2013 (4) TMI 293 - AT - Income Tax

Benefit of deduction u/s 54F denied - disallowance of benefit of indexation cost of value as on 1.4.1981 and repairs carried out in the premises and investment in capital gain account for purchase of another flat - Stay seeked against demand of principle amount and interest - the assessee/petitioner inherited the premises along with her aunt (grandmother s second daughter) as per the grandmother s will - Held that - AO has allowed the exemption u/s 54F only with respect to the flat at Sunshine but denied the benefit of indexation cost and exemption with respect to the deposits in capital gain account scheme. CIT(A) confirmed the action of the AO in denying the deduction u/s 54 and granting the deduction u/s 54F & has also confirmed the denial of the benefit of indexation cost of value as on 1.4.1981 as well as the claim with respect to the expenses for improvement/repairs. As regards the Fixed Deposits of Rs. 1.25 crores in the capital gain account, CIT(A) has allowed the claim of deduction u/s 54F in this respect. Thus,allowing part claim of the assessee and the demand is arising in respect of denial of the benefit of indexation cost valued as on 1.4.1981 and the expenses incurred for repairs and improvement of the property. Since these issues require an elaborate discussion and consideration at the time of hearing of the appeal of the assessee and therefore these are debatable issues, which has to be decided after the proper and detail hearing on merit. AO has attached the bank accounts and FD of the assessee, her aunty and the saving bank account of Matheran Sanatorium Trust is not understandable as to how the AO has attached the account of the other persons when the demand in question can be satisfied by the attachment of the bank account of the assessee alone. Thus the assessee has made out a prima-facie case wherein the stay may be granted subject to part payment of the outstanding demand. Accordingly the recovery of balance demand is stayed subject to payment of Rs. 15 lacs by the assessee which is to be paid on or before 28th Feb 2013.

Summary

Issues:
Stay against demand of Rs. 81,37,741 comprising principal amount and interest arising from the order of the Commissioner of Income Tax(Appeals) for the Assessment Year 2009-09.

Analysis:
The assessee sought stay against the demand of Rs. 81,37,741, including principal and interest, arising from the order of the Commissioner of Income Tax(Appeals) for the Assessment Year 2009-09. The assessee, an individual and unemployed lady, surrendered her right to reside in a property for Rs. 7.25 crores in 2008, leading to a capital gain of Rs. 5.08 crores. The Assessing Officer disallowed certain benefits claimed by the assessee, leading to a reduced demand of Rs. 81,37,741. The Commissioner of Income Tax(Appeals) partially allowed the assessee's claims, resulting in the reduced demand. The Assessing Officer attached bank accounts and FDs of the assessee, her aunt, and a trust, causing financial hardships. The assessee argued for the stay of demand and lifting of attachments, citing settled issues in her favor and inability to pay due to the attached accounts.

The Tribunal noted that the Assessing Officer allowed exemption only for a specific property, denying other benefits claimed by the assessee. The Commissioner of Income Tax(Appeals) upheld the denial of certain deductions while allowing others, leading to the current demand. The Tribunal found the issues debatable and requiring detailed consideration during the appeal hearing. The Tribunal observed that the assessee faced hardships due to the attachment of bank accounts, questioning the need to attach accounts of other individuals when the demand could be satisfied from the assessee's account alone.

Considering the circumstances, the Tribunal granted a stay on the recovery of the balance demand, subject to the payment of Rs. 15 lacs by the assessee. The recovery of the demand was stayed pending appeal disposal or 180 days, subject to the specified payment. The Tribunal directed the withdrawal of attachments on the mentioned bank accounts upon the payment. The appeal was scheduled for an out-of-turn hearing, contingent upon the payment directive. Failure to comply would result in the vacation of the stay and removal from the expedited hearing category. The assessee was required to produce the payment Challan before the next hearing date, with no separate notice to be issued.

In conclusion, the Stay Petition was allowed subject to the specified payment conditions, aimed at addressing the financial challenges faced by the assessee due to the demand and account attachments.