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2015 (9) TMI 124 - AT - Income TaxSale of the agricultural land - whether the assessee had no other sources of income and the amount of ₹ 1/-crore advanced by him to Shri Seethapathy Naidu on 13.08.2008 must be the amount received on account of sale of the agricultural land? - Held that - The amount of ₹ 1/- crore received by the assessee which was advanced to Mr. Seethapathy Naidu on 13.08.2008 would be the on-money received by the assessee towards the sale of his land on 11.8.2008, since the Revenue has not established any other source of income that could have been earned by the assessee during the relevant previous year. The only transaction of the assessee during the relevant previous year was sale of agricultural land. The Ld. Assessing Officer has also not made any finding with respect to the other activities of the assessee for earning income from any other source. Moreover it is a common practice to accept on-money on real estate transactions. Therefore, we do not find it necessary to interfere with the order of the Ld. CIT (A) on this count. - Decided against revenue. Denial of exemption u/s.54F - investments in agricultural land made in the name of the assessee s son - Held that - From the sale deed, it is evident that the property belonged to the HUF of the assessee because the land sold was inherited by the assessee and the entire members of the assessee s HUF are entitled to the property inherited by the assessee from his father s HUF. Since the existence of the HUF cannot be denied who owned the land sold, the assessment made in the hands of the assessee in the individual capacity is bad in law. Moreover as per section 171 of the Act, partial partition is not recognized for the purpose of assessment under the provisions of the Act. Hence it is apparent that the Revenue has assessed the assessee as individual wrongly for the sale of land owned by the assessee s HUF. Therefore we hereby quash the order of the Ld. A.O. Further we make it clear that the Revenue is at liberty to assess the assessee s HUF subject to complying with provisions of limitations stipulated in the Act and in accordance with our decision in this order on various issues raised by both the parties. We also make it clear that while assessing the assessee s HUF, the HUF assessee shall be entitled to the benefit u/s.54B of the Act for ₹ 2,92,140/- with regard to investments in agricultural land made in the name of assessee s son because property of a HUF can be legally held by any of the coparceners or Kartha of the HUF and in the instant case the assessee s son is one of the coparcener of the HUF and no partition in the HUF has taken place. It is ordered accordingly. Denial of exemption u/s.54F of the Act in regard to construction of a building in the land purchased at Vallingadu by holding that only extension in the existing building has been carried out - Held that - there are no details before us with respect to the construction made by the assessee toward the extension of the existing house. If the new asset constructed can be construed as a separate dwelling unit and if the conditions stipulated in Section-54F of the Act are complied, then the assessee would be entitled to the benefit of Section-54F of the Act. Therefore, if a fresh assessment is made in the hands of the assessee s HUF as observed by us in the earlier paragraph of this order, the Ld. Assessing Officer shall examine these aspects and pass appropriate order as per law and merit. Needless to mention that deduction U/s.54F of the Act can be availed by the assessee s HUF even if the new asset is purchased in the name of any of the coparceners of the HUF or the Kartha of the HUF subject to the fulfillment of the other relevant provisions of the Act. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Addition of Rs. 1 crore as income from other sources. 2. Denial of exemption under Section 54B of the Income Tax Act. 3. Denial of exemption under Section 54F of the Income Tax Act. 4. Levy of interest under Sections 234A and 234C of the Income Tax Act. Issue-wise Detailed Analysis: 1. Addition of Rs. 1 crore as income from other sources: The Revenue contended that the Rs. 1 crore paid by the assessee to Shri Seethapathy Naidu on 13.08.2008 should be treated as income from other sources since the assessee failed to provide proof of receiving this amount as an advance for the sale of land. The assessee argued that this amount was received as an advance in cash for the sale of land and later returned after the sale proceeds were credited to the bank account. The CIT(A) and the Tribunal concluded that the Rs. 1 crore was on-money received from the sale of agricultural land on 11.08.2008 and should be treated as part of the sale consideration, not as income from other sources. The Tribunal upheld the CIT(A)'s decision, noting the common practice of accepting on-money in real estate transactions and the lack of evidence for any other source of income. 2. Denial of exemption under Section 54B of the Income Tax Act: The Assessing Officer denied the exemption under Section 54B for Rs. 2,92,140/- because the investment in agricultural land was made in the name of the assessee's son, not in the assessee's name. The CIT(A) upheld this decision due to the lack of evidence showing joint ownership of the property by the assessee, his son, and his daughter. However, the Tribunal found merit in the assessee's argument, supported by the sale deed, that the property belonged to the assessee's HUF. The Tribunal quashed the assessment made in the individual capacity of the assessee, allowing the Revenue to assess the HUF and granting the exemption under Section 54B, as the property of an HUF can be held by any coparcener or Kartha. 3. Denial of exemption under Section 54F of the Income Tax Act: The Assessing Officer denied the exemption under Section 54F for the construction of a building on land purchased at Vallingadu, stating it was merely an extension of an existing building. The CIT(A) agreed with this view. The Tribunal noted the lack of details regarding the construction but stated that if the new construction could be considered a separate dwelling unit and complied with Section 54F conditions, the exemption should be allowed. The Tribunal directed the Assessing Officer to re-examine the issue if a fresh assessment is made for the HUF, emphasizing that the exemption under Section 54F can be availed by the HUF even if the new asset is in the name of any coparcener or the Kartha. 4. Levy of interest under Sections 234A and 234C of the Income Tax Act: The Tribunal dismissed the issue of levying interest under Sections 234A and 234C as it was consequential in nature. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objections, directing appropriate adjustments and re-assessment as per the detailed findings. The order was pronounced on 21st August 2015 at Chennai.
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