TaxTMI 
TaxTMI 
2021 (3) TMI 1064
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....sessee as representative assessee of Shri Ashok Tyagi u/s 160 of the Income Tax Act. Infact, the provisions of section 160(1)(i) are not applicable and therefore, assessment was to be framed by the Assessing Officer directly in the name of non-resident Mr Ashok Tyagi. 4. That the Assessing Officer has erred in law and on facts treating the assessee as agent of non-resident Mr Ashok Tyagi without passing a specific order u/s 163 of the Income Tax Act. 5. That the Ld. CIT(A) has erred in law and on facts in treating the assessee as agent of the non-resident Mr Ashok Tyagi u/s 163 of the Income Tax Act without giving him any opportunity of being heard as to his liability in the capacity of being treated as agent and thus has violated the principles of natural justice. 6. That without admitting, even otherwise the Assessing Officer and consequently the Ld. CIT(A) has erred in not framing the separate assessment in the name of assessee in representative capacity of nonresident Mr Ashok Tyagi. Therefore, the order passed by the Assessing Officer is contrary to provisions of section 161(1) of the Income Tax Act. Hence, the same is liable to be set aside....
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.... that he has deposited cash of Rs. 53,21,000/- in Bank of India. The source of above deposit was sale of property made by one Shri Ashok Tyagi by whom the assessee was holding power of attorney. Shri Ashok Tyagi, residing in New York, authorized the assessee to sale the property. Full amount of sale of property in the form of Rs. 53,21,000/- in cash of Rs. and 63,20,000/- through cheque amounting in all to Rs. 1,06,41,000/- was deposited in the bank account of assessee and there from transferred to Shri Ashok Tyagi. The assessee submitted the copies of the sale deed showing above transaction and further copy of general power of attorney appointing the assessee as an agent of Shri Ashok Tyagi was also filed. Assessee has further deposited cash in his bank account with Syndicate Bank which represented the repayment of loan from Shri Pankaj Kumar to whom the loan was given on 13.10.2010. The copies of the bank accounts were also furnished. Assessee also furnished the confirmation of Shri Pankaj Kumar of the loan and its repayment, confirmation of Shri Ashok Tyagi towards the receipt of above sum stating that Shri Ashok Tyagi has authorized assessee to sale the parental agricultural la....
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....as on 01.04.1981. It was further stated that there were some improvement in the land in 1992-93 for land filling etc as it is mentioned in the valuation report. Against the sale of property Mr. Ashok Tyagi has purchased two residential units for Rs. 57,79,893/- and copies of the purchase deed, bank account and allotment letters were filed. Therefore, he is also entitled to deduction u/s 54F of the act. 4. Ld AO then proceeds to make assessment of income earned by Shri Ashok Tyagi in the hands of the assessee by invoking section 160 and 162 of the Income Tax Act, 1961 as according to him assessee is a 'representative assessee' of Shri Ashok Tyagi and long term capital gain is chargeable to tax in the hand of the assessee. He therefore, held that Shri Manish Tyagi is a representative assessee of Shri Ashok Tyagi u/s 160(2) of the Act. He proceeds to assessee the capital gain in the hands of Assessee. He computed the capital gain of sale consideration of plot of land of Rs. 1,05,20,000/-, granted deduction of the cost of acquisition of Rs. 18,27,554/- computed long term capital gain of Rs. 86,92,446/-. With respect to the purchase of residential properties of Shri Ashok Tyagi am....
