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TMI Blog2017 (7) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... t the law and prejudicial to the interest of revenue. 1.3 The Learned Commissioner of Income-tax (Appeals) - 14. Chennai, erred in holding that claim made in the revised statement of total income filed during the course of reassessment proceedings cannot be considered by merely stating that reassessment under Section 147 is done to protect the interest of revenue. 2.1 The Learned Commissioner of Income-tax (Appeals) -14 erred in not considering claim of the appellant under Section 54EC of the Act in respect of the Long-term Capital Gains earned on sale of Urban Agricultural Land. 2.2 The Learned Commissioner of Income-tax (Appeals)-14. Chennai erred in not allowing the claim of the appellant under Section 54 of the Act in respect of the investment in new Residential House Property in the name of appellant's two daughters, one of whom is a minor, in respect of the Capital Gains earned on Sale of another Residential House Property, without considering Submission Nos.15.1 to 15.8 of the Written Submissions of the appellant filed during the course of appellate proceedings. 2.3 The Learned Commissioner of Income-tax (Appeals)-14, Chennai erred in not considering the ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made in the house property in the name of minors be allowed as exempt under section 54 of the Act. The Assessing Officer proceeded with scrutiny proceedings and held that sale of agriculture land was claimed exempt under section 2(14) of the Act was actually taxable to income tax as agriculture land in question was within 8 km Municipal limit of the Municipal area. Accordingly, the assessee admitted the fact and filed revised computation of statement of income against long term capital gain of agriculture land claimed exemption under section 54EC for Rs..43,75,358/- and balance claim of section 54EC for Rs..6,24,742/- claimed against the house property. Moreover, the house property which was sold and there arose a long term capital gain in the original return, the assessee has made claim under section 54EC of the Act. However, the Assessing Officer has observed that as per the provisions of section 142(2) of the Act, it is only to examine whether any claim or loss, exemption, deduction, allowance or relief made in the return is inadmissible and section 143(3) of the Act states that after examining such claim, or claims make assessment determining the total income or the loss as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the notice under section 148 of the Act. 6.1 In the assessee's case, the return had been processed under section 143(1) of the Act and accepted. The assessment under section 143(3) had not been taken up by issue of notice under section 143(2) of the Act. However, by service of notice under section 148 of the Act, the Assessing Officer reopened the assessment mainly on the ground that the assessee has not offered the gain on sale of agricultural land as taxable income, against which, the assessee has claimed exemption under section 54F of the Act towards sale of that particular agricultural land and moreover, the assessee has not claimed any other deduction during the course of reassessment proceedings. Therefore, we are of the considered opinion that the assessee has not made any fresh claim of deduction and only made the claim of deduction of exemption against which assessment was reopened. 6.2 As relied on by the assessee, in the case of Sun Engineering Works (P) Ltd. v. CIT 198 ITR 297, the Hon'ble Supreme Court has held as under: In proceedings under section 147 of the Income-tax Act, 1961, the Income-tax Officer may bring to charge items of income which had escaped asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs into an appeal or revision in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to "escaped income". Even in cases where the claims of tile assessee during the course of reassessment proceedings relating to the escaped income are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income, for purposes of "reassessment" cannot be reduced beyond the income originally assessed." From the above judgement of the Hon'ble Supreme Court, it is clear that a matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as 'escaped income'. In this case the assessee has claimed deduction of exemption under section 54F of the Act for investment made in the residential house property out of sale consideration of agricultural land, which was found to be escaped assessment, and no new claim of deduction has made during the course of reassessment proceedings. 6.