Income Tax Appellate Tribunal - Kolkata
Sunil Kumar Saha, Kolkata vs Assessee on 6 May, 2015
I .T.A . N o. 10 52 / KOL ./ 20 1 4
Ass es sm e nt ye a r: 2 00 6- 2 00 7
Page 1 of 8
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'A' BENCH, KOLKATA
Before Shri P.K. Bansal, Accounta nt M em be r
a nd Shri Rajpa l Yadav, Judicia l Membe r
I.T .A. No . 105 2 /KOL/ 2 01 4
Assess ment year : 2006 -2 00 7
Su nil Kuma r Sa ha ,............ ........ ............... .................. ...Ap p ella nt
7A, De shp riya Pa rk (West), 4 t h Floor,
Kol ka ta -700 026
[PA N : A LKP S 7564 E]
-Vs.-
Income Ta x Office r,........ .............................................Re sp ond ent
Wa rd -55(1), Kolka ta ,
54, Ra fi A hme d Kid wa i Roa d , 4 t h Floor,
Kol ka ta -700 016
Appeara nces by :
Shri K. M. R oy, FCA, f or the ass es see
Shri Anjan P rasad Ro y, JCIT, Sr. D.R., for the Department
Dat e of concluding t he hearin g : April 29, 201 5
Dat e of pr onouncing th e order : M ay 06, 2 015
O R D E R
Per P.K. Bansal:
This appeal has been filed by the asses see a gain st the o rder o f ld. Commissioner of In co me Tax ( Appeals)-XXXVI, Kolkata in Appeal No. 448/CIT(A)-XXXVI /Kol/Wd.55(1)/11-1 2 dated 27.02.2 014 for the as se ssm ent yea r 20 06-07 on the following grounds of appe al:-
(1) For that on th e fa cts and in circums tances of th e cas e, this re-assessment proceeding s u/s 147 is arbitrary and bad in law.
(2) For tha t th er e was no d efault or failure u /s 139 of the I.T. Act on the part o f the assess ee as the ld. ITO has to have r eason to beli eve that inco me has es cap ed assess ment.
(3) For that the ld. ITO h as n o power to reopen th e ca se since no tangible material wa s placed on r ecord so as to sho w that ther e was escapemen t o f incom e fro m assessm ent.
I .T.A . N o. 10 52 / KOL ./ 20 1 4 Ass es sm e nt ye a r: 2 00 6- 2 00 7 Page 2 of 8 (4) For tha t the ld. ITO er red in disallowing th e exemption cla imed un der section 54EC against ca pital gain fo r investm ent in REC Bond and assess ed ta x on LTGG of Rs.11,07 ,079/- is unwarran ted by th e facts of the cas e. (5) For that the ld. ITO err ed in addin g Rs.3 2,570/- a s accru ed inter est incom e on fix ed deposit, and the same is unjustified by the facts of th e cas e.
(6) For that the ld. ITO err ed in addin g Rs.1 2,600/- a s notiona l rent and the same is u njustified and unwarrant ed by th e facts of th e case.
(7) For that the ld. ITO err ed in addin g Rs.6 4,396/- a s income from r en tal, property at Naren d rapu r, 24-Pg s.(s ) and the same is arbitrar y and un ju stified by the fa ct s of the cas e.
(8) For that the re-ass es sm ent pro ceeding is vitia ted by errors of law and as such liable to be qua shed and/or set aside.
2. Gro unds No. 1 to 3 are n ot pres sed by the ld. cou nsel for the as se sse e at th e ti me o f h earin g. Therefore, these grounds are bein g dismi ssed as not p ress ed.
3. Gro und No. 4 relat es to th e n ot allowi ng exe mption u nder section 54EC in resp ect o f a su m of R s.11, 07,079/-.
4. Brief facts rel atin g to this g round are that durin g the y ear unde r co nsideration, the assess ee sold his h ouse p rope rty at Tara Road, Kolkata for a con sid eration of R s. 23,00,000/- and the c apital gain was comput ed at Rs.9,42,079/-. The ass essee clai m ed exemption u nder section 54EC amountin g to Rs.11,07,079 /- in resp ect of the invest ment made in Ru ral Electri fication Bond s, which were purchased by the asses see on 01.02.2007. Since the conveyance deed wa s executed on 15.01 .2006 and the invest men ts were mad e aft er mo re t han one year f rom th e dat e of the sal e of the p roperty, therefo re, the A ss essin g Offi cer took the view th at the co ndition s for th e eli gibility of th e exemption und er s ection 54EC of the Act were not fulfilled and , th erefo re, he disallowed the ex emption.