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.... as under:- Ground No. 2-Addition of Rs. 8,20,000/- 2. That the Ld. CIT(A) has erred in granting relief of only Rs. 50.000/- to the assessee out of total addition of Rs. 8,20,000/- made by the Assessing Officer on account of cash credits in syndicate bank account and confirming the addition of Rs. 7,70,000/- ignoring the documents / explanation offered by the assessee. Facts a) Vide letter-dated 26.04.2013, assessee enclosed ledger accounts of syndicate bank and statement of ICICI bank explaining all the credit and debit entries. b) Assessing Officer required the assessee to explain the source of cash deposit of Rs. 13,20,000/- in syndicate bank on various dates. c) Vide letter-dated 04.10.2013, assessee furnished the cash flow statement for the year ended 31.03.2011 and stated that all the entries of the bank have been incorporated in the cash flow statement. d) Vide letter-dated 17.10.2013, assessee explained that he was having opening cash in hand of 75,17,397/- out of which 73.80 lakh had been deposited on 08.04.2010, 75 lakh deposited on 14.05.2010, and 72 lakh each were deposited on 07.06.2010 and 24.11.2010. 740,000/- wer....
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....lained cash credit. h) Assessing Officer has made the addition in an arbitrary manner without giving any reason and therefore, deserves to be deleted." 9. The ld DR extensively read the order of the ld AO and ld CIT(A). He submitted that there is no infirmity in the order passed by the lower authorities. He submitted that the assessee has been given a proper opportunity of hearing before all the authorities and therefore there is no reason for not upholding the order of the lower authorities. 10. We have carefully considered the rival contentions and perused the orders of lower authorities on this issue. The ground No. 2 relates to the addition of Rs. 7,70,000/- in the hands of the assessee on account of cash deposit in Syndicate Bank. The assessee has deposited a cash of Rs. 13,20,000/- in Syndicate Bank on various dates. In the cash flow statement, the assessee has incorporated all the entries of the cash withdrawal and deposit. The claim of the assessee is that he was having an opening cash hand of Rs. 517397/- and has also sold a motor car for Rs. 5,00,000/- and therefore the total deposit covers the above sum after considering the current year income. . Therefor....
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....ore he has granted a relief of Rs. 50,000/- only and sustained the addition of Rs. 7,70,000/-. In view of the fact that to deposit a sum of Rs. 1,320,000 in the bank account of the assessee, assessee has received Rs. 550,000 on sale of car and further Rs. 517,397/- available with the assessee is an opening cash on hand, further the assessee has also cash flow generated during the year of approximately Rs. 320,000 out of his professional income justifies the deposit of cash into the bank account of the assessee of Rs. 1,320,000. In view of above uncontroverted facts, we do not find any justification for addition of all the above sum of Rs. 7,70,000/- in the hands of the assessee. In view this ground No. 2 of the appeal of the assessee is allowed. 11. Ground number 3 is with respect to the addition of Rs. 5,655,874 in the hence of the assessee on account of long-term capital gain chargeable to tax on account of sale of property by 13 Mr Asoka Tyagi, non-resident, in the hence of the assessee holding assessee as an agent of the non-resident as he is holding a power of attorney and the property is sold by the assessee and the money is transferred to the non-resident owner. 12. Th....
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....^56,55,874/- belonging to Shri Ashok Kumar Tyagi, as his personal income. CIT(A) confirmed the order of Assessing Officer. CONTENTIONS Representative assessee cannot be assessed in his individual capacity in respect of income of the person represented by him a) Section 160(1) defines 05 categories of representative assessees in respect of the particular incomes set out against each. As per section 160(1 )(i), in respect of the income of a non-resident specified in sub-section (1) of section 9, representative assessee means the agent of a nonresident, including a person who is treated as an agent u/s 163. By virtue of section 160(2) a representative assessee is deemed to be an assessee. b) Section 161(1), in defining the liability of a representative assessee, makes him subject to the same duties, responsibilities and liabilities, in respect of that income, as if the income were income received by or accruing to or in favour of him beneficially. He is liable to be assessed in his own name in respect of that income, but separately from the assessment of his own other income because the assessment, in respect of other's in....
