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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI SANJAY ARORA & SHRI GEORGE MATHAN
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
Order of the Commissioner of Income Tax (Appeals)-4, Chennai, in 2012-13/CIT(A)-4 dated 18.11.2016 for the AY 2012- 13.
Shri ARV.Sreenivasan, JCIT represented on behalf of the Revenue and Shri R.Lakshmi Ratan, represented on behalf of the assessee.
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It was submitted by the Ld.DR that in the course of the assessment the AO had denied the assessee the benefit of deduction u/s.54 in respect of construction of a residential house claimed by the assessee on the ground that the construction has not been completed till the date of assessment. It was a further submission that the AO had disallowed the claim of deduction u/s.80C.
It was a submission that in Ground Nos.2 to 2.2, the Revenue has challenged the action of the Ld.CIT(A) in holding that the Cost Inflation Index is to be applied from 01.04.1981. It was a submission that the assessee had received a property by way of family settlement on 27.02.2009. The assessee had claimed his share of cost of acquisition at Rs.3,57,500/-. It was a submission that the property belonged to the grand-mother of the assessee and the same was settled on 27.02.2009.
It was a submission that the assessee had sold this property on 16.05.2011. It was a submission that when computing the capital gains, the AO had applied the Cost Inflation Index relevant to the AY 2009-10.
It was a submission that the Ld.CIT(A) had relied upon the decision of the Hon’ble Bombay High Court in the case of Manjula J. Shah reported in 16 Taxmann.com to hold that the Cost Inflation Index was to be applied by taking the date of ownership as on 01.04.1981. The Ld.DR vehemently supported the order of the AO.
In reply, the Ld.AR supported the order of the Ld.CIT(A).
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We have considered the rival submissions. A perusal of the order of the Ld.CIT(A) more specific at Page No.10 of his Order clearly shows that the Ld.CIT(A) while applying the decision of the Hon’ble Bombay High Court in the case of Manjula J. Shah has taken into consideration the fact that the property was originally owned by the assessee’s grand-mother and in view of the provisions of Explanation-1(i)(b) to Sec.2(42A) has held that in determining the period for which any asset is held by assessee under a gift, the period for which the asset was held by the previous owner has to be included. The Revenue has not been able to dislodge the findings nor has any other decision on this issue been placed before us.
This being so, as it is noticed that the Ld.CIT(A) has followed the decision of the Hon’ble Bombay High Court in the case of Manjula J. Shah, we find no reason to interfere in the order of the Ld.CIT(A) on this issue.
In regard to Ground Nos.3 to 3.3 of the Revenue appeal, the Revenue has challenged the action of the Ld.CIT(A) in directing the AO to allow the deduction u/s.54F of the Act. It was a submission that the assessee has not proved the construction of the residential property till the date of the completion of the Assessment Order being 31.03.2015. It was a submission that for being eligible for deduction u/s.54F it was compulsory that the construction should have been completed within three years from the date of transfer of the original asset. It was a submission that the original asset had been sold by the assessee on 16.05.2011 and ITA No.301/Mds/2017 :- 4 -:
the three years period expired on 15.05.2014. It was a submission that till 31.03.2015, the construction had not been completed. It was a submission that the Ld.CIT(A) had directed the AO to allow the claim of deduction u/s.54 on the ground that the capital gains amount had been deposited by the assessee to the extent of Rs.50.00 lakhs in the Rural Electrification Corporation Ltd. Bonds (REC Bonds) and the remaining capital gains had been deposited in the capital gains account and an amount of Rs.24,31,000/- was invested in the purchase of land for the construction of a new residential house. It was a submission that out of Rs.95,30,000/- deposited in the capital gains account, the assessee had withdrawn an amount of Rs.95,53,249/- towards payment to the Builder for the construction of the new house property during the period from 15.03.2013 to 21.04.2014. Thus, the Ld.CIT(A) had directed that the assessee was entitled to claim of deduction in respect of capital gains. It was a submission that the construction of the house property itself was in question. The assessee has not been able to prove the construction of the house property or the completion of the same on or before 15.05.2014.
In reply, the Ld.AR placed before us a Completion Certificate issued by M/s.ARR Constructions dated 16.04.2015 wherein they have mentioned that they have completed the construction and the same has been handed over to the assessee at Page No.16 of the Paper Book. He drew our attention to the plan in respect of the said construction. On a specific query, as to whether the assessee has an approved plan, sanctioned copy
ITA No.301/Mds/2017 :- 5 -: or copies of the tax receipts in respect of the new house or evidences in the form of an electricity connection, the Ld.AR submitted that none of them were immediately available. It was a submission that other than the said letter of the contractor, no other evidence was available with the assessee.
We have considered the rival submissions. A perusal of the capital gains account in the assessee’s case with SBI shows that the first entry is of 27.07.2012 wherein there was a deposit of Rs.25,000/- and then there are various other deposits. On 15.03.2013, there is a withdrawal of Rs.90,12,733/- and subsequently another withdrawal of Rs.5,01,500/- on 21.04.2014. A perusal of the order of the Ld.CIT(A) at Para No.12 talks of deposits in Capital Gains Scheme Account of Rs.95,30,000/-. However, the bank account mentioned in the said paragraphs completely varies.
Further, as per the Paper Book, the capital gains account with SBI is shown as 32449616206. How the Ld.CIT(A) has treated the other bank accounts as capital gains account is unknown? The said capital gains account has shown in the Paper Book shows total deposit of nearly Rs.96,21,714/-. How the Ld.CIT(A) has arrived at the figure of Rs.95,30,000/- is also not coming out of any evidences? The Ld.AR has not been able to place before us any evidence to show that the residential house had been constructed. The Ld.AR was unable to explain, if the Completion Certificate was received on April 16, 2015, why the same had not been produced before the Ld.CIT(A)? However, no reply was given.
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Further, a perusal of the capital gains account, only two withdrawals one is Rs.90,12,733/- and another is Rs.5,01,500/-. How this amount was withdrawn, on the basis of what invoice is also not produced before us.
This being so, as the assessee has not been able to produce any evidence to substantiate the construction of the residential house, the order of the Ld.CIT(A) on this issue is reversed and that of the AO restored.
In regard to Ground Nos.4 & 4.1, it was submitted by the Ld.DR that the issue was against the action of the Ld.CIT(A) in granting the relief to the assessee u/s.80E of the Act to the extent of Rs.1,85,000/-. It was a submission that the Ld.CIT(A) has entertained the fresh evidence in the form of the letter issued from SBI regarding the deposit of sum of Rs.1,85,000/- towards the educational loan account of Shri Guarav Syal and Shri Rajan Syal. It was a submission that the evidence was not produced before the AO.
In reply, the Ld.AR submitted that he had no objection, if the issue is restored to the file of the AO for re-adjudication.
We have considered the rival submissions. As the said evidence has not been produced before the AO for examination, in the interest of natural justice, the issue in respect of the deduction u/s.80E is restored to the file of the AO for re-adjudication after granting adequate opportunity to the assessee of being heard.
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In the result, the appeal filed by the Revenue is partly allowed for statistical purposes.