TaxTMI 
TaxTMI 
2025 (6) TMI 2153
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....9/12/2019 passed u/s 143(3) of I.T. Act on total income of Rs. 1,63,10,250 by making an addition of Rs. 1,60,00,000 under the head 'Capital Gain' on sale of residential house for Rs. 1,60,00,000. The appellant contested the additions made by the Ld.AO before the Ld. First Appellate Authority which allowed part relief. Before us the appellant assessee has contested disallowance of its claim of expense of Rs. 8 lakhs paid as commission to a broker Ms Nikita Angirish u/s 48, expense of Rs. 42,22,152/- on account of denial of indexed cost of acquisition u/s 48 and of Rs. 94,50,000/- being exemption claimed u/s 54 of the Act. Before us the appellant has filed a detailed 3.0 The first issue raised by the appellant through the ground of appeal No. 1(a) is regarding the disallowance of commission paid to broker. The Ld. Counsel for the assessee submitted that the Ld.AO has made the impugned disallowance by making following observations on page 2-3 of the assessment order "The assessee has claimed commission of Rs. 8 lakhs on sale of property which cannot be allowed in the absence of documentary evidences.". The Ld. Counsel submitted that t....
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....pon the orders of lower authorities. 3.3 We have heard rival submissions in the light of material available on records. The appellant claims to have paid commission of Rs. 8,00,000/- through RTGS to Ms. Nikita Angirish for sale of appellant's residential house for Rs. 1,60,00,000/ -. We have noted from the order of Ld.CIT (A) on page 23 that he has not given a recent finding on the merits of the matter except that genuineness of payment has not been explained during assessment, appellate and remand proceedings. We have noted that appellant has produced through its paper book copies of documents which were provided before the lower authorities. The identity of the recipient has been established through aadhaar card. The payment for commission was made through banking channel. Therefore, there cannot be any scope of doubt when the identify of recipient and genuineness of transaction is prima face established. The rate of commission has also been found to be in proximity to prevalent market rate of 1 to 2@ of sale price. Accordingly, we are of the considered view that there is no merit in the impugned addition of Rs. 8 lakhs made by the Ld.AO on account of c....
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....t for not producing bills/vouchers for construction of the residential house which was constructed in FY 2010-11 as the same were not traceable after a lapse of 8 years i.e. from FY 2010-11 when construction took place and assessment proceedings u/s 143(3) which was completed vide assessment order dated 29/12/2019. In these circumstances, the cost of construction worked out at Rs. 26,68,400 in the financial year 2010-11 by the Government registered valuer deserves to be adopted. In support of its contentions, the assessee relied upon the decision of the SMC Bench of the Jaipur tribunal in the case of Shri Kanhaiya Lal lalvani in ITA No. 364/JP/2022. 3.6 Per contra, the Ld.DR would like to place reliance upon the order of lower authorities. 3.7 We have heard rival submissions in the light of material available on records. It is the case of the assessee that because it had provided evidences towards construction of house, building plans, valuer's report etc and therefore mere non-production of bills and vouchers qua expenses cannot deny the claim. The issue seminal to the controversy is that the assessee is claiming cost of improvement of the property which has co....
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.... are not allowable ..... ". The Ld. Counsel further submitted that the Ld.CIT (A) confirmed the disallowance of exemption u/s. 54 of I.T. Act, holding that "Regarding the investment in new asset, I find that the appellant had not invested the eligible amount before the due date for filing the return of income and as such the appellant was required to deposit the relevant amount in the specified capital gains scheme to avail the benefit of deduction u/s. 54. However, the appellant has fail to do so. Therefore the appellant is not eligible for deduction u/s. 54 of the Act." 4.1 The Ld.Counsel submitted that the assessee had sold his residential house No. B - 131, Sector 105 on 06/02/2017 for a total consideration of Rs. 1,60,00,000/ -. Appellant assessee had filed his I.T. Return on 10/08/2017 declaring income of Rs. 10,90,520/ -. Thereafter, appellant assessee purchased a residential apartment No. G-249, 1st Floor Preet Vihar for Rs. 94,50,000/- (including stamp duty of Rs. 4,50,000/-) on 13/10/2017 in the name of self and his wife Smt. Neeta as per registered sale deed. Thereafter, revised Income Tax return declaring income of Rs. 3,10....
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....sed the relevant material on record, including the decisions relied upon by the parties. In the instant case, the assessee has claimed deduction under section 54 of the Act against booking of flat before the due date of filing of return under section 139(4) of the Act. The chronological events of sale of the original asset and investment in new residential house submitted by the assessee are reproduced as under: Sl.No. Particulars Remark 1 Sale of residential house Property at 211, Sector-6, Panchkula 23.06.2010 2 Capital Gain arising there from 78,80,819 3 Date of agreement with M/S Hadapsar Infrastructure Pvt. Ltd. 15.10.2012 4 Due Date of Filling of Income Tax Return U/S 139(1) 31.07.2012 5 Date of Filling of Income Tax Return by assessee U/S 139(4) 31.10.2012 6 Due date of filing of Income Tax return u/s 139(4) 31.03.2013 11.1 The Assessing Officer and the Learned CIT (A) has denied the deduction on two grounds. Firstly, the amount of sale consideration has not been invested in the capital gain scheme, prior to due date of filing of return under section 139(1) of the Act and therefore, assessee is not entit....