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.... Maharaja Dharmendra Pratap Narain Singh vs State of Uttar Pradesh (1980) 121 ITR 806 (ALL) Valivalam Desikar High School Trust vs CAgIT (1981) 131 ITR 84 (Mad) g) In respect of the income of a validly created Trust, no assessment can be made against the trustee of the Trust in his Individual capacity unless such trustee himself is a beneficiary under the Trust. AGENT OF A NON-RESIDENT - AN ORDER TREATING THE PERSON AS AN AGENT OF A NON-RESIDENT IS TO BE PASSED BEFORE FRAMING ASSESSMENT ON HIM AND THAT TOO ONLY AFTER GIVING OPPORTUNITY OF BEING HEARD a) Section 163(1) defines, for the purposes of the Act, an "agent" in relation to a nori-resident. The Assessing Officer has relied upon subclause (c) of clause (1) of section 163 which includes any person in India from or through whom the non-resident is in receipt of any income whether directly or indirectly. Section 163(1 )(c) requires only that the non-resident should receive income directly or indirectly from or through any person in India. b) In CIT vs T.I.& M. Ltd. (1978) 114 ITR 59 (Cal), it is held that as ordained by section 163(2), no person can be treated as the agent of non....
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....icer proceeds to assess the income in the hands of the agent, he has to pass an order u/s 163. The determination of a question of agency can not be postponed to be taken-up alongwith the assessment, as was the case under 1922 Act. f) Bangalore Bench of ITAT in Suez Tractebel S.A. vs Deputy Director of Income Tax (International Taxation), Bangalore (2013) 35 Taxmann.com 419 (Bangalore-Trib), 143 ITD 614 (Bangalore-Trib) have held that as per the provisions of section 163(2) before treating a person as an agent, an opportunity of being heard has to be given to such person so that he can file objections in that regard. Tribunal relied upon the judgement of Punjab & Haryana High Court in the case of Kanahiya Lai Gurmukh Singh wherein it was observed that the obvious intention of the legislature in providing an appeal under clause (g) of section 246 against an order u/s 163 was that a person who is treated as an agent could challenge the matter so as to avoid further botheration to himself in facing the assessment. Tribunal has also relied upon the judgement of Madras High Court in the case of Express Newspapers Pvt. Ltd. wherein no order had been passed by the Assessing Office....
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....sessee also produced certificate-dated 09.01.2014 issued by the Tehsildar stating that the land sold by the assessee was agriculture land and that the land situated in the village was a rural village. d) Assessee also produced map showing distance of 18.7 km of Ibrahimpur from MCD limit i.e. from Narela. e) Assessee also produced copy of NOC issued by the office of Deputy Commissioner (North West) Kanjhawala stating that the land was purely agriculture land. Despite all these documents, the Assessing Officer treated the land as urban land, he merely relied upon the website of Delhi Govt, and treated the property as capital asset within the meaning of section 2(14) of the Act. f) CIT(A) did not decide the issue stating that the assessee has not contested the finding of the Assessing Officer that impugned land is a capital asset subject to capital gain taxation. When the assessee had challenged the addition of ?56,55,874/- as a whole. D) Ground No. 10 - Disallowance of cost of Improvement 10. That the Assessing Officer and the Ld. CIT(A) have erred in not taking into consideration the cost of improvement incurred by Mr Ashok Tyagi in FY 19....
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....d got the allotment letter assigned by Shri Pankaj Kumar Sharma in his favour. Shri Pankaj Sharma was the original allottee who had already paid 90% of the payment to the builder M/s Omaxe Buildhome Pvt. Ltd. Assessee paid a sum of T57,79,893/- to Pankaj Sharma from his bank account with Bank of India and in turn Shri Pankaj Sharma signed endorsement Form F2 and endorsed the allotment letter and all the receipts in favour of Shri Ashok Kumar Tyagi. All these documents were filed by the assessee with Assessing Officer vide reply dated 10.02.2014. Claim u/s 54F a) As per section 45 any profits or gains arising from the transfer of a capital asset, subject to section 54 etc., be chargeable to income tax under the head Capital Gains and shall be deemed to be the income of the P.Y. in which the transfer took place. b) Section 54F deals with the exemptions, it lays down that, where capital gain arises from the transfer of any Long term capital asset and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after the date constructed a residential house, t....
