PCIT Vs Jangpal Singh Tanwar (Punjab and Haryana High Court)
Summary: The Punjab and Haryana High Court dismissed the Revenue’s appeal under Section 260A of the Income Tax Act, 1961, holding that no substantial question of law arose against the Income Tax Appellate Tribunal’s decision allowing the assessee’s claim of exemption under Section 54F of the Income Tax Act, 1961.
The case concerned Assessment Year 2016-17. The assessee, a retired pensioner, had filed his return on 05.08.2016 declaring income of Rs.4,21,230/-, which was accepted by the Assessing Officer on 07.12.2018. The income was declared under the heads “Salaries” and “Income from Other Sources.” Subsequently, in proceedings under Section 263, the Principal Commissioner of Income Tax, Chandigarh, set aside the assessment order on the ground that the Assessing Officer had failed to examine the assessee’s eligibility under Section 54F and directed a fresh assessment.
The Tribunal recorded that the assessee had sold residential plot No.227, Mansa Devi Complex at Urban Estate, Panchkula, for Rs.1,28,50,000/- on 14.12.2015. The plot had been allotted by HUDA on 10.12.2010 for Rs.10,83,815/-. The computation of income showed capital gain of Rs.97,78,721/- on the plot. On 18.12.2015, the assessee purchased House No.365, Sector 20A, Chandigarh, jointly in his own name and in the names of his wife, Smt. Sumitra, and son, Sh. Sukhbir Singh, for a sale consideration recorded in the judgment as Rs.1,82,00,000/-.
During the revisional proceedings, the Revisional Authority held that the assessee had invested only Rs.60,00,000/- towards purchase of the property. Since the assessee was considered to have only a one-third share, the authority held that exemption of Rs.46,16,671/- could be claimed under Section 54F, whereas the assessee had claimed exemption of Rs.98,78,721/-. The excess claim was consequently stated to be Rs.51,62,050/-.
The Tribunal, however, noted that the assessee had produced bank statements before both the Assessing Officer and the Revisional Authority. It further noted that the assessee’s son, Sh. Sukhbir Singh, had obtained a house loan, a fact which the Revisional Authority had ignored. The Tribunal held that the Long Term Capital Gain of Rs.97,78,721/- had been invested by the assessee in purchasing House No.365 and that there was no evidence supporting the conclusion that only a one-third share belonged to the assessee. According to the Tribunal, the assessee had invested the entire amount for purchasing the property, while his son had also contributed after obtaining a bank loan.
The Tribunal further distinguished Kamal Kant Kamboj vs. ITO, 397 ITR 240 (P&H), which had been relied upon by the Revenue. As recorded in the judgment, that case involved an assessee who had invested money in a property exclusively in the name of his wife. In the present case, by contrast, the assessee had invested the entire money in purchasing the house and his son had also borrowed a loan for purchasing it. The Tribunal therefore held that merely mentioning the names of the wife and son as co-owners would not disentitle the assessee from claiming exemption under Section 54F.
Before the High Court, the Revenue also argued that the matter ought to have been remanded to the Assessing Officer. The High Court rejected that contention. It noted that the assessee was a retired pensioner and that the sale of the Panchkula plot and subsequent purchase of the Chandigarh house were not disputed by the appellant-authority. The Court observed that, although the assessee was stated to own only a one-third share and the remaining shares belonged to his wife and son, he had invested his entire money after selling the Panchkula plot in purchasing the Chandigarh house.
The High Court accordingly held that the Tribunal had rightly found the assessee entitled to seek exemption under Section 54F. It found no ground to interfere with the Tribunal’s judgment, holding that the Tribunal had appreciated the facts in the right perspective and that no substantial question of law arose for consideration. The Revenue’s appeal was consequently dismissed.
Cases Discussed
- Kamal Kant Kamboj vs. ITO, 397 ITR 240 (P&H) — distinguished by the Tribunal because the assessee in that case had invested money in a property exclusively in his wife’s name, whereas in the present case the assessee had invested the entire money in the house and his son had also contributed through a bank loan.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. The instant appeal under Section 260A of the Income Tax Act, 1961, has been filed against the order dated 22.06.2022 (Annexure A-4) passed by the Income Tax Appellate Tribunal, Chandigarh, whereby appeal filed by the respondent-assessee, for the assessment year 2016-2017, against the order dated 21.03.2021 passed by the Principal Commissioner of Income Tax, Chandigarh, has been accepted.
