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2019 (1) TMI 590 - AT - Income TaxCharging of interest u/s 234A and 234B - Held that - The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala 2001 (10) TMI 4 - SUPREME COURT . Thus uphold the action of the AO in charging the assessee the aforesaid interest u/s 234A and 234B - Decided against the assessee Capital gain computation - assessee along with his mother and siblings entered into a JDA - Transfer as per section 2(47)(v) - Held that - As per the details that emanate from the record, the assessee along with his mother and siblings entered into a JDA on 03.12.2007 with M/s. Sai Deep Estates, which, find, is a registered document. in the case of Dr. T. K. Dayalu ( 2012 (6) TMI 405 - KARNATAKA HIGH COURT ) has held that on entering into a JDA, there is a transfer as per the provisions of section 2(47) of the Act and consequently capital gains is attracted. In that view of the matter, this issue is covered in favour of the Revenue and against the assessee. Claim of Exemption u/s 54/54F - multiple units/ flats i.e., the 2 flats in the same apartment building received by him in lieu of entering into the JDA dated 03.12.2007 with M/s. Sai Deep Estates - Held that - There was a structure/building on the said property before the JDA was entered into on 03.12.2007, it is of the considered opinion that the issue for consideration in this ground i.e., the assessee s claim for exemption u/s 54/54F of the Act in respect of 2 flats in the same residential building complex; is squarely covered in favour of the assessee by the decision of the Hon ble Karnataka High Court in the case of CIT Vs. Smt. K. G. Rukminiamma 2010 (8) TMI 482 - KARNATAKA HIGH COURT . As decided in COMMISSIONER OF INCOME TAX VERSUS SMT. VR. KARPAGAM 2014 (8) TMI 899 - MADRAS HIGH COURT Amendment to section 54F of the Act being para materia to section 54 of the Act with regard to substitution of a residential unit by Finance (No.2) Act, 2014 was operative only w.e.f. 01.04.2015, whereby exemption for more than one unit/flat (residential house) is to be withdrawn. However, prior to the aforesaid Amendment (supra), a residential house would include multiple flats/residential units in the same apartment building. - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction on re-opening of assessment under Section 148 of the Income Tax Act. 2. Event of 'transfer' as per Section 2(47)(v) of the Income Tax Act. 3. Claim of exemption under Sections 54 and 54F of the Income Tax Act. 4. Charging of interest under Sections 234A and 234B of the Income Tax Act. Detailed Analysis: 1. Jurisdiction on Re-opening of Assessment under Section 148 of the Income Tax Act: The assessee contended that the assessment order passed under Section 147 read with Section 143(3) was void ab initio as the reasons for re-opening were not communicated despite a specific request. The CIT(A) held that the show cause notice dated 20.01.2012, which mentioned the reasons for re-opening, sufficed as communication of reasons. The Tribunal noted that the CIT(A) upheld the validity of the re-opening based on this show cause notice, which recorded the transaction details and the AO's belief that income had escaped assessment. 2. Event of 'Transfer' as per Section 2(47)(v) of the Income Tax Act: The assessee argued that there was no 'transfer' as defined under Section 2(47)(v) since no possession was handed over to the developer. However, the Tribunal found that the Joint Development Agreement (JDA) was a registered document and referred to the Karnataka High Court's decision in Dr. T. K. Dayalu's case, which held that entering into a JDA constitutes a 'transfer' under Section 2(47), thereby attracting capital gains. Consequently, this issue was decided against the assessee. 3. Claim of Exemption under Sections 54 and 54F of the Income Tax Act: The assessee claimed exemption under Sections 54 and 54F for 2 flats received in lieu of the land transferred under the JDA. The Tribunal referenced the Karnataka High Court's decision in CIT Vs. Smt. K. G. Rukminiamma, which held that multiple units in the same residential building qualify for exemption. The Tribunal also cited the Madras High Court's decision in CIT Vs. V. R. Karpagam, which supported the view that prior to the amendment effective from 01.04.2015, multiple units could be considered a single residential house for exemption purposes. Therefore, the Tribunal allowed the assessee's claim for exemption under Section 54F for the 2 flats. 4. Charging of Interest under Sections 234A and 234B of the Income Tax Act: The assessee contested the charging of interest under Sections 234A and 234B. The Tribunal upheld the AO's action, stating that charging interest is consequential and mandatory, as upheld by the Supreme Court in Anjum H. Ghaswala's case. However, the AO was directed to re-compute the interest while giving effect to the Tribunal's order. Conclusion: The Tribunal partly allowed the assessee's appeal. It upheld the validity of the re-opening of assessment and the event of 'transfer' under Section 2(47)(v). However, it allowed the assessee's claim for exemption under Section 54F for the 2 flats received under the JDA. The issues regarding the computation of capital gains and the cost of acquisition were rendered academic and not adjudicated due to the allowance of the Section 54F exemption. The interest under Sections 234A and 234B was upheld but required re-computation based on the Tribunal's directions.
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