Income Tax Appellate Tribunal - Delhi
Sudesh Suri, New Delhi vs Assessee on 6 September, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: G : NEW DELHI
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA No. 328/Del/2011
Assessment Year: 2006-07
Income Tax Officer, Vs. Sudesh Suri,
Ward 2(3), Meerut. Kanpur Bareilly Freight Carrier
Transport Nagar, Meerut
(PAN ABSPS6744E)
(Appellant) (Respondent)
AND
C.O. No. 40/Del/2011
(ITA No. 328/Del/2011)
Assessment year 2006-07
Sudesh Suri, vs. ITO
C/o O.P. Sapra & Associates, Ward 2 (3)
C-763, New Friends Colony Meerut
New Delhi - 110 025
(PAN ABSPS6744E)
(Appellant) (Respondent)
Appellant by : Dr. Prabha Kant, Sr. DR
Respondent by : Shri O.P. Sapra, Advocate
Date of hearing : 6.9.2012
Date of pronouncement :
ORDER
PER I.C. SUDHIR, JUDICIAL MEMBER
In the appeal preferred by revenue, following issues have been raised :-
1. Whether in the facts and circumstances of the case the Ld. Commissioner of Income tax (Appeals) has erred in law in deleting the addition of Rs.
16,34,792/- ignoring the provisions of section 54F of the I T Act wherein 2 ITA No. 328/Del/2011 & CO 40/Del/2011 the investment made by deposing in Capital Gain Account scheme is allowable only at the proportionate rate.
2. Whether in the facts and circumstances of the case the Ld. Commissioner Of Income tax (Appeals) has erred in law in directing to adopt the actual sale consideration of Rs. 45,64,208/- instead of value at Rs61,99,000/- as per Stamp Valuation Authority in terms of section 50C, while computing the-Capital Gain. On the ground that matter was not referred to the Valuation Officer by the AO,. ignoring the facts that making reference to the valuation cell is only a discretionary power of the AO.
3. Whether in the facts & circumstances of the case the order of the Commissioner of Income tax (Appeals) may be set a side and that of the A.O, restored.
2. The assessee on the other hand in her cross objection has raised following objections :-
1. That the grounds of appeal by the Revenue is misconceived and the same deserves to be dismissed.
2. That the Ld. CIT(A) was not justified in holding that the AO had rightly denied the deduction u/s 54F in respect of Rs. 32,39,850/-
claimed against the investment made in the purchase of flat.
3. That the deduction allowed by the authorities below u/s 54F of I.T. Act was inadequate.
3. We have heard and considered the arguments advanced by the party in view of the orders of the authorities below, material available on record and the decisions relied upon.
Issue No. 2 (Revenue)
4. The relevant facts are that during the year assessee had sold seven tenanted shops situated at 132, Delhi Road, Meerut for Rs. 45,64,208/-. The 3 ITA No. 328/Del/2011 & CO 40/Del/2011 shops were purchased for Rs. 45,000/- each besides stamp duty of Rs. 4725/- with other co-owner during financial year 1982-83. The consideration of Rs. 45,64,208/- was shown as per sale deed as per which the property in question was on rent and even on the date of purchase it was rented property as mentioned in purchase deeds. Sale deeds were made to the sitting tenants who got them registered in their name or in the name of their relatives. The AO required the assessee to show cause as to why the provisions of section 50C of the Act be not invoked. In response the assessee submitted that the value adopted by the stamp Valuation Authority at Rs. 61.99 lacs for the purpose of charging stamp duty did not represent the fair market value. The AO did not agree and adopted the value of the property at Rs.61,99,000/- on the basis of stamp value as against declared by the assessee at Rs. 45,64,208/-. The AO accordingly worked out the long term capital gain. The Ld. CIT(A) has however accepted the above explanation of the assessee after detailed discussion on the issue. He has directed the AO that actual sale consideration of Rs. 45,64,208/- was to be taken into account while computing long term capital gain. Against this action of the Ld. CIT(A) the revenue has raised the issue under adjudication before the Tribunal.
5. The Ld. DR has placed reliance on the assessment order. The Ld. AR on the other hand tried to justify the first appellate order in this regard. He placed reliance on the decision of Hon'ble Punjab & Haryana High Court in the case of 4 ITA No. 328/Del/2011 & CO 40/Del/2011 CIT vs. Chandani Bhocher 323 ITR 510 (P & H). He also placed reliance on the following decisions :-
i. 214 ITR 610 (Raj.) Krishna Kumar Rawat & Others vs UOI. Ii. 223 ITR 572 (Bom) Mrs. Nirmal Laxminarayan Grovcr vs. Appropriate Authority (1997)
111.AIR 1996 SC 1170 (SC) U.P. Jal Nigam vs. Kalra Properties (P) Ltd.
iv. 217 ITR 59 (Mad.) CGT vs. R. Jawahar v. 279 ITR 360 (All.) CIT vs. Smt. Raj Kumar Vimla Devi & Another
6. We find that certain relevant facts have not been disputed in the present case. These facts are that all the seven shops i.e. property in question which were sold by the asseessee were occupied by the tenants and these tenants have purchased these shops for Rs. 45,64,208/-. Besides the AO had not made reference to the valuation officer in terms of section 50C (2) despite this fact that the assessee had claimed before the AO that the value adopted by the stamp valuation authority was not the fair market value of the property. Under these circumstances we are of the view that Ld. CIT(A) respectfully following the decisions relied upon by the assessee before him has rightly come to the conclusion that the provisions of section 50C(1) are not sacrosanct so as to apply the same without reference to peculiar facts of the case. In absence of rebuttal of the above noted material facts of the case by the revenue before us we do not find reason to interfere with the first appellate order. The same is upheld. The issue is thus decided in favour of the assessee.
