Referred Sections:
Section 54 of the Act
Referred Cases / Judgments:
Sadhu Singh S. Mulla Singh Vs District Board AIR 1962 (Punjab) 204
CIT Vs Ashok Kumar Ralhan 2014 146 taxmann.com 416 (Delhi)
CITVs P V Narsimhan 181ITR 101 (Mad.)
CIT Vs A.R.Mathavan Pillai 219 ITR 696 (Kerela)
Jvothi Pat Ram Vs ITO 92 ITD 423 (Lucknow)
Elvis Stephenson Vs ITO (ITA No. 1924/Hvd/2011- IT AT) (Hvd.)
CIT Vs Gita Duggal [2013] 30 taxmann.com 230 (Delhi)
CIT Vs Gita Duggal [2014] 52 taxmann.com 246 (SC) - SLP Dismissed
CIT vs D Ananda Basappa 309 ITR 329 (Kar.)
CIT v. K.G. Rukminiamma, 331 ITR 221 (Kar)
CIT vs Gumanmal Jain [2017] 80 taxmann.com 21 (Mad)
Circular No. 1/2015 dated 21-01-2015 issued by Hon’ble CBDT
1 ITA No. 1477/Del/2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `A' NEW DELHI
BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A. No. 1477/DEL/2016 (A.Y. 2011-12)
Anil Aneja Vs. ACIT
A-1/178, Circle-61(1)
Safdarjung Enclave New Delhi
New Delhi-
PAN : AAGPA2328B
(APPELLANT) (RESPONDENT)
Appellant by Sh. Ranjan Chopra, CA
Respondent by Smt. Rinku Singh, Sr.DR
Date of Hearing 01.08.2019
Date of Pronouncement 06.08.2019
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed against the order dated 10.08.2015 by the assessee
passed by CIT(A)-20, New Delhi for Assessment Year 2011-12.
2. The grounds of appeal are as under :
"1. That the Order of learned CIT(A) partly sustaining the order of the learned
Assessing Officer is bad in law and on facts and is liable to be set-aside.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A)
has erred in law and on facts in confirming the action of Ld. Assessing Officer
in making addition of Rs. 69,42,053/- under the head Long Term Capital
Gains on account of disallowance of exemption claimed u/s 54 of the Income
Tax Act, 1961 by the Appellant.
3. That having regard to the facts and circumstances of the case, Ld.CIT(A)
has erred in law and on facts in giving only partial relief to the appellant u/s
2 ITA No. 1477/Del/2016
54 of the Income Tax Act, 1961 while passing order u/s 154/250 of the Act,
though deposit of Rs. 75 lacs was made by the appellant under Capital Gains
Scheme on 31.03.2011.
4. That Ld.CIT(A) has erred in law and on facts in totally ignoring the fact
that Rs. 75 lacs has been paid by the appellant only as evident from the bank
statement, though jointly held with his wife, who is separately assessed to
tax and had made separate deposit of Rs. 50 lacs in Capital Gain Account
Scheme which was totally ignored by learned CIT(A).
5. That orders passed by learned CIT(A) and learned Assessing Officer are
against the principles of natural justice.
6. That the appellant craves the leave to add, amend, modify, delete any of
the grounds of appeal before or at the time of hearing and all the above
grounds are without prejudice to each other."
3. During the year under reference, the assessee had sold a property at
Qutab Enclave Complex, Phase-II, Gurgaon and claimed exemption under
Section 54 under the head Long Term Capital Gains. The Assessing Officer
disallowed Rs. 69,42,053/- in respect of the claim of exemption u/s 54 of the
Income Tax Act, 1961 made by the Assessee.
4. Being aggrieved by the assessment order the assessee filed appeal before
the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that as regards Ground No. 2 relating to
addition of Rs. 69.42,053/- made under the head Long Term Capital
Gains on account of disallowance of exemption u/s 54 of the Income Tax
Act, the assessee sold a property at Qutab Enclave Complex, Phase-II,
Gurqaon and claimed exemption u/s 54 of the Income Tax Act. 1961. The
Assessing Officer disallowed claim of exemption u/s 54 of the Act, though
assessee duly deposited Rs, 75,00.000/- in Capital Gain Accounts
Scheme on or before 31 st March 2011. In the present case, the assessee had
demolished the existing residential property at Safdarjung Enclave, jointly
3 ITA No. 1477/Del/2016
owned by him, and had constructed four new flats. The Ld. AR submitted that
deduction under Section 54 of the Act is allowable where a consideration
received on transfer of a long term capital asset is utilized on the construction
of residential house. The act of demolishing of the existing structure and
construction of new structure would mean "reconstruction" of the house
property. The expression "construction" is not defined under the Act. The Ld.
AR relied upon the decision of the Hon'ble Punjab High Court in the case of
Sadhu Singh S. Mulla Singh Vs District Board AIR 1962 (Punjab) 204 wherein
it is held that "construction and reconstruction are interchangeable terms and
in fact every reconstruction is construction." In view of the above judgment, the
Ld. AR submitted that the assessee is eligible for exemption under Section 54
of the Act as the consideration received on transfer of long term capital asset,
being residential house property, is unutilized/ invested in reconstruction of
the residential house property owned by the assessee. The Ld. AR submitted
that the assessee had duly complied with the provisions of Section 54 of the
Act and the construction was a new one and not a renovation of existing
building, the old house stood demolished completely. The Ld. AR further
submitted that law does not provide that the assessee is not entitled to
demolish an old structure and construct a new building thereupon. The above
view also finds supports from the following judgments:
-- CIT Vs Ashok Kumar Ralhan 2014 146 taxmann.com 416 (Delhi)
-- CITVs P V Narsimhan 181ITR 101 (Mad.)