5. The as se ss ee went in appe al before th e ld . CIT(Appeals), who held that exemptio n und er se ction 54EC is available only when the specifi ed I .T.A . N o. 10 52 / KOL ./ 20 1 4 Ass es sm e nt ye a r: 2 00 6- 2 00 7 Page 3 of 8 Bonds are purchased with in a period of six month s. Since the as se ss ee did not make the pu rcha se within a perio d of six month s f rom th e d ate of the sal e of property , therefo re, he su stai ned the o rder of the Ass es sin g Officer.
6. We hav e heard the rival submission s and ca refully conside red th e same along with the o rders of the tax authorities. Befo re u s, ld. A.R. vehemen tly relied on the ord er of the Hon'ble Bombay High Court in the case of CIT, Cent ral-I II, Mu mbai -vs.- Cello Plast rep ort ed in 24 Taxman.com 111 (Bomb ay), a copy of which wa s pl aced b efore u s, in which it was h eld th at if the bonds of ass es see's choice are not available thro ughout the pe riod o f six mo nth s as pro vided und er section 54EC, ti me of invest in Bon ds wo uld get auto matically ex tend ed till bo nds are av ailable in ma rket an d a ssess ee c an purchase the sa me an d clai m exemption under s ection 54EC acco rdi ngly . We hav e gone through this decision as reli ed o n by the ld. A.R. We noted that in that case also, the as se sse e so ld its facto ry on 22.03. 2006 and durin g the period 22. 03.2006 to 01.07.2006 the Bonds were not available on 30.06.2006. CBDT issued the Circu la r ext endin g the time to in vest Bonds upto 3 1.12.2006, and upto 22 .01.2007 the REC Bon ds were not availab le within six months fro m the date of the sal e of the p rope rty. In that ca se ti me period al so expi red o n 21.09.2006. The last date in view of th e Circul ar o f the Boa rd for inve stment in RE C Bonds was 31 .12.2006 but the Bond s were av ailable betwee n 22.01. 2007 to 31. 01.2007. The assess ee b ought the Bonds on 311.01.2 007. The Hon'ble Hi gh Cou rt under th ese fact s allowed the exe mption to the assessee when th e matt er travelled to the Hon'ble High Court. In the p resen t c ase, we noted that the assessee sold his house property on 15.01. 2006 for a considerat ion of Rs.23,00,00 0/- while as p e r the pro visions of sect ion 50C, the consideration as per the st amp valu ation wa s Rs. 24,65,600/-. The indexed cost of acquisition of the property cam e to Rs.13,57, 921/-. The assess ee comput ed the capit al gain at Rs.9,42 ,079/- but taking the stamp duty valuation under s ection 50C I .T.A . N o. 10 52 / KOL ./ 20 1 4 Ass es sm e nt ye a r: 2 00 6- 2 00 7 Page 4 of 8 the Assessin g Of ficer comput ed the capital gain at Rs.1 1,07,079/-. The as se sse e co uld not make any invest men t in REC Bonds as th e Bonds were not available. The Central Board of Dire ct Taxes vide Ci rcular No. 142/09/2006-TPL dated 30. 06.2006 extended th e date fo r mak ing th e invest ment upto 31.12.200 6. Therefore, if the date would have m ade th e invest ment till that dat e he wo uld have been eli gible for the exemption. But we noted afte r 31.12.2006 till 21.07.2007 th e REC Bonds were not av ailable in the market fo r purchase, therefo re, the asses see could no t make th e investmen t in Bonds. The B ond s were available fo r sale only fro m 22.0 1.2007 and the as ses see pu rchased Bonds on 0 1.02.2007 i.e. within 11 days from the dat e when the Bonds we re available fo r sale in the m ark et. In our opinion , the deci sion of the Hon'ble Bo mbay Hi gh Court i s clearly applicable in the cas e of the as se ssee. The as se sse e had purcha sed th e Bonds within re ason able p eriod wh en the Bonds were av ailable fo r inve st men t. No cont rary decisio n was brou ght to our knowledge by the ld. D.R. even though he has vehemently relied on the order of the As se ssin g Office r. We, therefore, resp ectfully following the aforesaid decision of the Hon'ble Bombay High Co urt set aside the o rde r of the ld. CIT(Appeal s) and direct the As ses sin g Offic er to allow exemption to the assessee un der sectio n 54EC for a sum of Rs.10 ,10,000/- Thus th is ground stands allowed.
