Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI DUVVURU RL REDDY & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of Commissioner of Income Tax (Appeals)-4, Chennai in 09/CIT(A)-4 dated 28.06.2017 for assessment year 2008-09.
Smt. Uma Reddy, the assessee, has sold a land situated at Plot No. 203, Seashore Town, Survey No. 12/1, Shollinganallur Village, Chinglepet District for Rs. 80 lakhs on 10.03.2008. Two years after the sale, she filed her return for assessment year 2008-09 on 17.03.2010, admitting a total income at Rs. 1,60,560/- and claimed the entire capital gain as exempt stating that she had deposited in the capital gains fixed deposit scheme with SBI on 31.07.2008. The AO found from the bank that the deposits were made on 26.09.2008 only, which was withdrawn on 20.11.2008 itself and hence he re- opened the assessment u/s. 147. During the re-assessment proceedings , the officer invoked the provisions of section 50C, adopted the guideline value fixed by the per stamp valuation authority at Rs. 1,07,06,400/- as the sale consideration for the purpose of computation of long term capital gains.
Since, the assessee deposited in the capital gains scheme on 26.09.2008, which was beyond the due date , i.e., 31.07.2008, of filing the return, relying on the Kerala High Court decision of V.R. Desai and others dated 26.11.2009 (197 Taxman 52(Kel)), the AO denied the deduction claimed u/s. 54F. On an appeal, the CIT(A) dismissed the assessee’s appeal. On further appeal, this ITAT in its order in dated 25.05.2015 set aside the order of the CIT(A) and directed the A O to make a reference to departmental Valuation Officer as per provisions of section 50C(2). On other grounds, the ITAT held that it is premature to adjudicate them.
Subsequently, the A O made a reference to the Valuation Officer, Valuation Cell, Chennai, obtained the valuation report and after considering the assessee’s reply etc, adopted the value determined by the Valuation Officer as the sale consideration for the purpose of computing the long term capital gains. With regard to the claim of deduction u/s. 54F, the AO found that the assessee’s claim that the sale consideration was lying in SB account and it was transferred to FD is not correct. The A O found that the deposits were made in SB account on 26.09.2008 while the date of registration was 10.03.2008, it was withdrawn on 20.11.2008 itself and hence he denied the deduction u/s. 54F. Aggrieved, the assessee filed an appeal before the CIT(A) and the CIT(A) dismissed the appeal. Against the CIT(A) order, the assessee filed this appeal.
The assessee pleaded that the VO has valued FMV of the property at Rs. 91,54,588/- based on the guideline value and without taking into account any comparable sale instances , even when the assessee, in order to substantiate that FMV of her property was at Rs. 80 lakhs only, had furnished three instances of sales in which the actual sale considerations were adopted by the registration authority. Relying on the decision of the Jurisdictional High Court in the case of CIT vs Chelladurai, the assessee pleaded that the average of the value given by the assessee and the value adopted by the Assessing Officer should be adopted for determining the fair market value of the property. If this ratio is followed then the assessee pleads that the deemed sale consideration would work out only Rs.87.25 lakhs instead of the value arrived by the Valuation Officer at Rs. 94.51 lakhs. Further, the assessee pleaded that there was a fraudulent transfer of her land.
Subsequently, she had taken legal steps to cancel the said fraudulent transfer Thereafter , unscrupulous land grabbing stood in the way of identifying buyers for the property. The assessee has produced documentary evidence in support of fraudulent transfer and subsequent cancellation and also in support of retracing of the offer given by one of the prospective buyers in view of the recording of the fraudulent transfers and cancellation in the records of the Sub-Registrar. The Valuation Officer, further has not considered the size of the property, the restriction on the construction of residential house within 500 meters of the sea shore etc properly and failed to take them while determining the FMV . Although, all these pleas were raised before the AO and the CIT(A), they have not considered them and given the due relief.