2. The present appeal relates to the assessment year 2016-2017, for which, the assessee-respondent had filed return on 05.08.2016 declaring an income of Rs.4,21,230/-. The said return was accepted by the Assessing Officer vide order dated 07.12.2018 (Annexure A-1). The income had been declared under the heads “Salaries” and “Income from Other Sources.” Thereafter, during proceedings under Section 263 of the Act, the Principal Commissioner of Income Tax, vide order dated 21.03.2021 (Annexure A-2), set aside the order of the Assessing Officer on the ground that he (Assessing Officer) had failed to examine the assessee’s eligibility under Section 54F of the Income Tax Act. The Assessing Officer was directed to pass a fresh order. Against the said order, the assessee preferred an appeal before the Income Tax Appellate Tribunal, Chandigarh.
3. On appeal, the Tribunal observed that the assessee is a retired pensioner and he had sold residential plot No.227, Mansa Devi Complex (MDC) at Urban Estate, Panchkula, for a sale consideration of Rs.1,28,50,000/- on 14.12.2015. The said plot had been allotted to him by HUDA on 10.12.2010 for a sum of Rs.10,83,815/-. As per the computation of income placed on record, he had earned capital gain of Rs.97,78,721/- on this plot. During the assessment proceedings, the assessee had purchased House No. 365, Sector 20A, Chandigarh on 18.12.2015 jointly in his name and in the name of his wife Smt. Sumitra & son Sh. Sukhbir Singh for a sale consideration of Rs.1,82,00,000/-.
4. During re-assessment proceedings, the Revisional Authority had held that the assessee had invested Rs.60,00,000/- only for purchasing the above said property. Since, he was owner of the house to the extent of 1/3rd share, it was held that he could claim exemption of Rs.46,16,671/- under Section 54F of the Income Tax Act, but the assessee had claimed exemption of Rs.98,78,721/-. The opinion of the Revisional Authority was that the assessee had claimed exemption in excess to the tune of Rs.51,62,050/-.
5. However, on appeal, the Tribunal observed that the assessee had produced the bank statements before the Assessing Officer as well the Revisional Authority. Sh. Sukhbir Singh, son of the assessee, had taken a house loan and this fact has been ignored by the Revisional Authority. The total price of the property was Rs.1,28,50,000/-, which included the loan taken by Sh. Sukhbir Singh, son of the assessee-respondent. The Long Term Capital Gain of Rs.97,78,721/- was also invested by the assessee by purchasing a house i.e. H.No.365, Sector 20A, Chandigrh. Since the entire amount had been invested in the property, which was not disputed by the Revenue, the Tribunal held that there was no evidence to support the conclusion that only 1/3rd share was belonging to the assessee. The assessee-respondent had invested the entire amount for purchasing the property and his son had also contributed in the same after taking loan from the bank. In that situation, merely mentioning the name of his wife and son as co-owners of the property, would not dis-entitle the assessee to claim exemption. The Tribunal had also clarified that the judgment passed in Kamal Kant Kamboj vs. ITO, 397 ITR 240 (P&H), referred to by the Revenue, will not be applicable to the facts of the present case, as in that case, the assessee had invested money in the property exclusively in the name of his wife and in this background, he could not claim exemption for long term capital gain under Section 54F of the Act. However, in the present case, the respondent-assessee has invested the entire money in buying a house and his son had also borrowed a loan for purchasing the said property. Merely mentioning the names of his wife and son as co-owners of the property, would not dis-entitle the assessee to claim exemption under Section 54F of the Act.
6. The argument raised by learned counsel for the appellant that the matter should have been remanded to the Assessing Officer, is also rejected on the ground that the assessee is a retired pensioner and the fact regarding sale of his plot in Panchkula and thereafter, purchase of a house in Chandigarh, is not being disputed by the appellant-authority. The issue relates to the fact that the assessee is owner of the house only to the extent of 1/3rd share and remaining share in the house belongs to his wife and son respectively. After selling his plot in Panchkula, the assessee had invested his entire money while purchasing a house in Chandigarh. Therefore, the Tribunal has rightly held him entitled to seek exemption under Section 54F of the Act.
7. After going through the impugned judgment, no ground is made out to interfere therein, as the same has been passed after appreciating the facts in the right perspective. No substantial question of law arises for consideration.
8. Resultantly, finding no merits, present appeal is dismissed.
