Income Tax Appellate Tribunal - Delhi
Rajnish Chaudhary (Huf), New Delhi vs Assessee on 30 October, 2014
ITA NOS. 2565 & 2566/D/2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI J.S. REDDY, ACCOUNTANT MEMBER
I.T.A. No. 2565/DEL/2012
A.Y. : 2007-08
Sh. Rajnish VS. Addl. CIT,
Chaudhary (HUF), Karnal Range,
C/o M/s RRA Karnal
TaxIndia,
D-28, South
Extension,
Part-I, New Delhi -
49
(PAN:AAHHR8689H)
(APPELLANT) (RESPONDENT)
AND
I.T.A. No. 2566/DEL/2012
A.Y. : 2007-08
Sh. Ramneek VS. Addl. CIT,
Chaudhary (HUF), Karnal Range,
C/o M/s RRA Karnal
TaxIndia,
D-28, South
Extension,
Part-I, New Delhi -
49
(PAN:AAHHR8689H)
Assessee by : Dr. Rakesh Gupta,
Advocate
Department by : Sh. Shameer Sharma, Sr.
D.R.
Date of hearing : 20.10.2014
Date of pronouncement : 30.10.2014
1
ITA NOS. 2565 & 2566/D/2012
ORDER
PER H.S. SIDHU : JM These appeals by the different assessees emanate out of common order passed by the Ld. CIT(A), Karnal in Appeal No. IT/60/62/KNL/CIT(A)/KNL/2009-10 dated 12.3.2012 pertaining to assessment year 2007-08. Since the issues in both the appeals are similar and identical, hence, both the appeals are being disposed of by this common order.
2. The grounds raised in ITA NO. 2565/DEL/2012 read as under:-
"1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order in the status of assessee as 'HUF' instead of 'Individual' and that too by disregarding the submissions of assessee and by recording incorrect facts and findings.
2. That in any case and in any view of the matter, action ofLd. CIT(A) in not quashing the impugned assessment order framed by Ld. AO in the status of assessee as 'HUF' which is contrary to law and facts, unjustified and void ab initio.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in disallowing the deduction of Rs.1,81,15,551/- u/s 54B of the Act and that too without appreciating the facts and circumstances of the case and by recording incorrect facts and findings.
4. gard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not allowing the deduction U/S 54F fully as 2 ITA NOS. 2565 & 2566/D/2012 claimed by the assessee on both the residential houses and has further erred in sustaining the action of Ld. AO in allowing the deduction for only one investment i.e. 18,91,250/- that too without any basis.
5. That in any case and any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in denying/reducing the deduction u/s 54B and 54F on the second house property and framing the impugned assessment order is contrary to law and facts, void ab initio, beyond jurisdiction, and by recording incorrect facts and findings and the same is not sustainable on various legal and factual grounds.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment in violation of principles of natural justice in as much as passing the impugned order by recording incorrect facts and findings and without providing adequate opportunity of hearing.
7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging the interest u/s 234A and 234B of the Income Tax Act, 1961.
8. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other."
3. The grounds raised in ITA No. 2566/Del/2012 read as under:-
"1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. Aa in framing the impugned assessment order in the status of assessee as 3 ITA NOS. 2565 & 2566/D/2012 'HUF' instead of 'Individual' and that too by disregarding the submissions of assessee and by recording incorrect facts and findings.
2. That in any case and in any view of the matter, action ofLd. CIT(A) in not quashing the impugned assessment order framed by Ld. Aa in the status of assessee as 'HUF' which is contrary to law and facts, unjustified and void ab initio.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. Aa in disallowing the deduction of Rs.1,81,15,551/- u/s of the Act and that too without appreciating the facts and circumstances of the case and by recording incorrect facts and findings.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment in, violation of principles of natural justice in as much as passing the impugned order by recording incorrect facts and findings and without providing adequate opportunity of hearing.
