Income Tax Appellate Tribunal - Chennai
Mrs. Rajyashree Shyam,, Chennai vs Acit, Corporate Circle - 18 (1),, ... on 8 November, 2019
आयकर अपील य अ धकरण, 'बी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
' B' BENCH : CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी इंटूर रामा राव, लेखा सद य के सम
[BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER]
आयकर अपील सं./I.T.A. No.2114/CHNY/2019
नधारण वष /Assessment year : 2016-2017.
Rajyashree Shyam, Vs. The Assistant Commissioner
No.A-1405, of Income Tax,
Radiance Mandarin, Corporate Circle 18(1)
No.1, Pallavaram Chennai 600 034.
Thioraipakkam Raidal Road,
Chennai 600 097.
[PAN AGCPS 0649F]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ# क$ ओर से/ Appellant by : Shri.R. Vijayaraghavan and Shri.
Saroj Kumar Parida, Advocates.
&'यथ# क$ ओर से /Respondent by : Shri. AR.V. Sreenivasan, JCIT.
सन
ु वाई क$ तार ख/Date of Hearing : 24-10-2019
घोषणा क$ तार ख /Date of Pronouncement : 08-11-2019
आदे श / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER
This is an appeal filed by the Assessee directed against the order of the Commissioner of Income Tax (Appeals)-15, Chennai ('CIT(A)' for short) dated 30.05.2019 for the Assessment Year (AY) 2016-2017.
:- 2 -: ITA No.2114/CHNY/2019
2. The Assessee raised the following grounds of appeal:
''1. The order of the Commissioner of Income Tax (Appeals) is contrary to Law, facts and in the circumstances of the case.
2. The Commissioner of Income tax (Appeals) erred in confirming the disallowance of the deduction under Section 54 in respect of the amount of Rs 70.32 Lakhs being contributed by the Appellant's husband towards reinvestment in new house property.
2.1 The Commissioner of Income tax (Appeals) erred in holding that the legislative intention is to provide deduction under Section 54 only in respect of reinvestment in a new house property out of the long term capital gains, and this cannot include the amount contributed by the spouse, though it may include loans borrowed from bank.
2.3 The Commissioner of Income tax (Appeals) has accepted that the Assessee has fulfilled all the conditions required under the Section to avaiL the deduction, that is,
(i) The new property purchased is residential house property in her Name.
(ii) The Property was sold in April 2015 and utilization of sale proceedsfor purchase of new property was made from January 2016, onwards. Total amount of Rs.1.55 crs was paid to the builder for the acquisition of the new property.
(iii) An amount of Rs.22 lacs was deposited into the Capital Gain Account Scheme (CGAS) before the due date of filing return of income for Assessment Year 2016-17.
(iv) The new property was acquired within the time limits specified under Section 54.
2.4 The Commissioner of Income tax (Appeals) ought to have appreciated that the Assessee is not required under the provisions of section 54 to establish the nexus between the amount of sale consideration and the cost of new asset.
:- 3 -: ITA No.2114/CHNY/2019 2.5 The Appellant submits that Section 54 of the Act is a beneficial provision which should be interpreted Liberally in favour of the exemption/deduction to the taxpayer and deduction should not be denied on hyper technical ground. 2.6 The Appellant submits that the Supreme Court in Bajaj Tempo Ltd., 196 ITR 0188 has held that 'The Statute should be construed Liberally; and since the provision for promoting economic growth has to be interpreted liberally, restrictions on it too has to be construed so as to advance the objective of the provisions and not to frustrate it'.
3. The Appellant craves leave to adduce additional grounds at the time of hearing''.
3. The brief facts of the case are as under:
The appellant is an individual. The return of income for the AY 2016-17 was filed on 30.07.2016 disclosing total income of Rs.
15,08,810/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Non Corp.
Circle 18(1) Chennai vide order dated 22.12.2018 passed u/s. 143(3) of the Income Tax Act, 1961 (for short 'the Act') at total income of Rs.
1,07,41,750/- by restricting capital gains u/s.54 of the Act to H79,13,000/- as against the claim of H1,74,45,939/- on the ground that new house was brought by the assessee not out of sale proceeds of original asset but out of funds provided by spouse.
4. Being aggrieved, an appeal was preferred before the Ld.CIT(A). The ld. CIT(A) vide impugned order directed the Assessing Officer to allow exemption to the extent of H22,00,000/- deposited in :- 4 -: ITA No.2114/CHNY/2019 capital gains scheme account and confirmed the denial of benefit u/s.54 of the Act to the extent of amount borrowed from appellant's husband to the extent of H70,32,000/-.
5. Being aggrieved by the order of the ld. CIT(A), the appellant is in appeal before us in the present appeal. Ld. Counsel argued that assessee had complied with the conditions prescribed u/s.54 of the Act and the provisions of Section 54 of the Act does not postulates establishing the nexus between amount received on sale of original asset and the cost of new asset. He also placed reliance on the decisions of Hon'ble Gauhati High Court in the case of CIT vs. Rajesh Kumar Jalan, (2006) 286 ITR 0274, Hon'ble Kerala High Court in the case of ITO vs. K.C. Gopalan, (1999) 107 Taxman 0591, Hon'ble Punjab and Haryana High Court in the case of CIT vs. Kapil Kumar Agarwal & Ors, (2016) 382 ITR 0056.
