2016 (4) TMI 70 - AT - Income Tax

Disallowance of claim of deduction u/s 54F - transactions done by Shri Ram Gopal Bansal as a Karta of the HUF OR in his individual capacity - Held that - The assessee has been consistent in its approach in terms of treatment and disclosure of the purchase and sale and subsequent purchase of the properties. It so happened that in the agreements, the name of Shri Ram Gopal Bansal has been mentioned wherein all the relevant facts taken together leads to the conclusion that all these transactions have been effectively done by Shri Ram Gopal Bansal as a Karta of the HUF and not in his individual capacity. In the instant case whether the sale consideration has been brought to tax in hands of Ram Gopal Bansal HUF, the subsequent claim of relief u/s 54 should have been allowed to the assessee knowing fully well that both the original purchase/sale agreements and subsequent purchase agreement, the name has been mentioned as Ram Gopal Bansal and not Shri Ram Gopal Bansal HUF. In the instant case, if it s the case of the Revenue that capital gains on sale of the property is liable for taxation in hands of assessee HUF even though the sale agreement talks about the individual, in our view, the Revenue should equally allow the relief from such taxation where the assessee fulfills all required conditions except that the name in the purchase agreement is that of individual and not assessee HUF. It t is not in dispute that the sale consideration has been deposited in the bank account of Ram Gopal Bansal HUF and the same has been utilized for purchase of plot of land and the construction of house thereon by utilizing the funds withdrawn from the bank account of Shri Ram Gopal Bansal HUF. The said facts is clearly apparent from the statement recorded by the AO of Shri Ram Gopal Bansal during the course of assessment proceedings which has been totally ignored by the lower authorities. Thus the assessee should be eligible to claim the necessary relief u/s 54 of the Act in respect of investment in plot of land and subsequent construction of house thereon. - Decided in favour of assessee Addition on account of excess cash deposit over the cash withdrawal in the account maintained by the assessee - Held that - It is noted that the bank statement of both the bank a/cs maintained by the assessee which includes the opening and closing balances were available with the AO. Secondly the details of the agricultural income were also apparent from the return filed by the assessee. Keeping in view the factual position and explanation of the assessee, we hereby delete the addition in the hands of the assessee. - Decided in favour of assessee Income from other sources as against agricultural income - Held that - As per the ld. CIT(A) no independent evidence is filed which may indicate that agriculture income to such extent was derived by the assessee. The case of the assessee is that the land was irrigated and capable of giving yield which was supported by copy of Kasra Girdhawari and Jamabandi as well as sale contract notes. Further it is noted that in the past the assessee has been consistently showing the agriculture income. Keeping the entirely of the facts and circumstances of the case, income is hereby directed to be treat as agricultural income and not as income from other sources - Decided in favour of assessee

Issues Involved:
1. Jurisdiction and validity of the assessment order.
2. Assessment of long-term capital gain and denial of deduction under section 54F.
3. Addition on account of unexplained cash credit.
4. Treatment of agricultural income as income from other sources.
5. Setoff of agricultural income.
6. Charging of interest under sections 24B, 234C, and 234D.

Issue-wise Detailed Analysis:

1. Jurisdiction and Validity of the Assessment Order:
The grounds challenging the jurisdiction and validity of the assessment order under section 143(3) were not pressed during the hearing and were dismissed as not pressed.

2. Assessment of Long-Term Capital Gain and Denial of Deduction under Section 54F:
The assessee sold a property in Jaipur and claimed exemption under section 54F for the construction of a house on a plot purchased in the name of an individual, not HUF. The AO disallowed the claim, stating the property was purchased and constructed in the name of an individual, not HUF. The CIT(A) upheld the AO's decision, citing the jurisdictional High Court's ruling that the deduction is available only if the property is purchased by the assessee himself.

The Tribunal noted that the property transactions were consistently shown in the books of HUF and the funds for the purchase and construction were from HUF. The Tribunal emphasized that the provisions of sections 45 and 54 should be harmoniously interpreted, and the relief should be allowed to the assessee HUF. The Tribunal allowed the deduction under section 54F for the investment in the plot and subsequent construction but denied the claim of Rs. 68,905 for construction cost due to lack of evidence.

3. Addition on Account of Unexplained Cash Credit:
The assessee challenged the addition of Rs. 5,39,500 for excess cash deposits over withdrawals. The Tribunal considered the opening and closing balances, agricultural income, and the explanation provided by the assessee. It found the addition uncalled for and deleted it, accepting the assessee's explanation.

4. Treatment of Agricultural Income as Income from Other Sources:
The AO treated the agricultural income of Rs. 2,35,320 as income from other sources. The assessee provided evidence of agricultural activities and past income records. The Tribunal noted the consistency in declaring agricultural income and the supporting documents. It directed the income to be treated as agricultural income, not as income from other sources.

5. Setoff of Agricultural Income:
This ground was an alternative plea contingent on the outcome of the addition of unexplained cash credit. Since the Tribunal deleted the addition, this ground became irrelevant.

6. Charging of Interest under Sections 24B, 234C, and 234D:
The grounds challenging the charging of interest under sections 24B, 234C, and 234D were not pressed during the hearing and were dismissed as not pressed.

Conclusion:
The appeal was partly allowed. The Tribunal granted relief under section 54F for the investment in the plot and subsequent construction, deleted the addition of unexplained cash credit, and directed the agricultural income to be treated as such. The claims of construction cost and grounds not pressed were dismissed.

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