Income Tax Appellate Tribunal - Chennai
Suresh Kumar Gopilal Nichani, Chennai vs Dcit, Chennai on 23 May, 2018
आयकर अपील य अ धकरण, 'डी' यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH: CHENNAI
ी जॉज माथन, या यक सद य एवं
ी एस जयरामन, लेखा सद य के सम%
BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND
SHRI S. JAYARAMAN, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.909/Chny/2017
नधारण वष /Assessment Year: 2012-13
Shri Suresh Kumar Gopilal Nichani, Vs. The Dy. Commissioner of -
Flat No.2B, Gummadi Shilpi Villa, Income Tax,
No.103, Habibullah Road, Non-Corporate Circle-2,
T.Nagar, Chennai-600 017. Chennai.
[PAN: AAAPN 3894 K]
(अपीलाथ'/Appellant) (()यथ'/Respondent)
अपीलाथ' क* ओर से/ Appellant by : Mr.V.S.Jayakumar, Adv.
()यथ' क* ओर से /Respondent by : Mrs.Sumathi Venkataraman,
JCIT
सुनवाई क* तार ख/Date of Hearing : 23.05.2018
घोषणा क* तार ख /
: 23 .05.2018
Date of Pronouncement
आदे श / O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-2, Chennai, in ITA No.45/CIT(A)-2/2015-16 dated 30.11.2016 for the AY 2012-13.
2. The appeal is filed after a delay of 53 days. It is submitted that the order passed by the CIT(A) was received by one Mr.D.Seshagiri, an In-Charge to ITA No.909/Chny/2017 :- 2 -:
receive tapals, correspondence, etc., who did not inform either to the assesse or to the Power of Attorney holder about the actual receipt of the order and misplaced the order. Subsequently, he has resigned also. As soon as the order was located, on due advice, the assesse has filed this appeal. The delay in filing the appeal is not deliberate or wanton and hence, the AR pleaded for condonation of delay in the interests of justice. We heard the rival submissions and condone the delay.
3. Shri Suresh Kumar Gopilal Nichani, the assessee, admitted income from Capital Gains apart from interest income for the AY 2012-13, claimed exemption u/s.54 of Rs.1.50 Crs. and arrived a taxable Long Term Capital Gains of Rs.2,14,60,852/-. While making the assessment, the AO found, inter alia, that the assessee claimed the deduction on the payments made between 29.06.2011 to 05.07.2012 to M/s.Indiland Sez Projects (Bangalore) Pvt. Ltd, wherein, the assessee was a Director and the entire shares of the company was held by his family members. After detailed examination, the AO found that the payments made to the company with a contract to construct a residential house property, appeared to be a tailor-made transaction to suit the assessee's needs etc., the investment in the company is not an acceptable mode of investment either u/s.54EC or CGAS-88, etc., and hence the AO proposed to disallow the assessee's claim, which was accepted by the assessee. Accordingly, the AO disallowed the deduction claimed u/s.54. Further, the A O found that while arriving the Capital Gains, the assessee ITA No.909/Chny/2017 :- 3 -:
claimed indexed cost of improvement on personal effects like TV, Fridge, etc., at Rs.41,19,190/- and on due analysis, he disallowed this claim also.
4. Aggrieved, the assessee filed an appeal before the Ld.CIT(A) on the issue of claim of cost of improvement alone, i.e. with reference to the disallowance on personal effects at Rs.41,19,190/-. The Ld.CIT(A) on due consideration of assessee's submissions and relevant material, dismissed the assessee's appeal.
5. Aggrieved against the order of the Ld.CIT(A), the assessee filed this appeal. The Ld.AR pleaded that the assessee submitted before the Ld.CIT(A) vide Ground No.3 that the AO is wrong in re-computing the taxable income at Rs.3,88,93,168/- by disallowing the claim of Rs.41,19,190/- and also by not setting off the carried forward Long Term Capital loss of Rs.24,62,435/-.
