Income Tax Appellate Tribunal - Delhi
Bhup Singh, Faridabad vs Ito, Ward-1(2), Faridabad on 8 July, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'SMC' NEW DELHI
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
ITA No. 590/Del/2019
Assessment Year: 2015-16
Bhup Singh vs ITO
MCF-238, Baba Hirday Ram Ward 1(2)
Colony, Mujessar, Faridabad, Faridabad.
Haryana.
PAN No. BHWPS0157G
APPELLANT RESPONDENT
Assessee by Shri Gaurav Kataria, CA
Revenue by Shri S.L. Anuragi, Sr. DR
Date of Hearing 04.07.2019
Date of Pronouncement 08.07.2019
ORDER
This appeal filed by the assessee is directed against the order dated 29.11.2018 of the Ld. CIT(Appeals), Faridabad relating to AY 2015-16.
2. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 27.02.2017 declaring total income of Rs. 3,44,730/-. During the course of assessment proceedings, the AO noted that the assessee along with four others has sold his land in Amarpur Kondala, Aligarh for a consideration of Rs. 3,85,00,000/- vide sale deed dated 14.01.2015. The assessee being 1/5th shareholder received Rs. 77,00,000/- from 2 ITA No. 590/Del/2019 the said land sale. The assessee claimed exemption on capital gain from the land deal in the return of income treating the land as agricultural land. The AO, therefore, asked the assessee to explain as to why the land should not be treated as capital asset and capital gain tax charged on the capital gain. It was submitted by the assessee that the land was an agricultural land and does not fall within the meaning of capital asset defined u/s 2(14)(iii)(b) of the I.T. Act. However, the AO rejected the said explanation on the ground that the land in question is 8 kms from the bus stand, hospital and railway station, Aligarh and the said land was sold to M/s Amaar Frozen Foods Private Limited. Thus, the land falls within the meaning of capital asset as defined in section 2(14)(iii)(b) of the Act. Rejecting the various explanation given by the assessee the AO determined the capital gain at Rs. 16,37,826/-.
3. Before Ld. CIT(A) the assessee raised an additional ground stating that assessee has invested the capital gain on transfer of the agriculture land for purchase of residential house property and, therefore, is entitled to exemption u/s 54F of the Act. It was submitted that assessee has made payment of Rs. 31,91,500/- towards such purchase and has incurred Rs. 1,59,600/- towards stamp duty. However, Ld. CIT(A) rejected the additional ground relying on the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (2006) reported in 157 Taxman 1 (SC), wherein it has been held that no new claim can be made except through a valid return of income or a valid revised return of 3 ITA No. 590/Del/2019 income. He further noted that even on merit also the assessee is not entitled for the claim of deduction u/s 54F as the same transaction for the purchase of plot was not in the name of assessee but was in the name of the wife of the assessee. So far as the addition made by the AO was concerned, he upheld the same.
4. Aggrieved with such order of the CIT(A) the assessee is in appeal before the Tribunal by raising following grounds of appeal:
1. "On the facts and circumstances of the case, the order passed by Ld. CIT(A) is bad both in eyes of law and on facts.
2. On the facts and circumstances of the case, the order passed by Ld. CIT(A) is not a speaking order as per section 250(6) of the Income Tax Act, 1961.
3. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in upholding the addition made by Ld. AO by holding that the agricultural land sold by assessee at Amarpur Kondala Tehsil of Aligarh district, Uttar Pradesh is a capital asset hence liable to capital gain tax.
4. The Ld. CIT(Appeals) has erred on facts and in law in disallowing the additional claim of the assessee u/s 54F of the Income Tax Act, 1961.
5. That the Ld. CIT(A) erred in law as well as fact in passing the order without taking into consideration the details and evidences submitted by the appellant.
6. That the Ld. CIT(A) erred in law and fact as well by upholding interest u/s 234b, 234C and 234D of the Income Tax Act, 1961 without considering the merit of the case as the interest in assessee's case was not leviable.
7. That the appellant reserves the right to add, modify, alter, amend or delete any of the grounds."
5. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A) in rejecting the additional ground raised before 4 ITA No. 590/Del/2019 him and also the denial of exemption u/s 54F of the Act on account of the land being purchased in the name of the wife of the assessee. He submitted that the order of the CIT(A) that no new claim can be made during the appellate proceedings except through valid return of income or a valid revised return of income is not correct in view of the decision of Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. reported in 349 ITR 336 and various other decisions as per the paper book filed. So far as the observation of the Ld. CIT(A) that assessee is not entitled to deduction u/s 54F of the Act since the purchase was not made in the name of the assessee but in the name of the wife of the assessee is concerned, he submitted that the entire payments were made out of the bank account of the assessee and, therefore, merely because the property has been purchased in the name of the wife of the assessee, the deduction u/s 54F of the Act cannot be denied to the assessee.
6. Referring to the decision of Hon'ble Delhi High Court in the case of CIT vs. Ravinder Kumar Arora reported in 342 ITR 38 he submitted that the Hon'ble High Court has held that where the assessee has included the name of his wife and the property has been purchased jointly in the names of the assessee and his wife it would not make any difference and the conditions stipulated in section 54F stand fulfilled.