5. That in any case and any view of the matter, action ofLd. CIT(A) in confirming the action of Ld. AO in denying the deduction uls 54B and framing the impugned assessment order is contrary to law and facts, void ab initio, beyond jurisdiction, and without giving adequate opportunity of hearing, by recording incorrect facts and findings and the same is not sustainable on various legal and factual grounds.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging the interest U/S 234A and 234B of the Income Tax Act, 1961.4
ITA NOS. 2565 & 2566/D/2012
7. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds prejudice to each other.
4. The facts of the case are not in dispute by both the parties, therefore, need not repeated here for the sake of convenience.
5. Ld. Cousnel of the assessee has filed the synopsis in support of his claim, which is reproduced as under:-
"The issue in the present appeal is regarding the Assessment Order passed by Ld. A.O. as HUF, which he was duty bound to pass it as individual and assessee HUF was not owning the land in question and thus there was no question of bringing to tax any capital gain in the hands of the appellant-HUF.
Ld. A.O. computed the long term capital gain in the hands of the appellant-HUF on the basis that appellant HUF was the owner of the land in question, whereas the fact of the matter is that appellant HUF was not the owner of land in question and therefore, there could not be capital gain in the hands of the appellant HUF and capital gain cannot be assessed in the hands of the appellant HUF, merely on the basis that the appellant HUF filed its return (PB 112-114) by treating itself as the owner of land, more so when appellant HUF made detailed submissions with evidences during assessment proceedings itself showing that it was not the owner of the agricultural land and that the land in question was owned by the individual.
Mr. Ramneek Choudhary along with other co-sharer sold the agricultural land in the year under assessment, which were interalia acquired by him through a court-decree from his father in F.Y. 1994- 1995. Though the said land as per the provisions of Hindu Succession 5 ITA NOS. 2565 & 2566/D/2012 Act was individual property, but Mr. Ramneek Choudhary filed his income tax return for the first time for A.Y. 2007-08 i.e. the impugned year in the status of HUF showing wrongly the capital gain on sale of this land in the hands of HUF.
During the assessment proceedings itself, assessee came to know about the correct legal position that the subject property belongs to the individual and not to HUF and made detailed submissions supported by evidences to establish that the impugned land was the property of the "individual" and not the property of HUF and capital gain tax liability can not be raised in its hands.
Following pleadings and evidences would establish that the land in question was the property of individual and not the property of HUF and thus, any capital gain arising on the transfer of such land would not be the income of the HUF PB 119 is letter to Ld. Addl. CIT (A.O.) submitting the above mentioned contention and furnishing court decree dated 07.05.1994.
PB 115 is letter to AO submitting the registry-wise details of purchase, sales of agricultural land together with the copies of purchase and sale deeds and that the transfers took place under family settlements and submitting zamabandi and intkal i.e. mutations.
PB 133 is the family tree and mentions as to how the impugned properties were acquired in different years.
PB 90 is the details of agricultural land and the year and the manner of acquisition which would show that the impugned land was acquired in 1994, through court decree from father Sh. Ram Kishan Coudhary and the father Sh. Ram Kishan Chaudhary also obtained the same either 6 ITA NOS. 2565 & 2566/D/2012 through court decree or purchased, obtained the same by way of gift from father and Will of the brother.
PB 1-2, 3-6, 7-8 are the mutations of the properties owned by Mr. Ran Singh -grandfather of the appellant and details of which are on slip prior to PB 1.
PB 131-132 is the submissions before Ld. CIT (A) submitting that there are several judicial decisions holding that property acquired by the assessee in the circumstances constitute individual property.
PB 120-122, 123 is submission to Ld. CIT (A) on these lines.
PB 141-142 are the submissions to Ld. CIT (A) on this issue PB 148-149 is the counter comments from Ld. A.O. mentioning that since assessee showed this property as HUF property, therefore it has to be taxed in the hands of HUF meaning thereby Ld. A.O. accepts the factual position as to the manner of acquisition of the subject property and that being so, the capital gain tax liability can be raised in the hands of the appellant-HUF.