However, in this working, the assessee did not make any reference to the exemption claim u/s.54 amounting to Rs.1.50 Crs. The assessee had been claiming the exemption u/s.54 throughout the assessment proceedings. Even in his letter dated 02.02.2015, he has not specifically agreed to withdraw the claim of exemption as such before the AO. He has only stated that the claim needs to be disallowed and that the claim of Rs.1.50 Crs. u/s.54 may be added to the returned income. The assessee was now advised that the claim of exemption u/s.54 is legally justifiable as he had "utilized" the amounts for investment in the residential house proposed to be constructed and for that ITA No.909/Chny/2017 :- 4 -:
purpose, he had handed over various amounts to M/s.Indiland Sez Projects (Bangalore) Pvt. Ltd., who had also confirmed the receipt . These facts were also recorded by AO in Page No.2 to 4 vide Para Nos.3.3 to 3.6 of his order. Hence, the AR submitted that the assessee was not made aware of my legitimate claim of exemption u/s.54 and the claim made by him is a proper one and is legally supported by decisions from various Tribunals and High Courts on this issue.
6. Per contra, the Ld.DR submitted that the assessee claimed deduction u/s.54 from the sale of his property, on 15.04.2011, being an apartment at MANTRI ALTIUS, at Kabban Road, Bangalore. The assessee paid Rs.1.50 Crs. to M/s.Indiland Sez Projects (Bangalore) Pvt. Ltd., over a period from 29.06.2011 to 05.07.2012 to construct a residential property in the land at Bangalore belonging to the assessee's wife. The assessee is a Director in the above company and the stakes were entirely held by his family members. The AO examined, inter-alia, as to whether the company had wherewithal to construct a residential house, whether it is proceeded with the intended construction and whether the money advanced by the assessee was not diverted elsewhere etc. On examination of the financials of the company, the AO found that the assessee had interest income only from 2008-09 to 2012-
13, it had booked losses from year to year particularly AYs 2010-11 to 2013-14 on futures and options which resulted in losses, its net worth was negative etc., when all these things were pointed out, the assessee withdrawn the claim ITA No.909/Chny/2017 :- 5 -:
and accordingly, the AO concluded the assessment. The assessee also did not file appeal on this issue before the Ld.CIT(A). If at all, the assessee's plea is correct, he should have gone before the Ld.CIT(A) only. The Ld. DR inviting our attention to the Assessment Order and the order of the Ld.CIT(A) submitted that the assessee miserably failed to prove its claim of deduction u/s.54. On the other hand, the AO by examining the claim and pointing out relevant facts proposed that the payment made to the company, in which the assessee is a Director and his family members hold the entire shares, is nothing but a tailor-made transaction to suit the assessee's needs and on such facts, the assessee's deduction claim cannot be allowed. The assessee accepted the AO's proposal and filed letter accepting the disallowance and the AO concluded the assessment. Therefore, the assessee's claim is needs to be rejected and pleaded to dismiss the appeal.
7. We heard the rival submissions. To claim deduction u/s.54, from the date of transfer, the assessee ought to have purchased a new residential house within two years or constructed the new asset within three years. The assessee claimed to have given Rs.1.50 Crs., on a contract, to construct a residential property in the land at Bangalore belonging to his wife. The AO found that entire money advanced has been used by the company towards dealings in the stock market or dealt in futures and options etc., which resulted in heavy losses to it, the amount given by the assessee has not been utilized to the extent possible to create a new residential asset, such diversion ITA No.909/Chny/2017 :- 6 -:
could not have happened without the knowledge or acceptance or control of the assessee and therefore, it is a tailor-made transaction to suit the assessee's needs and hence the AO proposed to disallow the impugned deduction which was accepted by the assesse, i.e., the disallowance proposed u/s.54 was agreed to by the assesse in his letter dated 02.02.2015. Therefore, the AO completed the assessment accordingly. The assessee has also not questioned such disallowance or the addition before the Ld.CIT(A). In such facts and circumstances, the assessee's grounds of appeal do not have any merit and hence his appeal is dismissed.
8. In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the Open Court on 23rd May, 2018, at Chennai.
Sd/- Sd/-
(जॉज माथन) (एस. जयरामन)
(GEORGE MATHAN) (S. JAYARAMAN)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे नई/Chennai,
1दनांक/Dated: 23rd May, 2018.
TLN
आदे श क* ( त2ल3प अ4े3षत/Copy to:
1. अपीलाथ'/Appellant 4. आयकर आयु5त/CIT
2. ()यथ'/Respondent 5. 3वभागीय ( त न ध/DR
3. आयकर आयु5त (अपील)/CIT(A) 6. गाड फाईल/GF