6. On the other hand, the ld. Sr. Departmental Representative placed reliance on the orders of lower authorities.
7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the allowance of deduction u/s.54 of the Act. Assessee had sold house property located at Marigold Co-operative Housing Society Ltd, Flat No.803, :- 5 -: ITA No.2114/CHNY/2019 Sapodila, Vadagaon Sheri, Pune for a consideration of H2,90,00,000/-. The capital gains were computed at H1.71 Crores after reducing cost of indexation of H1.19 Crores. Assessee bought new residential property for H1,88,00,000/- at No.A-1405, Radiance Mandarin, No.1, Pallavaram Thoraipakkam Radial Road, Chennai-97 and claimed exemption of capital gains u/s.54 of the Act as assessee brought new residential property for consideration of H1.88 Crores. During the course of assessment proceedings, the Assessing Officer found that sale consideration received was invested in mutual funds and bonds. He further found that new residential house was bought out of money of H92,32,939/- received from the spouse of the assessee. Based on this information, he concluded that assessee is entitled to deduction u/s.54 of the Act only to the extent of amount invested in new residential house out of his own source and accordingly he denied the exemption u/s.54 of the Act to the extent of H92,32,939/-. Even on appeal before ld. CIT(A), the ld. CIT(A) upheld the same view, however directed the Assessing Officer to allow deduction u/s.54 of the Act to the extent of amount deposited in capital gains scheme account of H22,00,000/-.
8. Therefore, the issue that comes up for consideration is whether exemption u/s.54 of the Act are to be denied in the absences of nexus between sale consideration received on sale of old :- 6 -: ITA No.2114/CHNY/2019 asset and source of investment in new house. On mere reading of provisions of Section 54 of the Act, it would be clear that statute has not laid down condition for the assessee in order to get the benefit of Section 54 of the Act, the actual sale consideration received on sale of original asset should be utilized for acquisition of new house property. The only condition required to be fulfilled is that assessee should purchase a new house property within a period of one year before or after the date on which the transfer of his property took place or he should have constructed a house property within a period of two years after the sale of original asset. There is no provisions under Section 54 of the Act stipulating that assessee should utilize the amount which he obtained by way of sale for meeting the cost of new house. It is settled principle of interpretation of statute that Court do not have power to go beyond the terms of statute where the benefits are granted subject to fulfillment of certain conditions. The Courts cannot impose some other conditions in order to give benefit conferred by the statute.
9. We also place reliance on the decision of Hon'ble Kerala High Court in the case of K.C. Gopalan (supra) wherein it was held as follows:-
''The assessee has to construct or purchase a house prperty for his own residence in order to get the benefit of s. 54. The :- 7 -: ITA No.2114/CHNY/2019 wording of the section itself would make it clear that the law does not insist that the sale consideration obtained by the assessee itself should be utilised for the purchase of house property. The main part of s. 54 provides that the assessee has to purchase a house property for the purpose of his own residence within a period of one year before or after the date on which the transfer of his property took place or he should have constructed a house property within a period of two years after the date of transfer. Clauses (i) and (ii) of s. 54 would also make it clear that no provision is made by the statute that the assessee should utilise the amount which he obtained by way of sale consideration for the purpose of meeting the cost of the new asset.
6. A reading of ss. 53 and 54 of the Act would make it clear that a special provision is made in respect of capital gains arising out of transfer of particular type of capital asset, namely, house property which was being used by the assessee or a parent of his for the purpose of their residence.
Entitlement of the exemption under s. 54 relates to the cost of the acquisition of a new asset in the nature of a house property for the purpose of his own residence within the specified period. The three decisions relied on by the learned standing counsel for the Revenue have no application to the issue raised in this appeal. The statutory provision is clear that it does not call for a different interpretation from what has been given to it by the CIT(A) and the Tribunal''. The Hon'ble Punjab and Haryana High Court in the case of Kapil Kumar Agarwal & Ors (supra) referring to the judgment of Hon'ble Kerala High Court in the case of K.C. Gopolan(supra) held as follows:-
''14. The assessee has to purchase or construct a house property during the period specified under section 54F of the Act in order to get benefit there under. Section 54F of the Act nowhere envisages that the sale consideration obtained by the assessee from the original capital asset is mandatorily required to be utilised for the purchase or construction of a house property. No provision has been made by the statute that in order to avail of the benefit of section 54F of the Act, the assessee has to utilise the amount received by him on :- 8 -: ITA No.2114/CHNY/2019 sale of original capital asset for the purposes of meeting the cost of the new asset. Once that is so, the assessee was entitled for benefit under section 54F of the Act''.
Respectfully following the above decisions, we hold that benefit u/s.54 of the Act cannot be denied on the ground that sale proceeds of the original asset sold was not utilized for the purpose of purchase of new asset. Accordingly, we reverse the findings of the lower authorities and direct Assessing Officer to allow the benefit u/s.54 to the extent of investment made in new house.
10. In the result, the appeal filed by the assessee stands allowed.
Order pronounced on 08th day of November, 2019, at Chennai.
Sd/- Sd/-
(एन.आर.एस. गणेशन) (इंटूर रामा राव)
(N.R.S. GANESAN) (INTURI RAMA RAO)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे नई/Chennai
.दनांक/Dated: 08th November, 2019
KV
आदे श क$ & त0ल1प अ2े1षत/Copy to:
1. अपीलाथ#/Appellant 3. आयकर आयु3त (अपील)/CIT(A) 5. 1वभागीय & त न7ध/DR
2. &'यथ#/Respondent 4. आयकर आयु3त/CIT 6. गाड फाईल/GF