PB 150-151 are the submissions before Ld. CIT (A) PB 176 is the submissions before Ld. CIT (A) regarding the case of the Supreme Court in the case of Goetze India P. Ltd.
It has been held in the case of CIT v. Khimji Teju Kaya 115 ITR 168 (Bom.) that self acquired property of the father bequeathed to son by Will would constitute individual property and even if income from such property was shown in the return as HUF income, the income from that property is to be assessed in individual capacity.
PB 114-120 is the copy of the above decision 115 ITR 168 (Bom.) 7 ITA NOS. 2565 & 2566/D/2012 It has been held in the following decisions that properties received through gift or Will would constitute individual properties, are as follows:-
a) S. Parthasarathy vs. CIT (1970) 76 ITR 688(SC)
b) A.V.N. Jagga Row vs. CIT (1987) 166 ITR 862 (AP)
c) C.W.T. vs. Narayan Dass Sadani (1967) 65 ITR 137 (Cal.)
d) A. Seetharanaiah vs. W.T.O. (1983) 3 ITD (Hyd.) 495
e) Ajit G. Saraff Vs. CIT (1993) 201 ITR 388 (Kar)
f) CIT vs. Sambhu Ram Soni (1982) 138 ITR 373 (Del.)
g) CIT vs. Sambhu Ram (2003) 133 Taxman 15 (Del.) Thus, the land in question when belonged to Individual, its capital gain could not be brought to tax in the hands of different entity viz. HUF and it is prayed that the taxed capital gains may please be excluded from the hands of the appellant HUF.
Even if the assessee has shown the income in his return under misconception of law, it can not be assessed in his hands merely for that reason, as there can be no estoppel against the law as held in the following judicial decisions:-
I. If the additions are prime face contrary to law which could not have been made under any provision of the Act.
-108 ITD 577 (Mum) There is no estoppel against law.8
ITA NOS. 2565 & 2566/D/2012 Even if, assessee agrees or consents for something contrary to law, A.O. has to discharge his duty of making fair assessment of income and to compute amount of tax payable as per law:
*Article 265 of the Constitution of India: "No tax can be collected except by authority of law"
*Ramlal vs Rewa Coalfield Ltd AIR 1962 SC 361: " The State authorities should not raise technical pleas if the citizens have a lawful right is being denied to them merely on technical grounds. The state authorities cannot adopt the attitude which private litigants might adopt."
*56 ITR 67 (SC) Read at Page 74 last 7 lines of Para 1 *81 ITR 303 (Del.) Read at Page 304.
*SDS Mongia vs CBDT 211 CTR 357 (Del) *128 ITR 486 (Guj.) *107 ITR 63 (Guj.) * S.R. Koshti 276 ITR 165 (Guj) As per law there can be no agreement between assessee and A.O., any reasoning adopted by Ld. A.O. that addition was based upon assessee agreement has to be excluded from the order. After excluding it, if there is no basis at all to sustain any of the addition made by A.O., the same has to be deleted.
Srikant G. Shah vs ITO, (2007) 108 ITD 577 (Mum.)
1) Pullangode Rubber Produce Co. Ltd. vs State of Kerala and Anr. 91 ITR 18 (SC) It was held by the Hon'ble Supreme Court that even if the assessee filed its returns on the basis of some entries in his accounts, it was still open to the assessee to show that the entries in the accounts were incorrect. It was held vide Para 2 that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive.
It was further held that it was open to the person who made the admission to show that it was incorrect.
9
ITA NOS. 2565 & 2566/D/2012
2) S. Arjan Singh vs CWT 175 ITR 91 (Del) In this case it has been held that in certain circumstances even if the amount is lower than the returned amount it may be accepted if the lower amount is correct as per law. It was also held that an admission is an important piece of evidence, but it is not conclusive and it is open to the assessee to show that it is incorrect.
