Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & 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)-7, Chennai in dt 29.10.2015 for the assessment year 2011-
ITA No.2279/Mds/2015. :- 2 -:
2012 passed u/s.143(3) and 250 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’).
The assessee has raised substantial grounds that the Commissioner of Income Tax (Appeals) erred in confirming the findings of the Assessing Officer on denial of exemption u/s.54F of the Act as �36,00,000/- was not deposited in capital gains account scheme before due date u/sec. 139(1) of the Act.
The Brief facts of the case that the assessee is an individual and having income from salary, long term capital gains and interest income and filed return of income on 03.11.2011 disclosing total income of �5,72,246/- The return of income was processed u/s.143(1) of the Act, subsequently, the notice u/s.143(2) and 142(1) of the Act are issued.
In compliance to notices, the ld. Authorised Representative of the assessee appeared from time to time and filed details as per questionnaire issued by the Revenue. The assessee has sold vacant land at Sholinganallur for a consideration of �64,50,000/- on 02.10.2010. After considering the cost of acquisition including stamp paper and registration charges and index cost of acquisition the net capital gains worked out to �44,12,820/-. The assessee claimed exemption u/s.54F of the Act on investment in the construction of residential house property. The assessee has complied the conditions u/s.54F of the Act by entering
ITA No.2279/Mds/2015. :- 3 -: into construction and undivided share of land agreements on 03.02.2011 for total value of �66,64,457/- and assessee has invested �59,88,000/- in construction works. But the ld. Assessing Officer found the guideline value of the property as �82,28,252/- as per the Sub-Registrar Office, Neelankarai, Chennai on the date of execution of sale deed and deeming provisions u/s. 50C of the Act and calculated long term capital gains �62,91,672/-. Further, the Assessing Officer perused the purchase deed of the new residential property at Pondicherry alongwith construction agreement with builder. The ld. Authorised Representative filed details of payments by letter dated 18.02.2014 made to the builder �30,00,000/- by 31.07.2011 before due date of filing return u/s.139(1) of the Act, and remaining amount of �36,00,000/- was paid on 23.09.2011 �10,00,000/-, 03.02.2012 � 6,00,000/- and on 10.03.2012 �20,00,000/- total aggregating �36,00,000/- and also obtained confirmation from builder.
The Assessing Officer alleged that assessee has invested in the construction of property �30,00,000/- before due date of filing return and violated conditions of Sec. 54F by not depositing the remaining in capital gain account scheme and restricted exemption u/sec. 54F of the Act to the extent of investment of �30,00,000/- and disallowed long term capital gains �32,91,672/- alongwith other disallowance and passed assessment order u/s.143(3) of the Act on 28.03.2014. Aggrieved by the order, the assessee filed an appeal before Commissioner of Income Tax (Appeals).
ITA No.2279/Mds/2015. :- 4 -:
In the appellate proceedings, the ld. Authorised Representative of assessee argued on the grounds and substantiated his arguments with the evidence of sale and purchase of property and filed written submissions on 27.10.2015 referred at page No. 4 Commissioner of Income Tax (Appeals) order were ld. Authorised Representative supported the submissions relying on judicial decisions. The ld. Commissioner of Income Tax (Appeals) considered the factual issues, grounds, written submissions and findings of the Assessing Officer has elaboratively discussed in his order and concurred with the order of Assessing Officer and upheld. Aggrieved by the order of Commissioner of Income Tax (Appeals), the assessee has assailed an appeal before Tribunal.
Before us, the ld. Authorised Representative reiterated the submissions, of the assessment and appellate proceedings and explained that assessee is entitled for exemption u/s.54F considering the provisions of investment in the house property. The assessee entered into agreement on 03.02.2011 for purchase of residential flat for a total consideration of �66,00,000/- and as per the construction agreement assessee has paid �30,00,000/- before due date of filing of return u/s.139(1) of the Act and balance was paid by installments before 31.03.2012. The investment was made within the extended period and before end of assessment year
ITA No.2279/Mds/2015. :- 5 -: and assessee under a belief that the provision of capital gain account scheme are not applicable and prayed for deletion of additions.
