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2018 (12) TMI 452

e same issue proceedings under section 263 of the Act was initiated and dropped - Held that:- AO in the case of the assessee ought not to have revisited and readjudicated the issue with respect to deduction under section 54F of the Act against which proceedings under section 263 of the Act was initiated especially when the learned Assessing Officer on the earlier occasion has already adjudicated the issue in the scrutiny assessment proceedings under section 143(3) read with sections 147 and 148 of the Act. - Therefore we are of the considered view that the order of AO dated March 31, 2016 regarding adjudicating the issue of deduction under section 54F of the Act is erroneous. Hence we hereby direct the learned Assessing Officer to delete the addition made by disallowing the deduction under section 54F of the Act. - Since we have adjudicated hereinabove the legal issue with respect to revisiting an issue in the subsequent proceedings under section 153A read with section 143(3) of the Act which was already adjudicated in the scrutiny assessment proceedings earlier under section 143(3) read with sections 147 and 148 of the Act in favour of the assessee and were on the sa .....

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or ₹ 47,44,95,882 and claimed deduction under section 54F of the Act and the balance amount of ₹ 55,82,82,845 was invested in the long-term capital gain scheme account. On examining the claim of deduction under section 54F of the Act, the learned Assessing Officer observed that the assessee had constructed the residential building only in a minute portion of land and therefore disallowed the claim of deduction under section 54F of the Act to the extent of ₹ 46,19,92,974 vide his order dated March 31, 2016 under section 143(3) read with section 153A of the Act. On appeal, the learned Commissioner of Income-tax (Appeals) vide order dated January 5, 2018 confirmed the order of the learned Assessing Officer on the merits and made addition by rejecting the plea of the assessee that the issue did not emanate from the search proceedings. While doing so the learned Commissioner of Income-tax (Appeals) relied on the following decisions of the higher judiciary : (i) The Supreme Court in the case of CST v. Modi Sugar Mills Ltd. 12 STC 182 (SC) ; AIR 1961 SC 1047 observed as under (page 190 of 12 STC) : "10 . . . In interpreting a taxing statute, equitable considerations .....

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e for ₹ 55,82,82,845. (ii) The case was reopened under section 147 of the Act and notice under section 148 of the Act was issued on August 10, 2011. (iii) Subsequently the assessment was completed under section 143(3) read with section 147 of the Act on May 30, 2012 accepting the returned income under section 139(1) of the Act after duly examining the claim of deduction under section 54F of the Act and the investment made in capital gain account scheme. (iv) Thereafter notice under section 263 of the Act was issued to the assessee on August 22, 2012 of the Act initiating proceedings under section 263 of the Act for the reason that the impugned assessment order dated May 30, 2012 allowing the claim of deduction under section 54F of the Act and the transfer of expenses where without application of mind and with out conducting necessary enquiries. (v) Subsequently consequent to search action initiated under section 132 of the Act, the Commissioner of Income-tax (Appeals) dropped the proceedings under section 263 of the Act on February 18, 2014 on the ground that the proceedings under section 153A of the Act has overtaken the proceedings under section 263 of the Act. (vi) Thereaf .....

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on of search under section 132 of the Act or requisition shall not abate. It was therefore pleaded that in such situation the learned Commissioner of Income-tax ought to have passed order under section 263 of the Act and the same issue cannot be revisited in the proceedings initiated under section 153A of the Act. The learned authorised representative relied on the decision rendered by the hon'ble apex court in the case CIT v. Kelvinator of India Ltd. reported in [2010] 320 ITR 561 (SC) wherein it was held that revisiting an issue decided in an assessment shall amount to change of opinion which is not permissible. The learned authorised representative further relied on the decision rendered in the case Asst. CIT v. Kores (India) Ltd. in I. T. A. No. 5074/Mum/2009 vide order dated September 9, 2010 wherein it was held that once an issue is settled in the assessment prior to search, the same issue cannot be revisited in the assessment proceedings under section 153A of the Act because only a pending assessment shall abate on initiation of search and not the concluded assessment. It was further submitted that a similar view was also endorsed in the case Asst. CIT v. Mrs. Uttara S. .....