3) Federal Bank Ltd. vs State of Kerala 124 CTR 355 (Ker) Assessment made on the basis merely of an admission in return when that admission has been resiled from as made by mistake and there is nothing to indicate that the amount shown is the capital value in accordance with the Act is not valid in law- Admission made by assessee is relevant but not conclusive.
CIT vs Bharat General Reinsurance Co. Ltd. 81 ITR 303(Del) Income Tax authorities - Jurisdiction of ITO - Merely because an assessee has returned a particular income for a particular year, ITO does not get jurisdiction to assess the same in that year wherein fact the income does not properly belong to that assessment year. CIT vs Lucknow Public Educational Society 318 ITR 223 (ALL) AY 2001-02. The assessee was an educational institution registered under s.12A. It filed return claiming under s.10(23C). Later, it filed a revised return claiming exemption under s.11, alongwith the requisite audit report. The assessee was legally entitled to exemption under s.11. The exemption could not be denied for the reason that originally it was claimed under s.10(23C).
S.11 and s.10(23C) of the Income Tax Act 1961 In the facts and circumstances of the case, we are of the view that the Assessing Officer has treated the Revised Return as "non est" 10
ITA NOS. 2565 & 2566/D/2012 wrongly for the reason that the Assessing Officer himself has passed the order under section 143(3) on the basis of the Original Return where the assessee was legally entitled for the exemption under section 11, if not under section 10(23C). The department should not take advantage of the ignorance of the assessee as per the CBDT Circular No.14 (XL-35)/1955, dated 11-4-1955, quoted in Parekh Bros. v. CIT[1984] 150 ITR 105 (Ker.).
Such submission was made during the course of assessment proceeding it self and it was not necessary to revise the return and that the decision of supreme court in the case of Goetze would not be applicable in the instant case as held:-
EMERSON NETWORK POWER INDIA (P) LTD. vs. ACIT 122 TTJ 67 (MUM) (Refer PB 257 - 72) Business expenditure- allowability- claim made at the time of assessment- claim not made in original return nor made by way of valid revised return but made in the course of assessment - AO was obliged to give due relief to assessee or entertain its claims its claims if admissible as per law even though the assessee had not filed revised return- Legitimate claim of assessee should not be rejected on technical grounds- Chicago Pneumatic India Ltd. vs. Dy. CIT (2007) 15 SOT 252 (Mumbai) followed.
CIT vs. RAMCO INTERNATIONAL (2009) 221 CTR (P&H) 491 :
(2009) 180 TAXMAN 584 : (Refer PB 89 - 290) Deduction under s. 80-IB--Allowability--Claim not made in return-- Assessee having duly furnished the documents and submitted Form No. 10CCB during assessment proceedings, claim for deduction under s. 80- IB by way of an application was admissible--There was no requirement 11 ITA NOS. 2565 & 2566/D/2012 for filing any revised return--No substantial question of law arises-- Goetze (India) Ltd. vs. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC) distinguished.
ACWT vs. KU. RAGINI SANGHI (2009) 120 TTJ (Ind) 1116 :
(2010) 123 ITD 384 : (2009) 17 DTR 276 (Refer PB 291 - 295) As per s. 5(1)(vi) one house or part of a house belonging to an individual shall not be included in the net wealth of the assessee and wealth-tax shall not be payable by an assessee. Both the assessees are enjoying benefit of 50 per cent each i.e. in equal portion of the residential property and as such the same would not be subject-matter of wealth-tax. Even the Departmental Representative did not dispute the findings of the CIT (A) to that extent that the assessees are entitled to deduction and exemption under s. 5 (1)(vi). The contention of the Departmental Representative was only that since no deduction was claimed by way of revised return, the assessees would not be entitled to deduction at the assessment stage. The assessees did not claim any deduction. The claim of the assessees was with regard to exemption under s. 5(1)(vi) which provision clearly provides that once house or a part of house belonging to an individual shall not be included in the net wealth of the assessee and the assessee shall not be liable to pay wealth- tax thereon. It is a statutory provision contained under the Act and as such the law as it is should have been applied by the AO for granting exemption to the assessees. There is no need for the assessees to seek exemption as per law
-- Goetze (India) Ltd. vs. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC) distinguished.
