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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
ORDER
Per N. K. Saini, AM:
This is an appeal by the assessee against the order dated 26.11.2014 of the ld. CIT(A), Ghaziabad.
Following grounds have been raised in this appeal: “1. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) as well as the Assessing Officer erred in determining the quantum of Capital Gain on sale of residential plot.
2. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax Appeals erred in restricting deduction u/s 54F at Rs. 60,34,283/- only, towards purchase of new residential plot. 2.1 That the Learned Commissioner of Income Tax (Appeals) ought to have also considered the other expenses incurred in acquiring the new residential plot and further expenses incurred thereon.
2 Suresh Chandra 3. That on the facts and circumstances of the case and in law, the lower authorities erred in not considering the amount deposited in the Capital Gains account, for determining the deduction u/s 54F.
That the lower authorities have adopted a very technical approach in determining the quantum of deduction u/s 54F and have lost sight of the very purpose and intent of allowing deduction u/s 54F. 4.1 That the Learned Commissioner of Income Tax (Appeals) ought to have directed the Assessing Officer, to consider the total amount incurred by the assessee, for construction of residential house, upto the end of three years from the date of accrual of Long Term Capital Gain for allowing deduction u/s 54F. 4.2 That in determining the quantum of deduction u/s 54F, the lower authorities ought to have followed the '"Purposive Interpretation" test to grant deduction u/s 54F.
5. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 2,00,000/- towards household expenses. The Appellant craves leave to add, alter, amend, delete and / or vary from all or any of the above grounds of appeal
either before or at the time of hearing.”
3. The main grievance of the assessee vide Ground Nos. 2 to 4.2 relates to the restriction of deduction u/s 54F of the Income Tax Act, 1961 (hereinafter referred to as the Act) at Rs.60,34,283/- towards purchase of new residential plot. The another grievance vide Ground No. 5 relates to the confirmation of addition of Rs.2,00,000/- made by the AO on account of low house hold expenses.
3 Suresh Chandra 4. Facts of the case in brief are that the assessee filed the return of income on 09.08.2012 declaring an income of Rs.6,07,740/-. Later on, the case was selected for scrutiny through CASS. During the course of assessment proceedings, the AO noticed that the assessee sold residential plot No. IIIA/39, Nehru Nagar, Ghaziabad for Rs.1,35,00,000/- on 29.03.2012. The said plot was purchased on 30.12.1989 for Rs.2,37,900/- including registration expenses. As regards to the computation of Long Term Capital Gain, it was submitted that the necessary details regarding purchase, sale and exemption u/s 54 of the Act had already been furnished. The AO observed that the assessee sold the plot of land on 29.03.2012 for Rs.1.35 crore and purchased a plot of land on 28.03.2012 for Rs.65,62,050/- including registration expenses and that the assessee had deposited a sum of Rs.21,00,000/- in capital gain account with PNB on 24.01.2013. The AO did not allow the benefit of deduction u/s 54 of the Act by observing as under: “In this case the return of income was due to be filed on or before 31.7.2012, while the assessee filed the same on 9.8.2012. Therefore, as per existing provisions the un-utilized capital gain must have been deposited by the assesses in the Capital Gain Account with the Scheduled Bank on or before 31.7.2012, while the assessee deposited the sum of Rs. 21 lakh only, that too on 24.01.2013. Therefore, the assessee is not entitled for exemption under section 54 of I.T. Act, 1961 in respect of deposit made at Rs. 21 lakh on 24.1.2013. Further the assessee vide order sheet entry dated 11.02.2014 admitted that the construction over the plot has not yet been started, while the assessee has to construct the residential house within three year from the date of transfer of original capital asset i.e. up to 28.03.2015. In view of admitted fact that the assessee has not yet started construction on the said plot of land, the exemption of section 54 on the amount of purchase of plot is also denied. However, in case the assessee furnishes evidence regarding construction of house on or before 28.3.2015 the benefit of sec. 54 will be allowed on the purchase cost of plot at Rs.65,62,050/- only.”
4 Suresh Chandra 5. The AO worked out the long term capital gains at Rs.1,24,14,235/- as under: Sale consideration as per Rs.1,35,00,000/- Sale-deed dated 29.3.2012 Less : Indexed cost of 237,900 X 785/172 Rs.10,85,765/- purchase Long Term Capital Gains Rs.1,24,14,235/- 6. The AO also added Rs.2,00,000/- on account of low house hold expenses by observing that the assessee withdrew Rs.2,00,000/- on 16.02.2012 and Rs.1,50,000/- on 01.07.2011, which could not be considered as regular withdrawals or hardly co-related towards house hold expenses.
7. Being aggrieved the assessee carried the matter to the ld. CIT(A) and also raised the additional grounds which were sent to the AO for his comments. However, no comments were given by the AO. The ld. CIT(A) rejected the additional grounds raised
by the assessee by observing that statute has specifically stipulated that deposit is to be made by due date u/s 139(1) of the Act and that the sub-Section 54F(4) of the Act leads to the interpretation that though the return could be filed u/s 139(4) of the Act but the unutilized amount has to be deposited in the capital gains account by due date u/s 139(1) of the Act and proof of the same has to be given with the return of income filed u/s 139 of the Act which could be u/s 139(4) of the Act as well. He, therefore, denied the claim of the assessee regarding deduction u/s 54F of the Act on the deposits in the capital gains account scheme after due date of filing the return u/s 139(1) of the Act. However, he directed the AO to allow the claim for deduction u/s 54F(4) of the Act with respect to the investment of Rs.65,62,050/- in plot of land by following the decision of the ITAT Bench ‘B’, Hyderabad in the case of Smt. Pushpa Devi Tirbrewala Vs ITO
5. Suresh Chandra in for the assessment year 2007-08 order dated 22.03.2013 wherein it has been held as under: “Even assuming that the construction was not completed within the period of three years, which, of course, is not the case in the present appeal, if at all any disallowance has to be made, then, it has to be made in the year in which the period of three years expires and not in the impugned assessment year, in which the department is obliged in the first place to grant deduction under Section 54 of the Act. In support of such contention, the learned Authorized Representative drew support from the Board Circular No. 667 dated 18.10.1983.” However, the ld. CIT(A) upheld the action of the AO in making the addition of Rs.2,00,000/- on account of low household expenses.