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....ipal Commissioner of Income-tax Vs Shankar Lal Saini (supra). The relevant finding of the Hon'ble High Court of Rajasthan is reproduced as under: "19. The contention of Mr. Singhi that under Section 139, investment is to be made before the return is filed otherwise it will render the provision nugatory is to be considered in the light that while considering the case, Karnataka High Court in para no. 6 & 7 (supra) has considered the provisions and interpreted the same. Even the same is accepted by the Punjab and Haryana High Court and Gauhati High Court which has taken the view contrary to Kerala High Court decision. 20. In that view of the matter, three High Courts have taken the view and the Tribunal has followed the Karnataka High Court which has followed the earlier Gauhati judgment which has been independently supported by the Punjab Haryana High Court." 11.2.2 In the above decision, Hon'ble High Court of Rajasthan has relied on the decision of the Hon'ble Karnataka High Court in the case of Fatima Bibi Vs ITO (2009) 32 DTR 243 (Kar), Hon'ble Punjab and Haryana High Court in the case of Jagtar Singh Chawala (2013) 87 DTR 217 ( P & H) a....
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....on of the new asset before the date of furnishing the return of income under s. 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-s. (1) of s. 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazettee, frame in this behalf and such return shall be accompanied by proof of such deposit, and for the purposes of sub-s. (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilized wholly or partly for the purchase or construction of the new asset within the period specified in sub-s. (1), then,- (i) the amount not so utilised shall be charged under s. 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires....
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....reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-s. (1) i.e., before 31st day of July of the assessment year, the assessee can file return before the expiry of one year from the end of the relevant assessment year. 12. The sale of the asset having taken place on 13th Jan., 2006, falling in the previous (sic-assessment) year 2006-07, the return could be filed before the end of relevant asst. yr. 2007-08 (sic- 2006-07) i.e. 31st March, 2007. Thus, sub-s. (4) of s. 139 provides extended period of limitation as an exception to sub-s. (1) of s. 139 of the Act. Sub-s. (4) is in relation to the time allowed to an assessee under sub-s. (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-s. (1) of s. 139. Therefore, such sub-s. (4) has to be read along with sub-s. (1). Similar is the view taken by the Division Bench of Karnataka and Gauhati High Courts in Fatima Bai and Rajesh Kumar Jalan cases (supra) respectively. 13. In view of the above, we find that due date for furnishing the return of income as per ....
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....ued as a reference to two years from the end of the relevant assessment year." A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-section (1) i.e. before 31st day of July of the Assessment Year, the assessee can file return before the expiry of one year from the end of ever relevant Assessment Year." 10. In the present case, the assessee has proved the payment of substantial amount of sale consideration for purchase of a residential property on or before 31.3.2008, that is within extended period of limitation of filing of return. Only a sum of Rs. 24 lacs was paid out of total sale consideration of Rs. Two Crores on 23.4.2008, though possession was delivered to the assessee on execution of the power of attorney on 30.3.2008. Since the assessee, has acquired a residential house before the end of the next Financial Year in which sale has taken place, therefore, the assessee is not liable to pay any capital gain. Such is the view taken by the Income Tax Appellate Tribunal." 11.3 In the case of the assessee, the agreement to purchase of flat has been ....
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....rpose of section 54 of the Act, whereas according to the Learned DR, those circulars are only applicable to booking of flats under self-financing schemes of Delhi Development Authority and similar institutions. For ready reference, the aforesaid Circular No. 471, dated 15.10.1986 is reproduced as under: "CIRCULAR NO. 471 DATED 15TH OCTOBER, 1986 Capital gains tax-Whether investment in a flat under the Self-Financing Scheme of the Delhi Development Authority would be construction for the purpose of ss. 54 and 54F of the IT Act, 1961 CAPITAL GAINS SECTION 54 SECTION 54F Secs. 54 and 54F of the IT Act, 1961, provide that capital gains arising on transfer of a long-term capital asset shall not be charged to tax to the extent specified therein, where the amount of capital gain is invested in a residential house. In the case of purchase of a house, the benefit is available if the investment is made within a period of one year before or after the date on which the transfer took place and in case of construction of a house, the benefit is available if the investment is made within three years from the date of the transfer. 2. The B....
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....urposes of sections 54 and 54F of the Income-tax Act. The Board has since received representations that even in respect of allotment of flats/houses by co-operative societies and other institutions, whose schemes of allotment and construction are similar to those of Delhi Development Authority, a similar view should be taken. 2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions are similar to those mentioned in Para 2 of Board's Circular No. 471, dated 15th October, 1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income tax Act." 11.6.2 Regarding applicability of the circulars for booking of flats, the Hon'ble Delhi High Court in the case of RL Sood (supra) has observed as under: "2. The assessee was the owner of a residential house which he sold on 22nd Sept., 1981, for a total consideration of Rs. 2,75,000. On 25th Sept., 1981, he entered into an agreement for purchase of a residential flat and by September, 1982 paid a sum of Rs. 2,39,850 ....
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....ter to an allottee under its self-financing scheme, on payment of first instalment of cost of construction, the allottee gets title to the property and such allotment should be treated as cost of construction for the purpose of capital gains. On the same analogy, the assessee having been allotted the flat, he having paid a substantial amount towards its cost within the stipulate period of one year, he cannot be denied the benefit of the said section because the flat purchased by him had come into his full domain within the period of one year, though the sale deed in his favour was registered subsequently 11.6.3 Further, regarding eligibility of deduction 54 of the Act for booking of flat with private builders, the Tribunal in the case of Rampraksh Miyan Bazaz (supra) has held as under: "11. Now coming to a concomitant situation that if booking of flats does not tantamount to ownership of the house then how come the assessee claim that by booking a flat it has acquired 'new house' and becomes entitle for this exemption. Similar situations repeatedly arose and to settled them, the CBDT issued a circular No. 471 dated 15/10/1986 clarifying that payment m....