Even it was so pleaded to AO/CIT(A) to assess the capital gains in the correct status and for that purpose the return filed in the status of HUF 12 ITA NOS. 2565 & 2566/D/2012 may be treated to have been filed in the status of Individual which was permissible in view of the following judicial decisions and pleadings to this effect were made which are at abovementioned PB :-
In CIT vs. Brij Raj Singh 209 ITR 56, 62-63 (Raj), assessment made in the status of Individual on the basis of return filed in the status of HUF was sustained.
It has been held in the case of Sanjay Tandon vs. ACIT 119 TTJ 277 (PB 144) that it is open to an assessee to challenge and claim in appeal that it should be assessed in different status.
It has been held in Karanbir Singh vs. ITO 14 TTJ 528 (Chd.) that capital gain cannot be assessed as individual status if the land in question belonged to HUF. (PB 145-146) In the case of Ram Saran Pahalwan vs. ITO 2 TTJ 80 (Cal.), it was held that assessee has to be computed in the correct status as per law. (PB 143-144) In CIT vs. K. Venkatesh Dutt 319 ITR 331 (Kar.), it was held that assessee can always show the bona fide mistake in the return filed. (PB 164-168) Adverse observations of Ld. A.O. are met as under:-
A.O. has mentioned at Page--3 of the Assessment Order that it was the HUF, which declared income from capital gain in its return and has not disputed for quite some time and that assessee has declared the interest received as HUF income.
In reply it is submitted that there can be no estoppels against law and if assessee can show that there can be no capital gain in its hands as the property in question was not owned by it, liability cannot be fastened 13 ITA NOS. 2565 & 2566/D/2012 merely for the reason that it was shown in the return as per the decisions mentioned above.
Adverse observations of Ld. CIT(A) are met as under:-
1. Ld. CIT(A) has mentioned in Para 2.07 that since HUF has not revised its return, benefit of a fresh claim cannot be given.
In reply it is submitted that the issue is not about any fresh claim, but the issue is whether an HUF which does not own the property in question can be saddled with tax liability as capital gain on that very property merely for the reason that it itself has shown that said capital gain in its return of income. Therefore Ld. CIT(A) has approached the question wrongly.
2. Ld. CIT(A) has mentioned in Para 2.08 that assessee individual has thrown its property into the common hotchpot of the HUF. In reply it is submitted that if that is the case then in that case also the income is to be taxed in the hands of the individual and not in the hands of HUF as is clear from section 64(2)."
6. Ld. Counsel of the assessee also filed a Paper Book containing pages 1 to 181 having the photocopies of deeds of the properties in question and also assessment records etc.
7. Ld. DR on the contrary relied upon the orders of the authorities below. Ld. DR reiterated the conclusion drawn by the Ld. CIT(A), which is reproduced as under:-
14
ITA NOS. 2565 & 2566/D/2012 "In so far as Ramneek Chaudhary is concerned, it is noted that he was a stranger to the proceedings which were going on before the AO of 'HUF'. If at all, the 'HUF' felt that there was wrong statement made in the return, he was entitled to revise it by virtue of section 139(5) of the Act which allows revision on account of 'wrong statement' qua the status. The assessee was also having an option to file the return in individual status (may be by filing belated return u/s. 139(4) of the Act) returning therein the facts relating to income and the deduction claimable. Failure on the part of Sh. Ramneedk Chaudhary to do so or on HUF part to not to revise the return goes to show that they were of the conscious view that the property in question was of HUF. Only to claim benefit, the opinion was changed, which is not permissible. It is also endorsed by the fact of filing the return of the next assessment year i.e. of A.Y. 2008-09 in the status of HUF, which was processed as such. Had the return of income of the year under consideration been not taken in scrutiny, the status would be continued as such i.e., of HUF.