7. Referring to the decision of the Hon'ble Madras High Court in the case of CIT vs. V. Natarajan reported in 287 ITR 271, he 5 ITA No. 590/Del/2019 submitted that where the house was purchased in the name of the assessee's wife deduction u/s 54F is to be allowed. Referring to the decision of Hon'ble Delhi High Court in the case of CIT vs. Shri Kamal Wahal reported in 351 ITR 4, he submitted that the Hon'ble High Court in the said decision has held that where the assessee has purchased the house in the name of his wife deduction u/s 54F of the Act is to be allowed and the new residential house need not be purchased by the assessee in his name nor is it necessary that it should be purchased exclusively in his name. He, accordingly, submitted that the CIT(A) is not justified in rejecting the claim of deduction u/s 54F of the Act merely because the property has been purchased by the assessee in the name of his wife.
8. Ld. DR, on the other hand, strongly relied on the order of the CIT(A).
9. I have considered the rival arguments made by both the sides and perused the orders of the AO and the CIT(A). I have also considered the various decisions cited before me. I find the only issue to be decided in the impugned appeal is regarding the allowability of deduction u/s 54F of the Act on account of purchase of the house property by the assessee in the name of his wife when such deduction was not claimed in the original return or in the revised return and was claimed for the first time before the CIT(A). The Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. reported in 349 ITR 6 ITA No. 590/Del/2019 336 has held that the appellate authorities have power to consider a claim not made in the return of income. While doing so, the Hon'ble High Court has relied on various decisions including the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT reported in 284 ITR 323 and the decision of Hon'ble Delhi High Court in the case of CIT vs. Jai Parabolic Springs Ltd. (2008) reported in 306 ITR 42. It has been held by the Hon'ble Delhi High Court in the case of Jai Parabolic Springs Ltd. (supra) that the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) has made it clear that the decision was limited to the power of the assessing authority to entertain a claim for deduction otherwise then by a revised return and did not impinge on the powers of the Tribunal. It has been held by the Hon'ble Delhi High Court that there was no prohibition on the powers of the Tribunal to entertain an additional ground which is according to the Tribunal arose in the matter and for the just decision of the case.
10. I, therefore, hold that the finding of the ld. CIT(A) that the appellate authority has no power to consider a claim not made in the return is incorrect and not in accordance with law. I, therefore, agree with the Ld. Counsel for the assessee that the appellate authority has power to consider a claim not made in the return.
11. Now coming to the allowability of deduction u/s 54F on account of purchase of the residential property by the assessee in the name of his wife is concerned, it has been held in various 7 ITA No. 590/Del/2019 decisions that assessee cannot be denied the benefit of deduction under section 54F when the property has been purchased in the name of the wife of the assessee instead of purchasing the same in the name of the assessee himself. The Hon'ble Delhi High Court in the case of CIT vs. Shri Kamal Wahal reported in 351 ITR 4 has held that the new residential house need not be purchased by the assessee in his name nor is it necessary that it should be purchased exclusively in his name for claiming deduction u/s 54. Accordingly, the deduction u/s 54F was allowed where the property was purchased in the name of the wife of the assessee. The Hon'ble Madras High Court in the case of CIT vs. V. Natarajan reported in 287 ITR 271 has allowed the deduction u/s 54 where the house was purchased in the name of the assessee's wife. I find the Hon'ble Karnataka High Court in the case of DIT vs. Mrs. Jennifer Bhide reported in 349 ITR 80 has held that where the entire consideration has flown from her bank account, merely because either in the sale deed or in the bond, her husband's name is also mentioned, the assessee cannot be denied the benefit of deduction u/s 54 and 54EC of the Act. The various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that deduction u/s 54F should not be disallowed, merely because the property has been purchased in the name of the wife of the assessee when the consideration for the purchases has flown from the sale proceeds of the capital asset. In view of the above discussion, I am of the considered opinion that the assessee should not be denied the 8 ITA No. 590/Del/2019 benefit of deduction u/s 54F of the Act merely because the property has been purchased in the name of the wife of the assessee when the money has been flown from the bank account of the assessee, wherein the sale proceeds were deposited. However, this fact needs verification. I, therefore, restore this issue to the file of the AO with a direction to verify the bank account of the assessee that the sale proceeds of the land sold was deposited in the bank account and has been utilized for the purchase of the residential property in the name of the wife of the assessee. If the AO finds the same to be correct then he is directed to allow the claim of deduction u/s 54 of the Act. Needless to say the AO shall decide the issue as per fact in law after giving due opportunity of being heard to the assessee. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
12. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 08/07/2019 Sd/-
(R.K. PANDA) ACCOUNTANT MEMBER Dated: 08/07/2019 *Kavita Arora 9 ITA No. 590/Del/2019 Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation 04.07.2019 Date on which the typed draft is placed before the dictating 05.07.2019/ Member 08.07.2019 Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS 08.07.19 Date on which the fair order is placed before the Dictating Member 08.07.19 for pronouncement Date on which the fair order comes back to the Sr. PS/PS 08.07.19 Date on which the final order is uploaded on the website of ITAT 08.07.19 Date on which the file goes to the Bench Clerk 08.07.19 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order