-- CIT Vs A.R.Mathavan Pillai 219 ITR 696 (Kerela)
-- Jvothi Pat Ram Vs ITO 92 ITD 423 (Lucknow)
-- Elvis Stephenson Vs ITO (ITA No. 1924/Hvd/2011- IT AT) (Hvd.)
The Ld. AR submitted that it is not disputed that altogether a new house has
been built having four units after razing old construction to the ground. The
Ld. AR further submitted that multiple flats constructed have to be construed
as one house and deduction u/s 54 cannot be denied. The Ld. AR relied upon
the following judgments:
4 ITA No. 1477/Del/2016
-- CIT Vs Gita Duggal [2013] 30 taxmann.com 230 (Delhi)
-- CIT Vs Gita Duggal [2014] 52 taxmann.com 246 (SC) - SLP Dismissed
-- CIT vs D Ananda Basappa 309 ITR 329 (Kar.)
-- CIT v. K.G. Rukminiamma, 331 ITR 221 (Kar)
-- CIT vs Gumanmal Jain [2017] 80 taxmann.com 21 (Mad)
-- Circular No. 1/2015 dated 21-01-2015 issued by Hon'ble CBDT
Moreover, the assessee had deposited Rs. 75 lakhs in Capital Gain Account
Scheme on or before 31st March 2011. In view of the above, the Ld. AR prayed
that the addition made of Rs.69,42,053/- is liable to be deleted.
6. As regards to Ground No. 3 and 4, the Ld. AR submitted that the
CIT(A) has given only partial relief to the assessee u/s 54 of the Income
Tax Act while passing order u/s 154/250 of the Act though deposit of
Rs. 75 lacs was made by the assessee under Capital Gains Scheme on
31/03/2011 (from jointly held account with his wife). The assessee's wife
(Mrs. Mala Aneja) is separately assessed to tax and had made separate
deposit of Rs. 50 Lakhs in Capital Gain Account Scheme (though bank
statement is jointly held by her with the assessee). As per the provision of
Income Tax Act, 1961, where amount of capital gain is not appropriated or
utilized by the assessee for purchase or construction of residential house
before the due date of furnishing return of income, it shall be deposited by him
on or before the due date of filing return of income, in the Deposit Account in
any Branch of a Public Sector Bank or IDBI Bank in accordance with Capital
Gain Accounts Scheme, 1988. The amount deposited shall deemed to be
amount utilized for purchase or construction of a house under Section 54. In
the present case, assessee sold the property on 19/11/2010 and had duly
deposited Rs. 75 lakhs in Capital Gain Account Scheme on 31/03/2011
maintained with Indian Bank, copy of Bank statement was submitted to the
Assessing Officer at the time of assessment proceedings. At Para 3.3 of
assessment order passed by the Assessing Officer wherein the Assessing
Officer himself has accepted that "the proceeds from sale of property was
5 ITA No. 1477/Del/2016
deposited in Indian Bank purportedly to be used for construction of house".
The Ld. AR submitted that the CIT(A) has given only partial relief to the
assessee u/s 54 of the Income Tax Act while passing order u/s 154/250 of the
Act, though deposit of Rs. 75 lacs was made by the assessee under Capital
Gains Scheme on 31/03/2011 (from jointly held capital gain account with his
wife). The assessee's wife is separately assessed to tax and had made separate
deposit of Rs. 50 lakhs in Capital Gain Account Scheme.
7. The Ld. DR relied upon the order of the CIT(A) and Assessment order.
The Ld. DR further submitted that there is tax evasion if the assessee is
allowed the claim under Section 54 of the Act.
8. We have heard both the parties and perused all the relevant material
available on record. The Assessee has submitted computation of income of the
assessee as well as wife of the assessee before the Assessing Officer as well as
before the CIT(A). From the perusal of the same it can be seen that the
assessee duly deposited Rs. 75,00,000/- which is his share in Capital Gain
Accounts before 31.03.2011. The assessee demolished the existing residential
property which was jointly owned by him and constructed four new flats but
has claimed only as per his own share excluding the wife's share as well.
Therefore, the Assessee has rightly claimed exemption u/s 54EC as NHAI
bonds of 75,00,000/- were taken by the assessee after the property was sold.
All the criteria of Section 54 was fulfilled by the assessee. Thus, Ground No. 2
of the assessee's appeal is allowed. As regards to Ground No. 3 and 4, in fact
assessee's wife got the relief for her share as claimed by her from the Revenue
in respect of Capital Gains Scheme. Thus, the Assessing Officer should have
not rejected assessee's claim on the different footing which was rightly claimed
by the assessee. There is no double taxation involved in the present case.
Therefore, Assessing Officer as well as CIT(A) was not right in making the
addition on this account. Hence, Ground No. 3 and 4 are allowed. Thus, appeal
6 ITA No. 1477/Del/2016
filed by the assessee is allowed.
8. In result appeal of the assessee is allowed.
Order pronounced in the Open Court on 6th August, 2019.
Sd/- Sd/-
(N. K. BILLAIYA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 06/08/2019
*Binita*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 01.08.2019
Date on which the typed draft is placed before the 02.08.2019
dictating Member
Date on which the typed draft is placed before the
Other Member
Date on which the approved draft comes to the Sr.
PS/PS
Date on which the fair order is placed before the
Dictating Member for pronouncement
Date on which the fair order comes back to the Sr.
PS/PS
Date on which the final order is uploaded on the
website of ITAT
7 ITA No. 1477/Del/2016
Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
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