Further, it is an established practice of throwing individual property in the common Hotch Pot of the HUF. The circumstances especially in the filing of the return in HUF status show that Sh. Ramneek Chaudhary by necessary implication had treated his so called individual property to be of HUF. After having done so, he cannot be heard to change stand and claimed the individual status."
7. We have heard both the parties and perused the records, especially the orders of the revenue authorities and Paper Book and Synopsis filed by the assessee.
8. With regard to ground no. 4 relating to deduction u/s 54-F fully as claimed by the assessee is concerned, Ld. Counsel of the assessee fairly conceded that this issue is covered in favor of the Revenue by the decision of the Punjab and Haryana High Court in the case of Pawan Arya vs. CIT in IT Appeal No. 613 of 2010 vide order dated 13th December, 2010 reported in (2011) 237 CTR (P&H) 210 wherein the Hon'ble Court has adjudicated the matter as under:-15
ITA NOS. 2565 & 2566/D/2012 "2. The assessee claimed exemption on capital gains on sale of flat on the ground of acquisition of two houses. The AO set off the capital gain against one of the houses but held the claim not to be admissible against second house. However, the CIT(A) upheld the claim of the assessee relying upon decision of Bangalore Bench of the Tribunal in D. Anand Basappa vs. ITO (2005) 92 TTJ (Bang) 597 : (2004) 91 ITD 53 (Bang). The said view has been reversed by the Tribunal as follows :
"6. We have carefully considered the rival submissions in the light of the material placed before us. The facts in the present case are clear. The assessee is claiming exemption in respect of two independent residential houses situated at different locations; one is in Dilshad Colony, Delhi and the other is in Faridabad. The assessee in the Special Bench case had also purchased two residential houses against sale consideration of residential flat at 'Gulistan' situated at Bhulabai Desai Road, Mumbai. One residential property was at Varun Apartments at Varsova and the other property was at Erlyn Apartments, Bandra and it was held by the Special Bench in the aforementioned case i.e. ITO vs. Ms. Sushila M. Jhaveri (supra) that the assessee is entitled to get exemption only in respect of one house of her choice. Therefore, the decision of Special Bench is fully applicable to the present case and the assessee can avail exemption under s. 54 in respect of one residential house only. The factual aspect has not been disputed by learned Authorised Representative. The only dispute before us is legal proposition that whether the assessee is entitled to get exemption in respect of two independent residential houses purchased out of sale consideration of another residential house.
Therefore, the issue is decided in favour of the Department and it is held that the assessee is entitled to get exemption under s. 54 in respect of one property only and no question has been raised by learned Authorised Representative regarding the choice of the property or the factual aspect of the matter.
7. So it relates to the decision relied upon by learned Authorised Representative of Hon'ble Karnataka High Court in the case of CIT vs. D. Anand Basappa, it may be mentioned that the said case cannot be applied to the case of the assessee on the ground that in that case the two houses purchased by the assessee were not independent properties and a factual finding has been recorded that the two apartments which were claimed to be exempted against sale consideration were situated side by side and it was also stated by the builder in that case that he has effected modification of the flats to make it as one unit by opening 16 ITA NOS. 2565 & 2566/D/2012 the door in between two apartments. On these facts, the Hon'ble High Court has observed that the fact that at the time when Inspector inspected the premises, the flats were occupied by two different tenants is not the ground to hold that apartment is not one residential unit. The fact that the assessee could have purchased both the flats in one single sale deed or could have narrated the purchase of two premises as one unit in the sale deed is not the ground to hold that the assessee had no intention to purchase two flats as one unit. From these observations of Hon'ble High Court, it is clear that while rendering the decision they have kept in mind that the purchase of two flats in the same building which were united for living of the assessee by making necessary modifications made the residential unit as one and, thus, that case could not be applied to the facts of the case of the assessee........."
