PREMANAND MANIMARAN,CHENNAI vs. ITO NON CORP WARD 2(5), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -2, Chennai, dated 29.09.2017 and pertains to assessment year 2013-14.

The first issue arises for consideration is the claim of deduction under Section 54 of the Income-tax Act, 1961 (in short 'the Act').

Ms. Jharna B. Harilal, the Ld. representative for the assessee, submitted that the assessee along with his mother and brother sold a property at Old No.12/1, Mohammed Hussain Sahib Street, Chennai, to M/s Nakoda Foundation and Development Pvt. Ltd. for a total consideration of ₹2,70,00,000/- on 04.06.2012. According to the Ld. representative, the assessee’s share of sale consideration was ₹90,00,000/-. The assessee claimed deduction under Section 54 of the Act. According to the Ld. representative, the Assessing Officer disallowed the claim of the assessee on the ground that the construction was not completed within three years. Placing reliance on the order of the Assessing Officer, the Ld. representative submitted that the assessee, in fact, deposited the sale consideration in the Capital Gains Account Scheme maintained with State Bank of India, Mylapore. The funds were withdrawn and transferred to one Sylvanus Builders and Developers Limited through whom the assessee constructed the building. Referring to page 13 of paper-book, the Ld. representative submitted that the State Bank of India debited the assessee’s Capital Gains Account and issued DD in favour of Sylvanus Builders and Developers Ltd. Therefore, to the extent of the investment made by the assessee, according to the Ld. representative, there cannot be any disallowance.

We heard Shri B. Sahadevan, the Ld. Departmental Representative also. According to the Ld. D.R., the assessee could not complete the construction within a period of three years from the sale of the property, therefore, the CIT(Appeals) has rightly confirmed the order of the Assessing Officer.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee deposited the sale consideration in the Capital Gains Account Scheme maintained with State Bank of India, Mylapore Branch, before the due date for filing of return of income.

The assessee has taken one more ground with regard to addition of ₹1,25,000/- towards the cost of improvement.

We heard Ms. Jharna B. Harilal, the Ld. representative for the assessee and Shri B. Sahadevan, the Ld. Departmental Representative. After going through the details furnished by the assessee, it appears that the assessee has not made any improvement to the building, but what was spent is to maintain the building. There is a lot of difference between maintenance of the building and development. Since no material is available on record to suggest that the assessee has incurred any expenditure for development of the building, this Tribunal is of the considered opinion that both the authorities below have rightly disallowed the claim of the assessee. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, the appeal filed by the assessee is partly allowed.