I.T.O. 1(3), BHILAI(CG) vs. SHRI ARUN KUMAR TELANG, BHILAI(CG)

ITA 44/BIL/2015Status: DisposedITAT Raipur17 August 2018AY 2011-1212 pages
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What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal on the grounds that the tax effect was below Rs. 20 lakhs, citing CBDT Circular No. 03/2018. Regarding the assessee's appeal, the Tribunal held that the exemption under Section 54 should be computed based on the actual sale consideration, not the stamp duty valuation under Section 50C, following the Delhi High Court's decision in Smt. Nilofer I. Singh. The issue was restored to the AO for fresh decision. On the issue of exemption for the second residential house, the Tribunal held that the assessee is entitled to claim exemption u/s 54 for the second residential unit. The Tribunal relied on the Delhi High Court's decision in CIT vs. Gita Duggal, where it was held that a residential house comprising several independent units does not disentitle the assessee to deduction u/s 54/54F. The Tribunal noted that the amendment by Finance (No.2) Act, 2014, making the exemption applicable to only one residential house in India, is prospective and not applicable to AY 2011-12. Therefore, the denial of exemption for the second house by the CIT(A) was set aside.

What were the facts?

The assessee, an individual, filed a return for AY 2011-12 declaring income including LTCG. The Assessing Officer (AO) noted the assessee sold an immovable property for Rs. 1,32,52,500/- as per AIR information, but declared LTCG based on a sale consideration of Rs. 95,00,000/-. The stamp duty valuation authority adopted the market value at Rs. 1,32,52,500/-. The AO applied Section 50C and computed capital gain using the higher value. The assessee claimed deduction u/s 54 for investing in two residential houses. The AO allowed deduction for only one property. The CIT(A) restricted the fair market value to Rs. 1,07,00,000/- based on DVO report and allowed enhanced deduction u/s 54 for one property, rejecting the claim for the second house. Both assessee and revenue filed appeals.

What were the issues?

1. Whether the CIT(A) was justified in referring the matter to the District Valuation Officer (DVO) for calculating deemed capital gains u/s 50C when the assessee did not request the AO to do so during assessment proceedings? (Revenue's Ground 1) 2. Whether the CIT(A) was justified in restricting the fair market value of the property to Rs. 1,07,00,000/- for calculating LTCG? (Revenue's Ground 2) 3. Whether the CIT(A) was justified in allowing deduction u/s 54 for investments totaling Rs. 29,03,970/-? (Revenue's Ground 3) 4. Whether the CIT(A) erred in applying the DVO report as is, without considering objections, and in invoking Section 50C(2) without evidence of understatement of consideration? (Assessee's Grounds 1, 2, 3, 4) 5. Whether the CIT(A) erred in not allowing exemption u/s 54 for the second residential house purchased by the assessee? (Assessee's Ground 5) Assessee's contentions: The tax effect in the revenue's appeal is below Rs. 20 lakhs, making it non-maintainable as per CBDT Circular No. 03/2018. The CIT(A) erred in applying the DVO report without proper consideration and in invoking Section 50C(2) without evidence. The computation of capital gain should be based on the sale deed consideration, not market value. The assessee is entitled to exemption u/s 54 for the second house, as the amendment to Section 54/54F by Finance (No.2) Act, 2014, is prospective. Revenue's contentions: The CIT(A) was not justified in referring the matter to the DVO and restricting the fair market value. The CIT(A) was justified in allowing deduction u/s 54 only for one property.

Which sections of the Income-tax Act were involved?

Section 50C,Section 54,Section 48,Section 54F

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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI R. K. PANDA & MS. SUCHITRA KAMBLE

Heard together (2 matters)

ITA No.39/RPR/2015
ITA No.44/RPR/2015

Read from the judgment's own cause title. This page is filed under one of them.

ITA No.39/RPR/2015 CIT(A)- IL, Raipur (CG) relating to assessment year 2011-12. For the sake of convenience, these were heard together and are being disposed of by this common order.

2.

Facts of the case, in brief, are that the assessee is an individual and filed

The order continues below.

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