5ITA No. 328/Del/2011
& CO 40/Del/2011 Issue No. 1 (Revenue ) and objections (CO)
7. The relevant facts are that the assesssee claimed benefit provided u/s 54F of the Act on the basis that out of the sale consideration received she had made investment for Rs. 10,00,000/-in ICICI Prudential Life Insurance . The AO held that investment made in ICICI Prudential Life Insurance (ICICI-PLI) does not fall within the per-view of specified securities/bonds as laid down u/s 54E to 54ED of the I.T.Act hence assessee cannot get any deduction under these provisions in this regard. The assessee claimed further that Rs. 32,39,850/- invested in house property. As per her reply Rs. 6,75,000/- was advanced by her for purchasing a 200 sq. yards plot with M/s. Alliance Nirman Ltd. but she could not furnish completion certificate of construction of house nor the sale deed. She was also asked to furnish copy of possession certificate of the flat booked for Rs. 15,66,632/- with M/s. Ansal Landmark Township Pvt. Ltd.. The assessee did not furnish the same. The AO was thus not satisfied with the explanation of the assessee and denied the claimed deduction on the basis that sale deed has not been executed, with regard to purchase of plot of 200 sq. yds with M/s. Alliance Nirman Ltd. and possession letter was also not issued against the flat booked with M/s. Ansal Landmark Township Pvt. Ltd. The Ld. CIT(A) has also upheld the same. He has however held that the assessee is eligible to get deduction in terms of section EC of the Act fully on Rs. 20.00 lacs deposit to capital gain account scheme. He observed that section 54EC clearly states that unutilized 6 ITA No. 328/Del/2011 & CO 40/Del/2011 amount, if any, deposited in capital gain account should be fully allowed while working out capital gain. The AO had allowed deduction u/s 54F on this deposit of Rs. 20 lac 'in proportionate rate' . The action of the Ld. CIT(A) in this regard has been questioned by the revenue. The assessee on the other hand has objected the action of the Ld. CIT(A) in upholding the finding of the AO that the assessee is not eligible for deduction on the investment of Rs. 32,39,650/- against plot and flat.
8. In support of the issue raised in the appeal, Ld. DR has basically placed reliance on the assessment order. Ld. AR tried to justify the relief given by the Ld. CIT(A) with the submission that he should have also allowed deduction claimed u/s 54F of the Act in respect of investment of Rs. 32,39,650/- made in the purchase of the plot and flat. In support he referred the following decisions :-
1. Mukesh G Desai (HUF) vs ITO (2010) 12 ITD 212 (Mum)
2. Shri Gouli Mahadevappa vs. ITO 128 ITD 503 (Bangalore)
9. Considering the above submissions we find that undisputedly Rs. 20 lac deposited to the capital gain account was less than the capital gain arising from the transfer of original asset. The AO in our view was thus justified in allowing deduction u/s 54F on the amount of Rs. 20 lac deposited in the capital gain account scheme in proportionate rate. The language of the clause (b) to section 54EC(1) and 54F (1) of the Act are almost common which provides for such 7 ITA No. 328/Del/2011 & CO 40/Del/2011 allowance of deduction in proportionate rate where the cost of long term specified asset / new asset is less than the net consideration arising from the transfer of original asset. In view of these provisions we are of the view that Ld. CIT(A) was not justified in holding that utilized amount, if any, deposited in capital gain account should be fully allowed while working out capital gain. We thus set aside the first appellate order in this regard and restore the assessment order on the issue. The issue No. 1 (revenue) is thus allowed.
10. So far as objection raised by the assessee that the direction u/s 54F in respect of Rs. 32,39,850/- claimed against the investment made in the purchase of land and flat is concerned admittedly the investment of Rs. 6,75,000/- as advance for purchasing of plot with M/s. Alliance Nirman Ltd. and of Rs. 15,66,632/- for purchasing of flat with M/s. Ansal Landmark Township Pvt. Ltd. were made after due date of filing of the return on 31.8.2006. Thus during the year the assessee was not eligible for claiming deduction u/s 54F of the Act on these investments during the year. Of course there is utilization as and when the amount is being drawn for purchase of construction as long as completion of the or construction is completed before the outer time limit. An advance can be treated as utilization subject to fulfillment of other conditions provided u/s 54E of the Act. Similarly investment in a flat under some scheme would be construction for the purpose of section 54 and 54F subject to fulfillment of other requirements provided in the provisions. Due to above reasons we are of the view that the 8 ITA No. 328/Del/2011 & CO 40/Del/2011 authorities below have rightly denied the claimed deduction u/s 54F of the Act on the investment of Rs. 6,75,000/- for purchase of the plot of Rs. 15,66,632/- for purchasing of a flat aggregating to Rs. 32,39,850/-. The objection is thus rejected.
11. In the result appeal preferred by the revenue is partly allowed and cross objection is dismissed.
Order pronounced in the open court on 5.12.2012.
sd/- sd/-
(SHAMIM YAHYA) ( I.C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 5.12.2012
*Veena
Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
By Order
Deputy Registrar, ITAT