3. We have heard learned counsel for the appellant.
4. As regards claim for exemption against acquisition of two houses under s. 54 of the Act, the same is not admissible in plain language of statute. In the judgment of Karnataka High Court in CIT vs. D. Ananda Basappa (2009) 223 CTR (Kar) 186 : (2009) 309 ITR 329 (Kar), referred to in the impugned order, exemption against purchase of two flats was allowed having regard to the finding that both the flats could be treated to be one house as both had been combined to make one residential unit. The said judgment, thus, proceeds on a different fact situation.
5. Learned counsel for the appellant wanted to raise certain other points which have neither been pleaded in the memo of appeal nor raised before the Tribunal. The same could not be allowed merely on the basis of oral submissions.
6. No substantial question of law arises.
7. The appeal is dismissed."
17
ITA NOS. 2565 & 2566/D/2012 8.1 Respectfully following the precedent as above, we decide this issue against the assessee.
9. With regard to issue relating to framing the impugned assessment order in the status of assessee as HUF instead of Individual and that too by disregarding the submissions of the assessee and by recording incorrect facts and findings. We find that the issue in the present appeal is regarding the Assessment Order passed by Ld. A.O. as HUF, which he was duty bound to pass it as individual and assessee HUF was not owning the land in question and thus there was no question of bringing to tax any capital gain in the hands of the appellant-HUF. We also find that A.O. computed the long term capital gain in the hands of the appellant-HUF on the basis that appellant HUF was the owner of the land in question, whereas the fact of the matter is that appellant HUF was not the owner of land in question and therefore, there could not be capital gain in the hands of the appellant HUF and capital gain cannot be assessed in the hands of the appellant HUF, merely on the basis that the appellant HUF filed its return by treating itself as the owner of land, more so when appellant HUF made detailed submissions with evidences during assessment proceedings itself showing that it was not the owner of the agricultural land and that the land in question was owned by the individual. We also find that Mr. Ramneek Choudhary along with other co-sharer sold the agricultural land in the year under assessment, which were interalia acquired by him through a court-decree from his father in F.Y. 1994-1995. 18
ITA NOS. 2565 & 2566/D/2012 Though the said land as per the provisions of Hindu Succession Act was individual property, but Mr. Ramneek Choudhary filed his income tax return for the first time for A.Y. 2007-08 i.e. the impugned year in the status of HUF showing wrongly the capital gain on sale of this land in the hands of HUF. During the assessment proceedings itself, assessee came to know about the correct legal position that the subject property belongs to the individual and not to HUF and made detailed submissions supported by evidences to establish that the impugned land was the property of the "individual" and not the property of HUF and capital gain tax liability can not be raised in its hands.Following pleadings and evidences would establish that the land in question was the property of individual and not the property of HUF and thus, any capital gain arising on the transfer of such land would not be the income of the HUF. We find that the Hon'ble Bombay High Court in the fcase of CIT vs. Khimji Teju Kaya reported in 115 ITR 168 (Bom) held that self acquired property of the father bequeated to Son by Will would constitute individual property and even if income from such property was shown in the return as HUF income, the income from that property is to be assessed in individual capacity. We also find that Ld. Counsel of the assessee at the time of heraing has also filed the copy of income tax return of Sh. Sunny Choudhary, who is brother of the assesee and other co sharers which shows that the same was filed in the capacity of 'ïndividual'. In view of above discussions, we find that both the assessees come under the individual 19 ITA NOS. 2565 & 2566/D/2012 capacity instead of HUF category. Accordingly, we cancel the orders of the authorities below on this issue in respect of both the assessees and allow the appeal of both the assessee on this ground.
10. In the result, the ITA No. 2565/Del/2012 (A.Y. 2007-08) (Rajnish Chaudhary) is partly allowed and ITA No. 2566/Del/2012 (A.Y. 2007-08) (Ramneek Chaudhary) is allowed in the manner as aforesaid.
Order pronounced in the Open Court 30-10-2014.
Sd/- Sd/-
[J.S. REDDY] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 30/10/2014
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
20