
We heard the rival submissions and perused the material on 6. record. The ld. CIT(A) was right in holding that exemption u/s.54F of the Act was not allowable in respect of the construction of the house which is completed before the sale of the original asset. But the ITA No.1038/2018 :- 5 -: amount spent towards construction of house after sale of the original asset should be allowed exemption. Therefore since the Assessing Officer had not examined the details of the construction expenditure, we remit the issue back to the file of the Assessing Officer to give exemption u/s.54F of the Act in respect of money spent on construction of house property after sale of original asset after due verification.
In the result, the appeal of the assessee is partly allowed 7. for statistical purpose.
Order pronounced on 12th day of September, 2019, at Chennai.