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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The appeal filed by the assessee is directed against order of the Commissioner of Income-tax (Appeals)-I, Tiruchirapalli, in ITA No.390/2010-11/CIT(A)/TRY, dt 05.02.2015 for the assessment year
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2008-2009 passed u/s.143(3) and 250 of the Income Tax Act, 1961
(herein after referred to as ‘the Act’).
The assessee has raised the following grounds of appeal:-
The Learned Commissioner of Income Tax (Appeals) erred in holding that once the Assessing Officer adopted the same value as that of DVO for working out capital gains tax, no further objections can be entertained on this issue, ignoring the Judicial pronouncements under similar / identical circumstances, which are in favour of the Appellant. 3. The Learned Commissioner of Income Tax ( Appeals) has erred in not at all considering the additional grounds submitted by the Appellant before deciding the case ; he has simply mentioned the additional grounds and the Judicial pronouncements quoted by the Appellant without any discussion on the same. 4. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that where the full value of the consideration received as per sale agreement has been invested in the new house property, exemption u/s 54F is to be given for the full LTCG, as Section 54F is an exemption provision and a complete code in itself and and deeming fiction contained in any other provision cannot be brought into section 54F, as held out in various Judicial Pronouncements. 5. Without prejudice to above claim of full exemption of LTCG, it is submitted that the Learned Commissioner of Income Tax (Appeals) erred in not considering the plea of the Appellant to consider the full value of the investment of Rs 17,31,975/- in the new house property whereas the Assessing Officer has restricted the exemption to Rs 15,37,000/- , being the amount deposited initially in the Special Capital Gains Deposit Account’’.
The Brief facts of the case are that the Assessee is assessed
in status of HUF and is in the business of finance and filed Return of
income on 05.02.2009 with total income of �1,23,100/- and return of
ITA No.1005/Mds/2015 :- 3 -:
income was processed u/s.143(1) of the Act. Subsequently, the case
was taken up for scrutiny under CASS and notice u/s.143(2) of the Act
was issued. In compliance to notices, the ld. Authorised
Representative of assessee appeared from time to time and produced
Books of Account as called for. In the assessment proceedings, the
ld. Assessing Officer found that the assessee has sold land on
03.12.2007 at Abishekapuram Village, Trichy and received sale
consideration �15,67,125/- as against market value/guideline value of
stamp duty �33,22,305/-. The ld. Assessing Officer on request of the
assessee referred the property to Valuation Officer and the DVO has
determined market value of the property at �24,45,000/- u/s.16A(5) of
the Wealth Tax Act r.w.s. 50C(2) of the Income Tax Act. The ld.
Assessing Officer determined capital gains based on the DVO value
and worked out Long Term Capital Gains of �7,21,294/- whereas the
assessee has entered into agreement for residential flat with two
others in Bangalore on 06.11.2009 but sale deed was registered on
29.03.2010 for a consideration of �51,95,926/- and the assessee’s
share in the investment being �17,31,975/- and claimed the
exemption u/sec. 54F of the Act. Bu the ld. Assessing Officer has not
allowed exemption as the new residential asset was purchased on
29.03.2010 after a period of two years and three months and
Assessed total income including long term capital gains �8,44,394/-
ITA No.1005/Mds/2015 :- 4 -:
and raised demand. Aggrieved by the order, the assessee filed an
appeal before Commissioner of Income Tax (Appeals).
In the appellate proceedings, the ld. Authorised
Representative of assessee argued the grounds and explained the
facts that the ld. Assessing Officer has erred in adopting the value of
DVO, as vacant land sold at Trichy is situated on the banks of
Uyyakondan Canal, a low lying areas as per registered deed and the
assessee has deposited the sale proceeds amount with State Bank of
Travancore. The fact that the land sold was adjacent to Canal and it
has become drainage and further due to odd shape of the plot which
requires Heavy filing of mud for usage. The adoption of market value
determined for stamp duty cannot be applied considering the facts
and location of the land. Further, the ld. Assessing Officer has
restricted the claim in the construction of the house property to the
extent of �15,37,000/- as against �17,31,975/- towards assessee
share. The assessee has entered into agreement with Builder on
06.11.2009 and the possession was taken on 29.03.2010 on
registering deed within three years from the date of transfer of original
asset. The assessee filed additional grounds and relied on the judicial
decisions but the ld. Commissioner of Income Tax (Appeals) found that
the assessee has requested for valuation by DVO were the DVO has
fixed the value at �24,45,000/-. The ld. Assessing Officer have
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adopted the valuation but the assessee was prevented from filing the
objections on the value. But, the ld. Commissioner of Income Tax
(Appeals) confirmed the order of Assessing Officer. Aggrieved by the
Commissioner of Income Tax (Appeals) order, the assessee assailed an
appeal before Tribunal.
Before us, the ld. Authorised Representative of assessee
argued the grounds and reiterated the submissions made in the
assessment and appellate proceedings and contention of the ld.