7. The next gro und rel ates to th e additi on mad e on accou nt of th e accrued interest on fi xed d eposits. Th e As sessin g Of ficer noted that the as se sse e h as sho wn the interest on fixed depo sit a mounting to Rs. 88,390/- and from the det ails h e no ted that in resp ect of so me o f the dep osit s, the as sessee has n ot shown t he int erest inco me. The A ss essin g Officer, therefore, calculated the inte re st and added the sam e in the inco me of th e as se ssee. The ass es see went in appe al befo re th e ld. CIT(App eals) an d ld. CIT(Appe als) dis mi ss ed the g round of th e assessee.
I .T.A . N o. 10 52 / KOL ./ 20 1 4 Ass es sm e nt ye a r: 2 00 6- 2 00 7 Page 5 of 8
8. We hav e heard the rival submission s and ca refully conside red th e same. We find substance in th e submi ss ions mad e by the ld. A.R. that the interest inco me on FDR h as be en sho wn by the assessee regularly on the basis o f th e certific ate received f ro m th e Ban ker as i s included in the TD S. Si mila rly durin g th e i mpug ned yea r als o, th e inte re st h as been sho wn by the a sse ss ee in acco rdance with the calculation given by the Banke r. Since the ass essee is regula rly following th e sam e method of acco untin g, we, therefo re, do not find any legality in t he meth od of acco unting followed by the assess ee. Accordin gly we delete the in terest amounting to Rs. 32,570/-.
9. The next g round rel ates to the additio n of Rs.12,60 0/- as notion al ren t.
10. The fact s rela ting to thi s addition are that the as ses se e off ered notional rent fo r t wo p rop erties, namely at Gariahat Road and Tara Ro ad. For Ga riah at Road the ren t was shown for nin e months. The A ss essin g Officer was of the v iew that the rent sh own by the asses see is at a lowe r sid e. H e est imated the sam e @ R s.4,00 0/- per month amountin g to Rs. 36,000/- and aft er allowin g the s tatutory deduction h e mad e an add ition o f Rs.12,600/-.
11. After he arin g the rival submis sion s we no ted that the n otion al ren t has m erely b een estimated by the Ass essin g Office r without giving any basis and on what basi s the rent has been esti mated @ Rs.4,0 00/- per mon th. Th e provision o f sectio n 23 lays down how the annu al value of the property has to be esti mated. None of the relev ant p rovision s has been brought to ou r knowled ge by the Re venue. We, the refore, d el ete the add ition. Th us this gro und stand s allowed.
12. The next ground relate s to the ad dition of Rs. 64,396/-. The Assessing Offic er when enq uired th e a ssessee submitted that this property is utilized by the assessee's f amily fo r weekend d estination. But I .T.A . N o. 10 52 / KOL ./ 20 1 4 Ass es sm e nt ye a r: 2 00 6- 2 00 7 Page 6 of 8 occasion ally the p roperty al so is let out fo r picnic, p arty or shootin g and due to which the ass essee got ce rt ain in come. Th e Ass essin g Officer noted that the income f ro m th e said property varied f rom year to y ear. In the as se ssm ent year 2004-05, the rental receipt f ro m the s aid pro perty was Rs. 1,86,000/-, for ass es smen t y ear 200 5-06 it was R s.1,30,000/-, and for the assessment year 2 006-07 it was R s.1,07 ,000/-. Therefo re, the Assessing Of fic er estim at ed th e annu al value at Rs.1,86 ,000/- and afte r allowin g the d eduction he added th e diff erenc e of th e incom e as co mputed by him and as shown by the a ss ess ee a mounting to Rs.64,396/-.
