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Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI H.S. SIDHU, & SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax (Appeals), Ghaziabad dated 25.12.2014 pertaining to assessment year 2011-12.
The sum and substance of the grievance of the Revenue is that the CIT(A) erred in deleting the addition of Rs. 97.18 lakhs made by the AO on the ground that the assessee has not complied with the provisions of section 11(1A) of the Act.
None appeared on behalf of the assessee. We heard the ld. DR at length who relied upon the findings of the AO.
Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings, the AO noticed that the assessee has sold four plots of land for Rs. 1.11 crores. The AO found that no capital gains on sale of plots was shown. The assessee was asked to explain the same. In its reply, the assessee stated that u/s 11(1A) of the Act, capital gains arising on transfer of capital asset is exempt if net consideration is used in acquiring any capital asset and same is considered as application of income for charitable purposes.
The AO was of the opinion that the assessee has not fulfilled conditions for exemption which have been laid down in section 11(1A) of the Act. The AO disallowed the claim of exemption on the ground
that no evidence was furnished for the application of net sale proceeds towards acquisition of other capital assets.
When the matter was agitated before the CIT(A), it was pointed out that the assessee had furnished the details of investment in new asset and the AO has erroneously stated that no details have been furnished by the assessee. The CIT(A) called for remand report and after considering the remand report, the CIT(A) held as under:
“Having considered the facts of the case submission of the appellant and assessment order, the appeal si decided as under:
I Find that the sole reason of making the addition by AO is that the society has not fulfilled the conditions for exemption which have been laid down in Section 11(1 A) of I.T. Act, 1961. The assessing Officer in the assessment order has held that the society has despite several opportunities being provided, not been able to show as to how the net consideration derived from sale of the capital assets has been utilized in acquiring any other capital assets which has to be held under the trust. The application of the sale proceeds had to necessarily applied for acquisition of another capital assets as per the condition of section 11(1 A). The AR nowhere in the lengthy explanation offered above has discussed or furnished any evidence of the application of the net sale proceeds towards the acquisition of the other capital assets. Therefore, considering the existing provisions contained in section 11(1 A) of the Act the profit arising on sale of plots as computed in the Annexure forming part of assessment order is added to the income of the assessee society under the head “Capital Gain". Further the sale consideration is taken at Rs. 12680000/- as adopted or
assessed by the State Government for the purpose of payment of stamp duty as per provisions of Section 50C of l.T. Act, 1961. ”
7.2. In the remand report, it has been submitted by the Assessing Officer that details of investment in new assets were filed and are on record. I find that the investments have been made out of sale proceeds of capital asset. The assets sold, considerations received and investment made as per following details:-
Assets Sold
Amount (Rs.) Amount of (including 50C as amount of 50C Amount taken by as taken by assessing assessing S- Particulars Purchaser Date Mode (Rs.) officer (Rs.) officer) No. Part of Plot No. 17.04.2010 Cheque 765,000.0 Iand 17.04.2010 Cheque 700,000.0 9/312, Block 0 THA, Rajinder Rakesh 08.03.2010 Cheque 200,000.0 0 Sold No.9, Sector-03, (Transfer on 08.03.2010 cash 3,600.00 Nagar, Sahibabad 0 jain . 23.04.2010 1,400.00 23/04/2010) TOTAL 1,668,600 1,400.00 1,670,000.00 .00 Amount of Amount (Rs.) 50C as (including Amount taken by amount of 50C Particulars Purchaser Date Mode (Rs.) assessing as taken by Part of Plot No. 18.04.2010 Cheque 1,644,280. Block No.9, Rahul jain Cheque 200000 officer (Rs.) assessing 9/312, 00 j Sector-03, ] THA. 07.03.2010 officer) Rajinder Nagar,
(Transfer on 23/04/2010) 23.04.2010 4,840.00 TOTAL 1,865,160. 4,840.00 1,870,000.00 00 Amount of Amount (Rs.) 50C Sl as taken by (including assessing 50C as taken by amount of No. Particulars Purchaser Date Mode Amount (Rs.) assessing officer) officer 31.05.2010 cash 20,000.00 (Rs.) 31.05.2010 Cheque 500,000.0 07.06.2010 Cheque 500,000.0 0 07.06.2010 Cheque 1,000,000. 0 Part of Plot Khasra MACFLOW 07.06.2010 Cheque 1,000/000 00 3 land ENGINEERIN 07.06.2010 Cheque 500,000.0 No. 597/1, KarKar .00 (Transfer on LIMITED 07.06.2010 Cheque 500,000.0 G 0 Madan, Loni Sold 07.06.2010 Cheque 500,000.0 15/06/2010) 0 PRIVATE 07.06.2010 Cheque 500,000.0 0 07.06.2010 Cheque 500,000.0 0 07.06.2010 Cheque 500,000.0 0 TOTAL 6020,000. 0.00 6,020,000.00 0 00
Amount of Amount (Rs.) 50C as taken (Including S. Amount by assessing amount of 50C No. Particulars Purchaser Date Mode (Rs.) officer (Rs.) as taken by 4 land Part of Plot Khasra Kiranpal 14.07.2010 Cheque 1,600,000 assessing officer) Sold 29.07.2010 1520000 No. 597/1, KarKar Singh .00 TOTAL 1,600,000 1,520,000.00 3,120,000.00 Madan, Loni .00
Amount of Amount (Rs.) Amount 50C as taken (including Particulars (Rs.) by assessing amount of 50C TOTAL (1+2+3+4) 11,153,760 1,526,240.00 officer (Rs.) as taken by 12,680,000.00 .00 assessing officer)
Against the receipts of consideration as above of Rs. 1,11,53,760/-, the investments were of Rs. 16033215/- (as per para 4 of this order)
7.3 In my considered opinion, denial of the deduction u/s 11(1 A) on the ground cited by the AO is found to be factually incorrect. It is also noteworthy that neither the assessee has been held to be non charitable entity nor the new assets have been held to be purchased for purposes other than charitable nor it has been held that the new assets are not qualified for such deduction. Therefore, as such the appellant is entitled to deduction u/s 11(1 A) of the Act. The other related issue is adopting the sale consideration as per Section 50C. I find on facts of the case that investment in new assets is even more than the consideration as per Section 50C. Therefore, even if sale consideration is adopted as per Section 50C no addition would arise.
Therefore, whether consideration should be as per value adopted as per Section 50C is a mere academic exercise which has no relevance in facts of the present case and hence is not being ventured into. In vie discussion, the addition is deleted. Ground of appeal no. 1 is therefore allowed.”
Before us, the ld. DR could not point out any error or infirmity in the findings of the CIT(A). On the other hand, we find that the CIT(A) after considering the remand report from the AO has given a categorical finding on the fact that the assessee has invested in new assets and, therefore, is eligible for deduction u/s 11(1A) of the Act. We decline to interfere.
In the result, the appeal of the revenue in ITA No. 1452/DEL/2015 is dismissed.
The order is pronounced in the open court on 27.06.2018.
Sd/- sd/- [H.S. SIDHU] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27th June, 2018
VL/