Authorised Representative that the vacant land sold at Trichy is on the
banks of Canal which being low lying area for a consideration of
�15,67,125/- by registered deed on 03.12.2007 and the assessee has
deposited the sale consideration with State Bank of Travancore in
accordance with the provisions of Sec. 54F(4) of the Act till the
construction of the house. The ld. Assessing Officer in the assessment
proceedings As per provisions of Sec. 50C adopted the guideline of the
property at �33,22,305/- and at the request of the assessee, the ld.
Assessing Officer referred to valuation officer and fixed the DVO value
at �24,45,000/- which was not accepted and assessee was prevented
from filing objections on valuation report and the ld. Assessing Officer
while computing Long Term Capital Gains has restricted claim of
investment in House property to the extent of �15,35,000/-instead of 1/3rd share being �17,31,975/- The assessee has deposited the sale
ITA No.1005/Mds/2015 :- 6 -:
consideration of plot in Capital Gains Account Scheme and assessee
was not provided with adequate opportunity to rebut the DVO
valuation. Further, the ld. Authorised Representative submitted that
the assessee has invested sale consideration by entering into sale
agreement on 06.11.2009 for investment in new house property and
complied the provisions of Sec. 54F of the Act were as the provisions
of Sec. 50C of the Act are deeming provisions and cannot be applied
as the assessee has invested net sale consideration in construction of
Residential property which is not disputed by the Revenue and prayed
for allowing the appeal.
Contra, the ld. Departmental Representative relied on the
orders of Assessing authority and opposed the grounds.
We heard the rival submissions, perused the material on
record and judicial decision. The only crux of the disputed issue
argued by the ld. Authorised Representative that the assessee has
invested entire net sale consideration in the construction of house
property alongwith two others at Bangalore which is not disputed and
complied the stipulated conditions of provisions of Sec. 54F of the Act
that within three years from the date of transfer of original Asset i.e. 3rd December, 2007 and assessee should construct and take possession of the residential property on or before 3rd December,
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2010. But the assessee has entered into agreement of construction on
06.11.2009 for construction of house property at Bangalore alongwith
two others and sale deed was registered on 29.03.2010 much before
the stipulated date. Therefore, there is no dispute on violation of
stipulated conditions of Sec. 54F of the Act. Further, on the aspect of
applicability of provisions Sec. 50C of the Act, the ld. Authorised
Representative submitted that the guideline is to be considered for
the purpose of stamp duty valuation and not for assessment. Further,
the vacant land sold at Trichy is on canal and low lying areas formed
into drainage pit which shall not fetch the such market value. The
Section 50C of the Act provisions are deeming fictions and the
assessee has not received sale consideration other than the amount
specified in the sale deed. Under provisions of Sec. 54F of the Act, net
consideration has to be invested in the Residential property but not the
deeming value being fiction. The ld. Authorised Representative relied
on the decisions of Prakash Karnawat vs. ITO, (2011) 16 taxmann.com
357(jp), Gyan Chand Batra vs. ITO, (2010) 133 TTJ 482 (JP), Nand Lal
Sharma vs. ITO (2015) 61 taxmann. com 271 (Jaipur-Trib), ACIT,
Kanpur vs. M/s. The Upper India Chamber of Commerce, in ITA
No.601/LKW/2011 in assessment year 2008-2009, dated 05.11.2014,
Lucknow Bench and Subash Chand vs. ACIT in ITA Nos. 571 to
573/Chandi/2011, dated 28.11.2011, Chandigarh Bench. We
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considered the Co-ordinate Bench decision in the case of Shivkumar
Lakshman vs. ITO in ITA No.402/Mds/2015, dated 29.05.2015 were it
was held at para 9, page 6 as under:-
‘’9. We have considered the rival submissions on either side and perused the relevant material on record. The question arises for consideration is that for the purpose of granting deduction under Section 54F of the Act, whether the sale consideration disclosed in the sale deed has to be taken or the value adopted by the SubRegistrar for registering the document has to be taken. This Tribunal is of the considered opinion that for the purpose of granting deduction under Section 54F of the Act, the value disclosed in the sale deed has to be adopted rather than the value determined by the Sub-Registrar on the basis of guideline value. Actual sale consideration as reflected in the sale deed has to be adopted in the absence of any other material to indicate that the assessee has received any on-money over and above the amount disclosed in the sale deed. In this case, it is nobody’s case that the assessee received on-money over and above the sale consideration disclosed in the sale deed. Therefore, this Tribunal is of the considered opinion that the Assessing Officer has to adopt the actual sale consideration of ₹90 lakhs for the purpose of considering the claim of exemption under Section 54F of the Act’’.
ITA No.1005/Mds/2015 :- 9 -:
Respectfully following the Co-ordinate Bench decision, we allow the appeal of the assessee.
In the result, the appeal of the assessee in ITA No.1005/Mds/2015 is allowed.
Order pronounced on Friday, the 15th day of July, 2016, at Chennai.
Sd/- Sd/- (चं� पूजार�) (जी. पवन कुमार) (CHANDRA POOJARI) (G. PAVAN KUMAR) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER
चे�नई/Chennai �दनांक/Dated:15.07.2016 KV
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF