TMI Blog2017 (1) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, we are of the view that there is no prejudice is caused to the revenue. Accordingly, the CIT was incorrect in assuming jurisdiction to revise the assessment order u/s 263 of the Act. - Decided in favour of assessee Computation of capital gain towards transfer of asset between the assessee and his father - transfer - Held that:- In the present case on hand, on perusal of the facts available on record, we find that there is no consideration passed on between the assessee and his father. The consideration has been paid for purchase of property to the seller of the property as per the original sale agreement dated 7.6.2007 has been directly paid by the assessee’s father to the seller. Therefore, we are of the view that there is no transfer within the meaning of section 2(47)(v) of the Act, towards transfer of property between the assessee and his father. Accordingly, we direct the A.O. to delete addition made towards computation of long term capital gain. - Decided in favour of assessee Addition towards cost of construction u/s 69 - Held that:- As we hold that the transaction between the assessee and his father towards transfer of property is a transaction belonging to his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was noticed that the assessee has sold a vacant site for a consideration of ₹ 52,15,000/- and declared nil capital gains after claiming exemption u/s 54F of the Act for ₹ 52,15,000/- towards re-investment of sale consideration for construction of another residential house. On verification of the details filed by the assessee at the time of assessment, like copies of sale deed and computation of statement of total income, it was noticed that the assessee has purchased another residential site for a consideration of ₹ 31,36,000/- on 18.7.2007 vide document no.3166/2007 by way of registered sale agreement-cum-GPA in the name of his son. On further verification of the sale agreement, it was noticed that out of the total consideration of ₹ 31,36,000/-, a sum of ₹ 31,35,000/- has been paid and got possession of the property. The Municipal Corporation of Vijayawada has given plan approval for construction of the building in the name of his son vide letter in R.F. 54/09/G-7/BA No.00569/2009 dated 25.4.2009. From this information, it is clear that the new property has been purchased in the name of assessee s son whereas the assessee has claimed exemption u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other source of income to explain the sources of income towards purchase of property. The A.O. has taken a conscious decision after thorough examination of the details and also applied his mind to the provisions of section 54F of the Act. Therefore, the assessment order passed by the A.O. cannot be considered as erroneous in so far as it is prejudicial to the interest of the revenue. 5. The CIT, after considering the explanations of the assessee, held that the assessment order passed by the A.O. u/s 143(3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue, as the assessing officer has failed to examine the issue of exemption claimed u/s 54F of the Act towards re-investment of sale consideration for purchase of another residential house property. The CIT further observed that the documents furnished by the assessee clearly indicate that new residential property has been purchased in the name of his son. Though, the assessee got transferred the new asset in his name on 24.12.2010, which has exceeded the time limit by 6 months as per section 54F of the Act. Even otherwise, the claim of the assessee that he had invested entire sale consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallow exemption of ₹ 52,15,000/- claimed u/s 54F of the Act, that was claimed and allowed in assessment u/s 143(3) of the Act. The A.R. further submitted that the assessee has filed complete details of long term capital gain along with copies of sale deed and purchase deed of new property. The A.O. after examining the issue has completed assessment which cannot be termed as erroneous in so far as it is prejudicial to the interest of the revenue. On the other hand, the Ld. D.R., strongly supported the order of the CIT. 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The CIT assumed jurisdiction to revise the assessment order for the reason that the A.O. has not conducted proper enquiry before completion of assessment, thereby the assessment order passed by the A.O. u/s 143(3) of the Act, is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT, revised the assessment order for the reason that the A.O. failed to examine the allowability of exemption u/s 54F of the Act, even though documents indicate that new property has been purchased in the name of his son. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason that on verification of the details filed by the assessee, we find that the A.O. has issued a specific questionnaire, calling for all details pertaining to computation of long term capital gain from sale of property and also proof of investment u/s 54F of the Act. The assessee vide his reply dated 27.12.2010 and 30.12.2010 had furnished complete details of exemption claimed u/s 54F of the Act. The A.O. after satisfied with the details filed by the assessee, allowed exemption u/s 54F of the Act towards re-investment in purchase/construction of another residential house property. Therefore, we are of the view that the CIT was incorrect in holding that the A.O. has not examined the issue of exemption u/s 54F of the Act at the time of completion of assessment. 9. The CIT assumed jurisdiction to revise the assessment order on the sole ground that there is a lack of enquiry on the part of the A.O. in examining the issue of exemption u/s 54F of the Act. The assessee has filed a paper book which contains details furnished before the A.O. On perusal of the paper book filed by the assessee, we find that the assessee has filed a statement of total income, wherein he had claimed exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said site by obtaining a plan approval from the municipal authorities. Subsequently, the said residential house has been transferred in the name of the assessee n 24.12.2010. Though the assessee failed to give any explanations for initially entering into agreement in the name of his son, the facts remain that the property has been finally registered in the name of assessee. It is also an undisputed fact that the assessee has spent an amount of ₹ 31,35,000/- for purchase of site. The remaining amount of ₹ 20,80,000/- has been spent towards construction of residential house property. It is the contention of the CIT that the assessee has obtained, plan approval in the name of his son and also plan approval has been obtained beyond the due date specified u/s 54F of the Act. We do not find any merits in the findings of the CIT, for the reason that the provisions of section 54F of the Act is a beneficial provision to encourage the assessees to purchase residential houses out of sale proceeds of any assets other than residential houses. As long as, the assessees have made investment in purchase of residential house property, there is no reason to deny the benefit on tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption that the A.O. has considered all the details before accepting the claim of the assessee. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) is not erroneous in so far as it is prejudicial to the interest of the revenue. 14. Now it is pertinent to discuss case law relied upon by the assessee. The assessee relied upon the decision of Hon ble High Court of Delhi in the case of CIT Vs. Kamal Wahal (2013) 351 ITR 0004. The Hon ble High Court of Delhi, under similar circumstances held that for the purpose of claiming deduction u/s 54F of the Act, a new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. A purposeful construction is to be preferred as against the literal construction. The relevant portion of the order is extracted hereunder: In the case of CIT Vs. Ravinder Kumar Arora (2012) 342 ITR 38 (Del.) it was held that the entire purchase consideration was paid only by the assessee and not a single penny was contributed by the assessee s wife. It also noted that a purposive construction is to be preferred as against a literal construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he coordinate bench of this Tribunal, under similar circumstances held that once, the A.O. examined the issue on which the CIT wants further verification, the CIT cannot assume jurisdiction on the same issue which was already examined by the A.O. unless he proved that the A.O. failed to examine the issue and also applied his mind. The relevant portion of the order is reproduced hereunder: CIT(A) assumed jurisdiction to revise the assessment order on the sole ground that there is a lack of enquiry on the part of the A.O. in examining the issues referred to in his show cause notice. The question of low net profit declared by the assessee and also TDS on rent and hire charges have been considered by the A.O. at the time of completion of assessment. The assesses filed a paper book which contains the details furnished before the A.O. at the time of assessment. On perusal of the paper book filed by the assessee, ITAT find that the A.O. has issued a detailed questionnaire in respect of net profit and also TDS in respect of rent and hire charges. The A.O. after satisfied with the explanations furnished by the assessee has accepted the income returned. Therefore, ITAT are of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty was at ₹ 1,00,41,000/-. As the assessee has transferred long term capital asset during the financial year 2010-11, he is liable for payment of tax on long term capital gain arising out of this transaction. However, on verification of records, it is noticed that the assessee has not filed any return of income. In view of the above, the A.O. has reason to believe that the income chargeable to tax for the assessment year 2011-12 had escaped assessment within the meaning of section 147 of the Act, accordingly, a notice u/s 148 of the Act was issued. In response to notice u/s 148 of the Act, the assessee has filed a letter on 28.6.2013 and requested to treat the return of income filed electronically on 30.3.2013 as the return filed in response to notice u/s 148 of the Act. 20. Subsequently, the case has been selected for scrutiny, accordingly, notice u/s 143(2) and 142(1) of the Act were issued. In response to notices, the authorized representative of the assessee appeared from time to time and produced information called for. During the course of assessment proceedings, based on information available on record, the A.O. issued a show cause notice and asked to explain why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also confirmed the additions made by the A.O. towards unexplained investment in construction of property. However, the CIT(A) has re-worked capital gain after allowing cost of construction of ₹ 35,73,000/-, as the same has been considered u/s 69 of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 22. The first issue that came up for our consideration is computation of capital gain towards transfer of asset between the assessee and his father. The A.O. was of the opinion that the assessee is liable to pay tax on capital gains towards transfer of property to his father. The A.O. further observed that the assessee purchased a property by way of registered sale agreement-cum-GPA and also has taken possession of the property as on the date of agreement. The A.O. further observed that the assessee has constructed a building by taking approved plan from municipal authorities. Therefore, opined that the subsequent transfer between the assessee and his father coming within the meaning of transfer as defined u/s 2(47)(v) of the Act. It is the contention of the assessee that there is no transfer within the meaning of section 2(47)(v) of the Act, as the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, on perusal of the facts available on record, we find that there is no consideration passed on between the assessee and his father. The consideration has been paid for purchase of property to the seller of the property as per the original sale agreement dated 7.6.2007 has been directly paid by the assessee s father to the seller. Therefore, we are of the view that there is no transfer within the meaning of section 2(47)(v) of the Act, towards transfer of property between the assessee and his father. Accordingly, we direct the A.O. to delete addition made towards computation of long term capital gain. 24. The next issue that came up for our consideration is addition towards cost of construction u/s 69 of the Act. The A.O. made addition of ₹ 35,73,000/- u/s 69 of the Act towards cost of construction. The A.O. was of the opinion that the assessee failed to explain sources for investment in cost of construction. It is the contention of the assessee that property has been purchased by his father and the cost of construction has been incurred by his father and also which was disclosed in his father s income tax returns. We find force in the arguments of the assessee, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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