With regard to the claim of deduction u/s. 54F, the AR submitted that the assessee invested the sale consideration in the capital gains deposit scheme with State Bank of India and subsequently withdrawn the amount and utilised substantiate part ie Rs. 50,12,500/- towards the payments of vacant site at Shollinganallur where she had planned to construct the residential property.
However, due to legal tangles the deal could not go through and hence she has to re- depositthe amount withdrawn on 27.11.2008 into State Bank of India to prove the bonafide that the money was lying only with State Bank of India before it was transferred to capital gains deposit scheme. The AR submitted that this was beyond the control of the assessee. Subsequently this money was withdrawn for purchasing a plot at No. 33, Rainbow Drive, Halanayakanalli Village, Varthur Hobli, Bangalore on 24.11.2008 and she constructed the house thereon for a total cost of Rs. 92,86,068/- and claimed deduction u/s. 54F. Without appreciating the entire facts, the AO denied the deduction u/s. 54F primarily for the reason that the capital gain deposits were made beyond the time limit for filing the return of income u/s. 139 i.e., 31.07.2008. The AR submitted that the fact of utilisation of sale proceeds towards the construction of residential property within the time of three years form the date of sale has never been disputed by the Assessing Officer. The AR submitted that the various benches of Tribunals and High Courts have taken the lenient view when the assessee has constructed the residential house within the three years, allowing the deduction claimed u/s. 54F.
Further, the assessee relied on the decision of the Punjab and Haryana High Court in the case of CIT vs Jagtarsingh Chawala 259 CTR 388 (P&H) this tribunal in in the case of Mr. P. Sankaran vs ITO, Ward-IX (4), Chennai for ay 2009-10 dated 15.09.2016.Per contra, the DR supported the orders of the AO/CIT(A).
We heard the rival contentions and gone through the relevant material.
The fact remains that the assessee sold her property for a consideration of Rs. 80 lakhs, while, the value of sale consideration adopted by the Stamp Duty Authorities was at Rs. 98,54,105/-. On a reference to the Departmental Valuation Officer, he arrived the value at Rs. 94,51,588/-. The assessee pleads that while determining the FMV of the property, the DVO has adopted the guideline value given by the stamp duty authority as they have not given comparable sale instances. The assessee has furnished three comparable sale instances which was accepted by the stamp duty authority in those cases and on the basis, the assessee pleads that the FMV of the land would be 87.25 lakhs. Further, the assessee pleaded that there was one duplication by sale by impersonation which she had corrected by due legal action. Further, she had to deal with land grapping problem etc., which stood in the way of realising market value. Apart from that the restrictions placed on the construction of residential houses also was against her in realising the fair market value. However, the DVO while dealing with these aspects has given very minor relief viz., 5% towards depressing effect on the value due to duplication of old sale deal, 8% towards the restriction placed by the coastal regulation zone and 3% on account of large size of plot which limited the number of purchasers etc. After considering all the facts and circumstances, we are of the opinion that the adoption of the average value of 3 sale instances brought by the assessee would meet the ends of justice, as this :-7-: FMV, the relief sought on all the above accounts from the value determined by DVO is automatically taken care of. Accordingly, we direct the AO to adopt the FMV of the property at Rs. 87.25 lakhs. To this extent, the assessee’s grounds are allowed.
With regard to the claim of deduction u/s. 54F, it is clear from the above that the assessee originally wanted to invest in Sholinganallur and proceeded accordingly. In view of the legal tangles, subsequently, she had to invest in the property in Bangalore. The investment and the construction has been completed well within the due date specified u/s. 139(4). Since, the AO has not disputed the facts of investment and completion of construction of house within the extended due date u/s. 139(4), we direct the AO to grant the deduction sought u/s. 54F. The corresponding grounds are allowed.
In the result, the assessee’s appeal is partly allowed.
Order pronounced on Friday, the 20th day of April, 2018 at Chennai.