Now the assessee is in appeal. The assessee moved an application under Rule 18(4)/29 of the Income Tax (Appellate Tribunal) Rules, 1963 dated 25.04.2018 by stating as under: “The captioned appeal was listed for hearing before your honours on 25.04.2017. During the course of hearing, my counsel has been directed to file a detailed application for admission of Additional Evidence forming part of paper book containing documents in support of various grounds of appeal
, which was filed by my counsel on 01.01.2018. The said paper book contains certain evidences, as stated in the index to the paper book, which were either not called for by the assessing officer or were not available during the assessment proceedings and decision was taken in their absence. Reason/ justification for filing additional evidence are as under: S.No. Particulars Page No. Reason/Justification
3. Copy / proof of further 68-70 AO did not ask for these payments made in relation to papers. purchase of plot at NOIDA
3. Copy / proof of further 71-73 Relate to payments made to payments made in relation to NOIDA subsequent to the purchase of plot at NOIDA date of Assessment Order.
6 Suresh Chandra 4. Copy of sanction of Building 74-75 Available only after the date Plan on plot at NOIDA of assessment order. These are required to establish construction of house.
Copy of Valuation Report of 76-82 Available only after the date House at NOIDA of assessment order. These are required to establish utilization for construction of house.
Copy of Bank Statement with 84-89 Relate to period subsequent ICICI Bank for the period to the previous year. AO did 01.04.2012-31.03.2015 not ask for these papers.
8. Copy of Bank Statement with 90-95 Relate to period subsequent Punjab National Bank for the to the previous year. AO did period 01.04.2012-31.03.2015 not ask for these papers.
Copy of Bank Statement with 96-97 Relate to period subsequent Punjab National Bank for the to the previous year. These period 24.01.2013-02.07.2015 are required to establish utilization for construction of house. The Additional Evidences filed before your honours are essential for deciding the grounds of appeal
. It is requested that in interest of justice, the additional evidences filed may kindly be accepted and taken on record.”
9. During the course of hearing, the ld. Counsel for the assessee reiterated the contents of the aforesaid application and requested to admit the additional grounds. It was further submitted that the beneficial provisions contained in Section 54 & 54F of the Act have to be interpreted liberally to advance their objective and the deposit made in capital gain account within the extended time limit u/s 139(4) of the Act would be eligible for deduction in computing the capital gain, if the assessee satisfied the conditions imposed in Sub-Section (1) of Section 54/54F of the Act. The reliance was placed on the following case laws: � CIT Vs Rajesh Kumar Jalan (2006) 286 ITR 274 (Gau) � CIT Vs Ms. Jagriti Aggarwal (2011) 339 ITR 610 (P&H) � CIT Vs K. Ramachandra Rao (2015) 277 CTR 522 (Kar.)
7 Suresh Chandra � ITO Vs Smt. Sapna Dimri in order dated 20.01.2012 � ACIT Vs Smt. Umayal Annamali in ITA No. 415/Mds./2015 order dated 22.04.2016 � Sh. Ajeet Kumar Jaiswal Vs ITO in ITA No. 1707/Hyd./2016 order dated 31.08.2017 � Sunayana Devi Vs ITO, Ward-2(4), Siliguri (2017) 86 Taxmann.com 72 (Kol. Trib.) � Mrs. Seema Sabharwal Vs ITO, Ward-4, Panchkula in ITA No. 272/Chd./2017 order dated 05.02.2018 10. The ld. Counsel for the assessee submitted that the AO made the additions and denied deduction u/s 54 of the Act without asking the proof of further payments made in relation to the purchase of plot at NOIDA. Therefore, those could not be furnished before the AO or before the ld. CIT(A). He requested to admit the additional evidences and restore the issue back to the file of the AO for fresh adjudication.
In his rival submissions, the ld. CIT DR strongly supported the orders of the authorities below and further submitted that the ample opportunities of being heard were given by the AO as well as the ld. CIT(A), therefore, the additional evidences now furnished by the assessee may not be entertained/admitted.
We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that the assessee had furnished the evidences relating to the payments made to New Okhla Industrial Development Authority, Noida in relation to purchase of plot, copy of which are placed at page nos. 68 to 73 of the assessee’s paper book. The assessee furnished copy of valuation report of house at NOIDA which is placed at page nos. 76 to 82 of the assessee’s paper book and also furnished copy of sanction of building plan at NOIDA which is placed at page nos. 74 & 75 of the assessee’s paper book. These 8 Suresh Chandra documents although furnished first time before this Bench of the ITAT, however, these go to the root of the matter and are very much relevant to resolve the present controversy. The assessee also furnished fresh evidences in the form of copy of bank statement with ICICI Bank and Punjab National Bank which are placed at page nos. 84 to 95 of the assessee’s paper book. All the aforesaid documents are new documents and very crucial to decide the present controversy. We, therefore, keeping in view the principles of natural justice, deem it appropriate to remand this case back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee and by considering the new evidences furnished by the assessee which go to the root of the matter.
In the result, the appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 09/07/2018)