2019 (3) TMI 476 - AT - Income Tax

Exemption u/s 54 - assessee could not obtain the possession and got the purchase deed executed within the period of three years - HELD THAT - Assessee has made payment of for the purchase of flat to the developer. The fact of payment of the same and the transaction of purchase of flat are not in dispute. The only issue is that assessee could not obtain the possession and got the purchase deed executed within the period of three years. The delay was on account of developer and not on account of the assessee. As perused the paper book, where we find that there is a complaint filed by La Tropicana, Resident Welfare Association against the developer with National Consumer Disputes Redressal Commission. Thus, the fact that delay in obtaining possession and getting purchase deed executed was on account of the developer and was by reason beyond the control of the assessee. The assessee has made substantial payment of ₹ 62,68,311/-. In such peculiar facts and circumstances, we are inclined to agree with the contentions of the assessee that exemption under section 54 cannot be denied to the assessee. The assessee has done all what he could have done. There is no failure on the part of the assessee. We are of the considered opinion that CIT(A) was not justified in denying the exemption claimed by the assessee under section 54 and direct the assessing officer to delete this addition. Disallowance of exemption in respect of amount deposited by the assessee in the capital gain account on the ground that the same was not utilised within the period of three - HELD THAT - The delay in the present case was on account of the developer and not on account of the assessee. The assessee had deposited the amount in capital gain account. The balance amount could not be utilised as there was a dispute and stay by the National Disputes Redressal Commisison. Accordingly, for the reasons stated hereinabove, we hold that the CIT(A) was not justified in confirming the action of the Assessing Officer and direct the AO to delete this. Even if the amount deposited by the assessee in the capital gain account scheme is to be charged to tax, then it could be taxed only after the expiry of the prescribed period not in the year to which the capital gain pertains to. The addition made by the AO and sustained by the CIT(A) deserves to be deleted. Expenses incurred by the assessee at the time of purchase of property - HELD THAT - On going through the assessment order, we note that assessee failed to submit any evidence in respect of the expenses incurred at the time of purchase of the property. Before us also the AR has not produced any evidences. Therefore, in absence of any evidence on record, the claim of the assessee does not stand substantiated. We, therefore, support the addition made by the AO and sustained by the CIT(A). Finding no infirmity in the impugned order on this score, this issue is decided against the assessee Disallowance on account of cost of improvement - HELD THAT - We find that the facts of this issue are identical to the issue of disallowance of cost of improvement dealt by us above wherein we have upheld the action of the Assessing Officer in ignoring the expenses in the absence of any evidence. Here also, in the absence of evidences, we hold that AO was correct in rejecting the claim of the assessee. The department is not supposed to make spot enquiry even when the assessee fails to adduce any evidence in support of its claim. Accordingly, this addition also deserves to be sustained.

Issues Involved:
1. Legality and jurisdiction of the assessment order.
2. Disallowance of ?83,41,330/- for the Assessment Year 2012-13.
3. Disallowance of ?62,68,311/- under Section 54F.
4. Disallowance of ?19,00,000/- for non-utilization within the period mentioned in Section 54(1).
5. Utilization of ?10,60,311/- for construction of a new asset.
6. Indexed cost of acquisition calculation discrepancy.
7. Disallowance of ?52,867/- for cost of improvement.
8. Relevance and validity of the observations and findings by the AO.
9. Incorrect and excessive interest charged under Sections 234B and 234C.
10. Consideration and interpretation of material on record.
11. Justification and excessiveness of the addition made.

Issue-wise Detailed Analysis:

1. Legality and Jurisdiction of the Assessment Order:
The assessee contended that the assessment order was illegal, bad in law, without jurisdiction, and against the principle of natural justice. However, this issue is not independently adjudicated as it is covered by the discussion on other issues.

2. Disallowance of ?83,41,330/- for AY 2012-13:
The assessee argued that the transaction should be scrutinized in AY 2015-16. This issue is implicitly covered under the broader discussion of the disallowances related to Section 54F and Section 54.

3. Disallowance of ?62,68,311/- under Section 54F:
The assessee invested ?62,68,311/- in a residential flat and deposited ?19,00,000/- in the capital gain account. The AO disallowed the deduction as the possession was not taken nor the purchase deed executed within three years. The Tribunal noted that the delay was due to the developer and beyond the assessee's control, referencing judgments such as Balraj Vs. CIT and CIT vs. R.L. Sood. The Tribunal held that the exemption under Section 54 cannot be denied due to reasons beyond the assessee's control and directed the deletion of the addition.

4. Disallowance of ?19,00,000/- for Non-utilization within the Period Mentioned in Section 54(1):
The assessee deposited ?19,00,000/- in the capital gain account but could not utilize it due to a stay order by the National Consumer Disputes Redressal Commission. The Tribunal agreed that the delay was beyond the assessee's control and directed the deletion of the addition. Additionally, it was noted that any unutilized amount should be taxed in the year the three-year period expires, not in the current assessment year.

5. Utilization of ?10,60,311/- for Construction of a New Asset:
The assessee argued that ?10,60,311/- was utilized for the construction of the new asset. This was implicitly covered under the discussion of the ?19,00,000/- disallowance, where the Tribunal found that the amount was not fully utilized due to reasons beyond the assessee's control.

6. Indexed Cost of Acquisition Calculation Discrepancy:
The AO took the cost of acquisition as ?2,00,000/- instead of ?2,20,450/-. The Tribunal upheld the AO's decision as the assessee failed to provide evidence for the additional ?20,450/- incurred at the time of purchase.

7. Disallowance of ?52,867/- for Cost of Improvement:
The assessee claimed ?52,867/- for the cost of improvement. The Tribunal upheld the AO's decision, noting the absence of evidence to substantiate the claim.

8. Relevance and Validity of the Observations and Findings by the AO:
This issue is general and covered by the Tribunal's detailed analysis of the specific disallowances and additions.

9. Incorrect and Excessive Interest Charged under Sections 234B and 234C:
The Tribunal directed the AO to give consequential effect regarding the interest charged under Sections 234B and 234C.

10. Consideration and Interpretation of Material on Record:
This issue is general and covered by the Tribunal's detailed analysis of the specific disallowances and additions.

11. Justification and Excessiveness of the Addition Made:
The Tribunal's detailed analysis and decisions on the specific disallowances and additions address this issue.

Conclusion:
The appeal is partly allowed, with the Tribunal directing the deletion of the additions related to the disallowances under Section 54F and the capital gain account deposit, while upholding the AO's decisions on the indexed cost of acquisition and cost of improvement. The Tribunal also directed the AO to give consequential effect regarding the interest charged under Sections 234B and 234C.

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