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, he claimed that it should be considered as acquisition under section 53A of Transfer of Property Act and the said house property should be considered for allowing exemption under section 54F of the Income Tax Act as purchase of the new house property during the year. 7.3 The Assessing Officer has observed as per the deed, one of the children was already a major on the date of agreement on 19.09.2005 and so, 50% of it gone to a major daughter and the assessee has no claim on it. Other 50% belong to a minor, but for all practical purposes, the property were purchased by his daughter only and belongs to her and cannot be treated as a property were purchased and owned by assessee at any point of time and therefore, held that acquisition of a property in the name of another person also not qualify for exemption. Moreover, the second 40% of the house property was acquired by way of Deed of Mortgage by Conditional Sale against which exemption cannot be claimed under section 54F of the Act since there was no purchase or construction. The Assessing Officer has further observed from the terms of agreement that it is not an agreement of purchase but advancement of a loan on inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to exemption under section 54." Further, in the case of Mir Gulam Ali Khan v. CIT [1987] 165 ITR 228, the Hon'ble Andhra Pradesh High Court has held as under: "The object of granting exemption under section 54 of the Income Tax Act, 1961, is that a person who sells a residential house for the purpose of purchasing another convenient house must be given exemption so far as capital gains are concerned. The word "assessee" in section 54 must be given a wide and liberal interpretation so as to include his legal heirs also. There is no warrant for giving too strict an interpretation to the word "assessee" as that would frustrate the object of granting the exemption." By following the ratio laid down in the case of CIT v. V. Natarajan (supra) and in the case of Mir Gulam Ali Khan v. CIT (supra), in the case of CIT v. Kamal Wahal [2013] 351 ITR 4 (Del), the Hon'ble Delhi High Court has held as under: "9. It thus appears to us that the predominant judicial view, including that of this Court, is that for the purposes of Section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: PROVIDED that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale." In view of the above provisions of Transfer of Property Act, we are of the opinion that the Mortgage is a 'Sale' in the first place, wherein; the possession of the property gets transferred to the mortgagee. The sale gets void when the mortgage-money is repaid by the mortgagor. In other words, the sale gets confirmed on default of the mortgagor to repay the mortgagemoney. In the present case, the assessee has obtained the possession of the property through a registered 'Deed of Conditional Sale' through mortgage deed executed on 19.09.2005, which can be understood from the following clause of the said Deed: "The MORTGAGOR has put the MORTGAGEES in possession of the property forming the subject matter of this Mortgage Deed. The MORTGAGOR has also handed over all original documents of title pertaining to this property t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. This objection of the Assessing Officer cannot be sustained in view of the judgement in the case of Balraj v. CIT 254 ITR 22 (Del), wherein, by relying on various decisions of the Hon'ble Supreme Court, the Hon'ble Delhi High Court has observed and held as under: "3. The Assessing Officer, the appellate authority as well as the Tribunal rejected the claim of the assessed in respect of the assessment year 1975-76 on the ground that he did not become the owner of the property, as the said transaction was not evidenced by registration thereof as provided under Section 17 of the Registration Act. For the purpose of attracting the provisions of Section 54 of the Income-tax Act, it is not necessary that the assessee should become the owner of the property. Section 54 of the said Act speaks of purchase. Moreover, the ownership of the property may have different connotation in different statutes. The question which arises for consideration appears to be squarely covered by a decision of the apex court in CIT v. T.N. Aravinda Reddy [1979] 120 ITR 46, where it has been held that "the word 'purchase' occurring in Section 54(1) of the Act had to be given its common meaning, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on 10.06.2005, which is beyond the six months from such transfer and therefore, the authorities below have held that the claim of the assessee was not entertainable. 9.1 Admittedly, the assessee made investment in NABARD bonds on 10.06.2005. However, the said investment was not made within a period of six months after the date of such transfer as stipulated under section 54EC(1) of the Act. The agriculture land was originally sold on 16.08.2004, whereas, investment in NABARD bonds were made on 10.06.2005, much after six month and the assessee has not furnished any valid reason either before the authorities below or before the Tribunal for the belated investment in the bonds after six months period of sale. 9.2 The case law relied on by the assessee in the case of Alkaben B. Patel v. ITO 148 ITD 31 (Ahd)(SB) has no application to the facts of the assessee's case because, in that case the sale document was registered on 10.06.2008 and the assessee should have purchased the bond within 10.12.2008. However, the assessee has submitted the application for the purchase of bonds and tendered the cheque on 08.12.2008, which was within the period of six months from the date of transf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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