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he assessee has asked to explain why the exemp tion should not be restricted to the construction area instead of the whole land. The authorised representative of the assessee has replied that "in the provisions of the Incomes tax Act there is no restriction to the words 'land appurtenant to and forming part of house' and accordingly the assessee has rightly claimed the whole area of land along with house under section 54F of the Income-tax Act, 1961. The authorised representative of the assessee also mentioned that the assessee has many case law in support of the claim made. The authorised representative of the assessee has quoted the following case laws : (a) The decision of the Income-tax Appellate Tribunal, Delhi incase of Addl. CIT v. Narendra Mohan Uniyal [2009] 34 SOT 151 (Delhi). (b) The decision of the High Court of Madras in the case of CIT v. Smt. M. Kalpagam [1997] 227 ITR 733 (Mad) ; [1997] 93 Taxman 283 (Mad) On a perusal of the above cases, specially the decision of the honourable Income-tax Appellate Tribunal, Delhi, the assessee can claim any extent of land appurtenant to building as long as it is continuous stretch of land. In the present case also the .....

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t be abated and therefore the learned Commissioner of Income-tax ought to have completed the proceedings and passed order under section 263 of the Act with respect to the issue on which action under section 263 of the Act was initiated even when the proceedings under section 153A of the Act was initiated against the assessee. But in the case of the assessee, it appears that the learned Commissioner of Income- tax has passed on the baton to the Assessing Officer who had jurisdiction under section 153A of the Act. This action of the learned Revenue author ities is not appropriate. What proceedings are to be completed under section 263 of the Act cannot be passed on to the proceedings initiated under section 153A of the Act subsequently because proceeding under section 263 of the Act cannot be abated in such situation. Moreover in the case of the assessee even the proceedings initiated under section 263 of the Act is debatable considering the decision rendered in the case of CIT v. Kelvinator of India Ltd. cited supra wherein it was held that revisiting an issue decided in an scrutiny assessment proceedings under section 143(3) of the Act amount to change of opinion and the decision r .....

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e to the conclusion that the entire 10 grounds and 29 square feet was utilised by the assessee and therefore, the Tribunal was of the view that the entire area of 10 grounds and 29 square feet would be appur tenant to the main building. If the building together with the land is treated as an indivisible or integral unit enjoyed as such by the person occupying the building, it is an indication that the entire extent of land is appurtenant to the building. On considering the facts arising in this case and after looking into the plan of the building, the Tribunal came to the conclusion that the entire extent of ten grounds and 29 square feet was used by the owner of the property by way of residence, pathway, sit-outs, servants quarters, cowsheds etc. There fore, on reappraising the fact, the court would not disturb the finding arrived at by the Tribunal on this aspect. It must also be remembered that this case is concerned with the assessment made in the assess ment year 1975-76 which is about 20 years ago. Therefore, looking at the standard of living prevalent during those times, it cannot be said that a person living in a house situated with an area of ten grounds and 29 square ft. .....

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h proceedings under section 263 of the Act was initiated especially when the learned Assessing Officer on the earlier occasion has already adjudicated the issue in the scrutiny assess ment proceedings under section 143(3) read with sections 147 and 148 of the Act. Therefore we are of the considered view that the order of the learned Assessing Officer dated March 31, 2016 regarding adjudicating the issue of deduction under section 54F of the Act is erroneous. Hence we hereby direct the learned Assessing Officer to delete the addition made by disallowing the deduction under section 54F of the Act. Since we have adjudicated hereinabove the legal issue with respect to revisiting an issue in the subsequent proceedings under section 153A read with section 143(3) of the Act which was already adjudicated in the scrutiny assessment proceedings earlier under section 143(3) read with sections 147 and 148 of the Act in favour of the assessee and were on the same issue proceedings under section 263 of the Act was initiated and dropped, we restrain ourselves from adjudicating the issue with respect to deduction under section 54F of the Act on the merits since it is infructuous. Further it is per .....

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