Saritha Jain Vs ITO (ITAT Bangalore)
In a recent development, the Income Tax Appellate Tribunal (ITAT) in Bangalore passed a significant order favoring Saritha Jain, who had appealed against the Commissioner of Income Tax (Appeals) order dated 07.12.2022 for the Assessment Year 2013-14. The appeal covered multiple grounds challenging the assessment and denial of exemptions under various sections of the Income Tax Act.
Key Grounds of Appeal:
1. Legal and Evidentiary Concerns: Saritha Jain raised the contention that the order passed by the Commissioner of Income Tax (Appeals) was opposed to law, weight of evidence, natural justice, and probabilities in the case.
2. Disputed Assessment: The appellant denied liability to be assessed at Rs. 1,98,89,503/-, challenging the assessment against the returned income of Rs. 8,08,010/-.
3. Capital Gains and Section 50C: Saritha Jain argued that no long-term capital gains were assessable for the year, questioning the justification for invoking section 50C of the Income Tax Act by adopting guidance value as against the sale agreement.
4. Validity of Section 50C Application: Saritha Jain contested the application of section 50C, challenging the decision of the Assessing Officer in adopting the date of executing the sale deed for valuation instead of considering the guideline value as on the date of entering an agreement to sell.
5. Finance Bill 2016 Proviso: The appellant argued that the authorities should have considered the provisions of the Finance Bill 2016 and its proviso, which could provide relief in the case.
6. Property Impediments: Saritha Jain highlighted the failure of the authorities to consider the impediments in the property due to acquisition for a layout known as Arkavathi Layout, leading to substantial additions under the head of long-term capital gains.
7. Valuation Officer Reference: The appellant claimed that the Assessing Officer should have referred to the valuation officer under section 50C(2) of the Income Tax Act, and any addition without reference should be deleted.
8. Exemption Under Section 54: Saritha Jain contested the disallowance of the claim of exemption under section 54, emphasizing the inadequacy of appreciation of evidence filed by the appellant regarding the existence of a building on the transferred property.
9. Interest Liability: Denying liability to pay interest under section 234A and 234B, the appellant argued that no additional tax liability was determined by the Assessing Officer.
10. Grounds Modification: The appellant reserved the right to add, alter, modify, substitute, change, and delete any or all of the grounds and to file a paper book at the time of hearing the appeal.
Key Observations and Tribunal Decision:
1. Section 50C Applicability: The Tribunal found in favor of Saritha Jain, ruling that the provisions of section 50C were not applicable for the Assessment Year 2013-14. The Tribunal highlighted the amendment brought about by the Finance Act, 2016, and clarified its effective date, thus rejecting the application of section 50C.
2. Exemption Under Section 54: The Tribunal allowed Saritha Jain’s claim for exemption under section 54, emphasizing that the sale deed clearly referred to the immovable residential property, and supporting evidence such as BESCOM bills, Katha, tax paid receipts, and photos of the structure were presented.
3. Overall Outcome: The Tribunal allowed the appeal, setting aside the Commissioner of Income Tax (Appeals) order. The decision provides relief to Saritha Jain on various grounds, offering a favorable outcome in terms of capital gains assessment and exemption under relevant sections of the Income Tax Act.
Conclusion: The recent order by the ITAT Bangalore in favor of Saritha Jain reflects a comprehensive consideration of the grounds raised in the appeal. The decision underscores the importance of precise legal arguments and supporting evidence in tax matters, and it serves as a notable victory for the appellant against the disputed income tax assessment.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
Present appeal arises out of order dated 07.12.2022 passed by the Ld.CIT(A)-12, Bangalore for A.Y. 2013-14 on following grounds of appeal:
“1. The order passed by the learned Commissioner of Income Tax (Appeals) — 12, Bengaluru (“CIT(A)”) under section 25o of the Act insofar as it is against the Appellant, is opposed to law, weight of evidence, natural justice and probabilities on the facts and circumstances of the Appellant’s case.
2. The Appellant denies himself liable to be assessed at 1,98,89,503/- as against the returned income of Rs. 8,08,010/- on the facts and circumstances of the case.
3. The Appellant submits that no long term capital gains are assessable for this year on the facts and circumstances of the case.
4. The learned CIT(A) is not justified in upholding the decision of the Assessing Officer in invoking the provisions of section 50C of the Act and bringing a sum of Rs. 1,90,78,000/- as long term capital gains, on the facts and circumstances of the case.
5. The learned CIT(A) is not justified in upholding the decision of the Assessing Officer in adopting the date of executing the sale deed instead of considering the guideline value as on the date of entering an agreement to sell entered by the appellant with the buyers and ought not to have applied the guidance value as on the date of execution of the sale deed for the purpose of section 50C of the Act on the facts and circumstances of the case.
6. Without prejudice, the authorities below ought to have held that the provisions of the Finance Bill 2016 by insertion of a proviso are applicable and given the relief on the facts and circumstances of the case.
7. The authorities below are not justified in not taking note of the impediments in the property by way of acquisition of the property for a layout known as Arkavathi Layout and non-consideration of this vital aspect has led to huge addition under the head long term capital gains which requires to be reduced to the returned income on the facts and circumstances of the case.
8. The learned CIT(A) failed to appreciate that the Assessing Officer ought to have referred to the valuation officer in terms of section 50C(2) of the Act and any addition without reference is liable to be deleted on the facts and circumstances of the case.
9. The authorities below are not justified in law in disallowing the claim of exemption under section 54 of the Act amounting to Rs. 66,01,550/- under the facts and circumstances of the case without properly appreciating the evidences filed by the appellant in connection to the evidences filed by the appellant in connection to the existence of a building on the immovable property transferred by the appellant under the facts and circumstances of the case.
10. The authorities below erred in not appreciating the irrefutable evidence of the registered sale deed, property tax and the electricity payment which fortifies the existence of the building and consequently, the denial of exemption under section 54 of the Act is not in accordance with law on the facts and circumstances of the case.
11. The Appellant denies the liability to pay interest under section 234A and 234B of the Act in view of the fact that there is no liability to additional tax as determined by the learned Assessing Officer on the facts and circumstances of the case.
12. The Appellant craves to add, alter, modify, substitute, change and delete any or all of the grounds and to file a paper book at the time of hearing the appeal.
13. In the view of the above and other grounds that may be urged at the time of the hearing of appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.”
Brief facts of the case are as under:
2.1 The assessee is an individual and a non-resident Indian residing in Germany. She filed her return of income for year under consideration declaring total income of Rs.8,08,010/-. The case was selected for scrutiny and notice u/s. 143(2) was issued to assessee in response to which the representative of assessee appeared from time to time and furnished the details as called for.
2.2 The Ld.AO noted that during the relevant financial year, assessee had sold following immovable properties and had claimed exemption u/s. 54 as under:
“During the previous year relevant to A. Y 2013-1 4, the assessee has sold the following immovable properties on 9.11.2012.
