Case Law Details

Case Name : A. Tamil Ponni Vs ITO (ITAT Chennai)
Appeal Number : ITA No. 3112/Chny/2019
Date of Judgement/Order : 25/02/2020
Related Assessment Year : 2008-09

A. Tamil Ponni Vs ITO (ITAT Chennai)

In the given case, the issue under consideration is if the new property has been invested in the name of assessee’s husband, then in such case whether the exemption under Section 54F can be denied to the assessee or not ?

The assessee in instant case had reinvested in the new property in the name of her husband. We find that there is no dispute with regard to the fact of making reinvestment in new property. The only dispute is that reinvestment in new property has been made by the assessee in the name of her husband instead of in her name. This is a sole reason for denial of exemption under Section 54F of the Act.

The Ld. A.R. has been heavily relied upon the case of C.I.T Vs. V. Natarajan reported in 287 ITR 271 (Mad.). Respectfully following the aforesaid decision, ITAT hold that even though the new property has been invested in the name of assessee’s husband, exemption under Section 54F cannot be denied to the assessee.

FULL TEXT OF THE ITAT JUDGEMENT

The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-1, Trichy in ITA No. 332/2011-12/C.I.T(a)-1/TRY, dated 21.08.2019 for the assessment year 2008-09.

2. Though the assessee has raised several grounds before us, the effective issues that are to be decided by this Tribunal are as under:-

a) Whether the sale consideration of Rs. 37,92,600/- on sale of land should be considered as against the actual sale consideration received in the sale of Rs. 19,85,000/- for the purpose of computation of capital gains in the facts and circumstances of the case.

b) Whether the assessee is entitled for claiming cost of development of Rs. 5 lakhs while computing the capital gains in the facts and circumstances of the case.

c) Whether the assessee is entitled for claim of exemption under Section 54F of the Act in the facts and circumstances of the case.

3. We have heard rival submissions and perused the material on record. We find that the assessee had sold 76 cents of land at Tharanallur village, Trichy on 25.02.2008. Prior to that date, the assessee had entered into an agreement for sale wherein the consideration amount was agreed at Rs. 37,92,600/- whereas the consideration as per the registered sale deed was Rs. 19,85,000/-. The assessee disclosed the capital gains by adopting the sale consideration at Rs. 19,85,000/-. This sale consideration figure was sought to be substituted by the Ld. A.O with Rs. 37,92,600/- being the consideration figure mentioned in the agreement for sale. The ld. A.O also recorded a statement from the purchaser of the land Smt.R.Pushpavalli on 23.11.2011 wherein on oath, she had categorically confirmed that she had paid actual consideration of Rs. 37,92,600/- to the assessee in cash in three installments. This fact when confronted with the assessee, the assessee was not able to counter the same. Accordingly, the Ld. A.O. adopted the sale consideration figure of Rs. 37,92,600/- as full value of consideration while computing the capital gains on transfer of land. This action was upheld by the learned CIT(A). We do not find any infirmity in the said action of learned CIT(A) upholding the Ld. A.O’s order with regard to adoption of sale consideration.

3.1 We find that the assessee had made a claim of 5 lakhs towards cost of improvement on the pretext that the said sum was incurred by her towards cost of development and assessee had incurred this expenditure through a mason Shri C.Vasudevan. The assessee had merely produced the receipt for payment of 5 lakhs from Shri C. Vasudevan to substantiate her claim. The Ld. A.O disbelieved the same and further observed that the PAN and address of Shri C.Vasudevan was not produced before him to check the correctness of claim made by the assessee. Accordingly, the Assessing Officer denied the benefit of grant of deduction of cost of improvement at 5 lakhs while computing the capital gains. This action was upheld by the learned CIT(A).

4. Before us, the Ld. A.R. argued that without incurring of development cost on the said land, the sale of land could not have happened. Hence, Ld. A.R. vehemently pleaded that assessee be given a deduction towards cost of improvement of 5 lakhs while computing the capital gains, but we find that except merely making a bald statement, the Ld. A.R. was not able to furnish any other evidence before us to substantiate the claim. However, as the last opportunity in the process of identifying truth behind the transfer of land by the assessee, we deem it fit and appropriate, in the interest of justice and fair play, to remit this aspect of the issue to the file of Assessing Officer for denovo adjudication i.e only with respect to amount of deduction towards cost of improvement of .5 lakhs while computing the capital gains. We hold that the assessee should furnish all necessary evidences in support of her claim before the Assessing Officer and the Assessing Officer should also make cross verification with Shri C.Vasudevan or any other person through whom the development work has been carried out to identify the truth involved thereon. Hence this aspect of the issue is remitted back to the file of A.O. for afresh adjudication.

5. With regard to claim of exemption under Section 54F of the Act, we find that the assessee in instant case had reinvested in the new property in the name of her husband. We find that there is no dispute with regard to the fact of making reinvestment in new property. The only dispute is that reinvestment in new property has been made by the assessee in the name of her husband instead of in her name. This is a sole reason for denial of exemption under Section 54F of the Act. We find that the Hon’ble jurisdictional High Court in the case of C.I.T Vs. V. Natarajan reported in 287 ITR 271 (Mad.), which has been heavily relied upon by Ld. A.R. before us, had held as under:-

“In the instant case, the assessee purchased a house property at Anna Nagar in the name of his wife Smt. Meera after selling a property at Bangalore, but the same was assessed in the hands of the assessee. Hence, as correctly held by the learned CIT(A) as well as by the Tribunal, the assessee is entitled for exemption under Section 54F of the Act.

Respectfully following the aforesaid decision, we hold that even though the new property has been invested in the name of assessee’s husband, exemption under Section 54F cannot be denied to the assessee. We direct the A.O. accordingly. The grounds raised by the assessee are disposed off in the aforesaid manner.

6. In the result, the appeal of assessee is allowed for statistical purposes.

Order pronounced in the open court on 25th February, 2020, at Chennai.

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