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.... the present case. Circular No.471 dated 15.10.1986 applies to acquisition of flat by allottee under the self financing scheme by DDA, it also clarifies that cases of allotment of flats under the self financing scheme of DDA. should be treated as cases of construction for the purpose of deduction u/s 54/54F. Circular No.672 dated 16.12.1993 clarified that if terms of scheme of allotment and construction of flat by co-operative society or other institutions are similar to that of DDA then such cases may also be treated as construction for the purpose of deduction u/s 54 and 54F of the Act. h) In the present case Shri Pankaj Sharma was covered by Circular No.471 r/w Circular No.672 and therefore, his deal was to be treated as construction. By way of signing endorsement form in favour of assessee, Mr. Pankaj Sharma had assigned all his rights to him in the flat and in the record of Omaxe Buildhome Pvt. Ltd., the name of the assessee had been substituted. Therefore, deal of the assessee with Pankaj Sharma and the builder was to be treated as construction. Assessee had produced all the evidences reflecting payment to the Co. as well as to Mr. Pankaj Sharma. It is not out of pla....
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....nd thereafter followed it with alterations and modifications carried out to make said house habitable, benefit cannot be denied by the Revenue u/s 54 of the Act. In this case, assessee sold his tenancy rights in a residential property and invested the sale proceeds in purchase of another house which was in a dilapidated condition. In order to make the house fit for residential purpose, assessee incurred certain expenses on repairs etc and claimed deduction u/s 54 of the Act. Assessing Officer rejected the same holding that cost of improvement cannot be allowed as deduction at the time of purchase of property. CIT(A) confirmed the order of Assessing Officer, however, ITAT allowed benefit of section 54 to the assessee holding that section 54 is a piece of beneficial legislation being incentive provision which need to be strictly construed for bringing within its hold the entitlement of the taxpayer to the said benefit, but once the taxpayer establishes his entitlement to the benefit u/s 54, then section 54 is to be liberally construed to grant the benefit to the assessee to fulfill the mandate of legislation which is to promote investment in residential housing construction rather th....
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....ecified. If the assessee had made investment within period of 03 years, exemption u/s 54 could not be denied for the reason that possession had not been taken. There may be delay in taking possession because of many factors not under control of assessee. Merely because possession is not taken, exemption could not be denied (Kishore H Galaiya vs ITO (2012) 24 Taxmann.com 11 (Mum). In the present case also, assessee was offered possession of house on 28.01.2011 i.e. within 03 years from the date of transfer but he could not take possession as infrastructure was not complete at that time. Later, the assessee could not take possession as he was out of India and therefore, could not complete the formalities of possession. In view of Circular No.471 dated 15.10.1986 and Circular No.672 dated 16.12.1993, allotment of flat by the builder is sufficient to entitle the assessee to claim benefit u/s 54F. Assessee had paid full amount of consideration and the builder had also offered possession, deduction u/s 54F cannot be denied to the assessee. b) In CIT vs R L Sood (2000) 245 ITR 727 (Del), it is held that on payment of substantial amount in terms of purchase agree....
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.... on 08.07.2016 by ITAT Mumbai), assessee sold a plot of land on 09.02.2010 for a consideration of T19,35,325/- and earned long term capital gain of ^14,81,284/-. Thereafter, the assessee invested a sum of T15,00,000/- on 12.03.2010 and T3,60,000/- on 19.03.2010 for buying a residential flat under construction from Seth Developers Pvt. Ltd. and Poonam Builders. Assessee claimed deduction u/s 54 of the Act which was denied by the Assessing Officer on the ground that the property was incomplete and that the registered document was not filed by the assessee. ITAT allowed deduction u/s 54F on the ground that the assessee had already invested a sum of T18.60 lakh in the residential property under construction within the time limit prescribed u/s 54F of the Act. 13. The ld DR extensively read the order of the ld AO and ld CIT(A). He submitted that assessee is an agent of the non-resident, granted an opportunity of hearing by the learned AO holding that why he should not be considered as an agent of the non-resident, considered the nature of the assets transferred and its taxability and thereafter computed the taxable income arising in the hence of the non-resident as income of....