Contra, the ld. Departmental Representative argued that the assessee has not utilized the sale consideration before due date of filing of return of income u/s.139(1) of the Act or invested in the capital gain accounts scheme and relied on the orders of the lower authorities and pleaded for dismissal of appeal.
We heard the rival submissions, perused the material on record and judicial decisions cited. The ld. Authorised Representative contention that the assessee is an employee and due date of filing of return applicable for the assessment year 2011-12 is 31.07.2011. The assessee has sold the property and invested in purchase of residential flat as per builder agreement entered on 03.02.2011. The assessee has paid �30,00,000/- before 31.07.2011 as per the evidence produced by builder in letter dated 18.02.2014 and remaining amount paid in three instalments before 31.03.2012 which is not disputed by the Assessing authority. The crux of the disputed issue arise before Assessing Officer that the assessee should have deposited the amount in the capital gain accounts scheme before 139(1) of the Act, therefore the ld. Assessing Officer has restricted exemption u/sec. 54F and denied the balance. On ITA No.2279/Mds/2015. :- 6 -:
perusal of the Sec. 54F(1) of the act the exemption is allowed to the assessee as under:-
‘’54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date [constructed, a residential house] (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,—
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ;
(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45:
[Provided that nothing contained in this sub-section shall apply where— (a) the assessee,— (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property”.]
ITA No.2279/Mds/2015. :- 7 -:
Considering the date of investments and provisions of laws as under:- (i) Date of transfer of vacant land : 02.10.2010. (ii) The date of filing of return by Assessee : 03.11.2011. (iii) Due date of filing return for the Assessment year 2011-12 : 31.07.2011. (iv) Date of builder agreement for Construction of house property : 03.02.2011. (v) Due date of filing of Belated return : 31.03.2013. u/sec. 139(4) of the Act Considering the above facts and provisions of law, the assessee has invested total consideration of �66,64,457/- before due date u/sec. 139(4) of the Act being 31.03.2013. The investment in residential property has to be within three years from the date of transfer of vacant land on 02.10.2010. The assessee has not deposited in capital gain accounts scheme �36,00,000/- before 139(1) of the Act but complied with the conditions u/s.54F(1) of the Act on purchasing and construction of residential flat within three years from the transfer of original asset which is not disputed by the Revenue. The provisions of Sec. 54F of the Act are beneficial and are to be considered liberally for reasonable bonafide cause but investment in residential property is mandatory which the assessee has proved with substantial evidence before the lower authorities. Prime facie the construction of the property has been complied though
ITA No.2279/Mds/2015. :- 8 -: investment was made subsequently but before extended due date u/s.139(4) of the Act. The assessee has direct investment in house property and therefore not opted capital gain account scheme. The ld. Authorised Representative further substantiated arguments with judicial decision of Delhi High Court in the case of CIT vs. R.L. Sood 245 ITR 727 (Del) were the date of agreement to purchase should be taken as the date of purchase. On applying the ratio to current circumstances, the assessee entered into agreement with builder for undivided share of land and construction agreement on 03.02.2011 which is very much before provisions of Sec. 139(4) of the Act. In the case of Jagtar Singh Chawla of Punjab and Haryana High Court in of 2012, dated 20.03.2013 the assessee has paid substantial amount for purchase of residential property before the extended due date of filing of return and the assessee was eligible for exemption and not liable to pay any capital gain tax.
Considering the factual aspects, genuiness of transactions and beneficial and liberal aspects of the provisions and the judicial decisions relied by the assessee. We are of the opinion that assessee complied the conditions and is eligible for exemption u/s.54F of the Act. We set aside the order of Commissioner of Income Tax (Appeals) and direct the Assessing Officer to grant exemption u/s.54F of the Act on the remaining construction cost
ITA No.2279/Mds/2015. :- 9 -: which was invested in the residential property before due date u/s.139(4) of the Act and allow the grounds of the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced on Friday, the 6th day of May, 2016 at Chennai.