13. We hav e heard the rival submission s and ca refully conside red th e same along with the ord ers o f the tax authorities. Ld. A.R. b efore us, even though v ehem ently contend ed fo r allowin g ded uct ion, but could not co nvince us how the annu al value of t he prop erty will ge t reduced. It i s not a case where the as ses se e has cl ai med vacancy allowance. Sect ion 22 of the In co me T ax A ct clearly stipulates that th e inco me f ro m the hou se property shall be chargeab le und er th e head "income fro m house property " on the b asi s of annu al value. The p rov ision of section 2 3 lays down how the annu al value h as to be determined. S ection 23 l ays do wn thre e basi s and on the basis o f which the ann ual value has to be determined. The first basis i s the su m for which the prop erty mi gh t reasonably be expected to let fro m year to year. The second ba sis i s app licable where the p rope rty or any p art of th e p rop erty is l et out and the actu al ren t receiv ed or rec eivable by the o wner in respect thereof i s in excess of th e sum ref erred to in clau se (a), the amou nt so received o r receivable; or th e third basis where t he pro perty nor any part of the property is let and wa s vacant d u rin g th e whole or any pa rt of the previous ye ar and owin g to such vac ancy the actual rent received o r receivable by the o wn er in resp ect th ereof is le ss than the su m re ferred to in clau se (a), the amoun t so received or receivable- Pro vide d that the taxes levied by any lo cal authority in resp ect of the p rop erty shall be ded ucted (irre sp ective of the p rev io us year i n which th e liab ility to pay I .T.A . N o. 10 52 / KOL ./ 20 1 4 Ass es sm e nt ye a r: 2 00 6- 2 00 7 Page 7 of 8 such taxe s wa s incu rred by the owner acco rdin g to the method of accoun tin g regula rly emp lo yed by him) in determinin g the annu al v alue of the p roperty of that previous yea r in which such ta xes are actu ally paid by him.
14. The a ss ess ee before u s cl aims th at th e p roperty was occ asion ally let out and part o f the p roperty is b ein g occupied by the assessee as week- end destin ation which mean s th at th e p rope rty remain s vacan t fo r p art of the year but th e asses see has not given any calculation how he received the rent an d du rin g wha t year the p ro p erty remain s vacant, so th at the actual rent receiv ed or receivable could have been computed in acco rdanc e with th e p rovisio ns o f sec tio n 23(1)(c) of the A ct. In our opinion, the onus is on the asses see. In case, h e want s to claim that th e property was not let o ut durin g th e whole of the year. S ince the a ssessee has not given any detail s n either befo re the authoriti es b elow n o r befo re us, we, therefo re, do not find any illegality or infi rmity in the annual valu e being tak en by the Assessin g Offi cer on th e basis of the ren t which the as ses se e received d urin g the assessment year 2004-05 amou nting to Rs. 1,86,000/-. We, th erefo re, confi rm the addition made by the A ss essin g Officer.
15. In the result, the app eal filed by the ass ess ee i s pa rtly allowed as indicated abo ve.
Orde r p ronounced in th e open Co urt on 06 t h May, 20 15.
Sd/- Sd/ -
Rajpal Yadav P.K. Bansa l
(Judi cial Member) (A ccounta nt M ember)
Kolkata, th e 06 t h day of May , 2015
Co pies to : (1) Su nil Kuma r Sa ha ,
7A, De shp riya Pa rk (West), 4 t h Floor,
Kol ka ta -700 026
(2) Income Ta x Office r,
Wa rd -55(1), Kolka ta ,
54, Ra fi A hme d Kid wa i Roa d , 4 t h Floor,
Kol ka ta -700 016
I .T.A . N o. 10 52 / KOL ./ 20 1 4
Ass es sm e nt ye a r: 2 00 6- 2 00 7
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(3) Comm iss ioner of Income-tax (Appeal s)
(4) Com mis sioner of Incom e Tax
(5) The Depar tmental R epr es entative
(6) Guard Fil e
B y order
Assistant Registrar
Income Tax App ellate Tribunal
Kolkata Ben ch es, Kolkata
Laha/Sr. P.S.