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HIGH COURT OF PUNJAB AND HARYANA

Pawan Arya

v.

Commissioner of Income-tax*

ADARSH KUMAR GOEL AND AJAY KUMAR MITTAL, JJ.
IT APPEAL NO. 613 OF 2010
DECEMBER 13, 2010
Section 54 of the Income-tax Act, 1961 - Capital gains - Profit on sale of property used for residential house - Assessment year 2005-06 - Assessee claimed exemption on capital gains on sale of flat on ground of acquisition of two houses - Assessing Officer set off capital gain against one of houses but held claim not to be admissible against second house - Tribunal upheld order of Assessing Officer - Whether claim for exemption under section 54 is not admissible against acquisition of two houses - Held, yes - Whether, therefore, no substantial question of law arose from Tribunal's order - Held, yes

[2011] 12 taxmann.com 440 (Kar.)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, Bangalore

v.

Smt. Jyothi K. Mehta

N. KUMAR AND RAVI MALIMATH, JJ.
IT APPEAL NO. 194 OF 2010
JANUARY 5, 2011




Section 54 of the Income-tax Act, 1961 - Capital gains - Profit on sale of property used for residential house - Assessment year 2006-07 - Whether expression 'a residential house' should be read in consonance with other words 'buildings' and 'lands' and, therefore, the singular 'a residential house' also permits use of plural by virtue of section 13(2) of General Clauses Act - Held, yes - Assessee sold her property and utilized sale consideration for purchase of two flats - Her claim for exemption under section 54 was rejected by Assessing Officer on ground that she was already an owner of a residential flat and had purchased two flats out of sale proceeds - Whether since evidence on record showed that two units were situated side by side, modification were made and door was opened making them as a single unit, assessee was entitled to benefit of section 54 - Held, yes [In favour of assessee]

Words and phrases : 'A residential house' as occurring in section 54 of the Income-tax Act, 1961

The assessee maintained proper books of accounts.  The books were audited under sec.44ab.  Some parties from whom the assessee purchased goods came to be Surveyed and the party confessed that he is a name lender.  The said party issued bills, payments were made by cheques to that party.  The GP. was normal.  The surveyed party is assessed to tax.  It is learnt that the AO made completed the assessment of the surveyed party on the basis of materials available and no concession was shown to him for the confession.  It was argued by the assessee that the assessee discharged his primary onus - establishing the identity of the party, establlishing that the said party encashed the cheque which was an account payee cheque.  No opportunity for cross examination of the surveyed party was given to the assessee.  Can the averments of the surveyed party be used against the assessee on the ground that a) the assessee did not maintain stock data, b) it is for the assessee to prove the genuineness of the purchase etc.

"a property" according to one court could be plural and whereas it is sigular according to some courts.  However, if the three properties are adjacent to each other so as to form one residential unit though in plans it may appear to be different properties, it could be argued that what is invested is in purchase of single unit.

The Rajasthan High Court decision was given in the context of levy of penalty for not getting the accounts audited.  For deleting the penalty it was held that the assessee was under a bona fide belief that the accounts need not be audited as turnover of different business was less that the prescribed limit.  It also further pointed out that non audit of accounts did not create any difficulty in computing the total income.  It nowhere says that the turnover should be looked at each of the business separately.

The ratio in the said judgement referred to by you should be understood in that context.  There were deposits in the bank.  It is assumed that the depositor was the assessee himself or he knew who the depositor is.  In the circumstanes it is assumed that  assessee is fully aware of the source of the funds. 

The requirement under the IT Act is in the circumstances spelt by Courts that the assessee should discharge his primary onus i.e. name and address of the depositor, hiis Pan  and bank details etc.  since the assessee would have full knowledge of these details.  It is for the Department to prove that the transaction is not genuine thereafter.

Though the restriction has the effect of relating back to a date prior to the presenti, the law stricto sensu is not retrospective, but is retroactive. The restriction does not interfere with settled or vested rights.

there is a reported Bombay high Court Decision where it was held that the amount of cash deposited has to be treated as capital gains.

please forward a copy of the order of the GUJ High Court and oblige

iN VIEW OF THE GUDGEMENT IN THE CASE OF GOETZ the AO has no power to assess the income at a figure less than the returned income though the assessee might have failed to claim certain exemptions etc.  The assessee has to file a revised return.  However this bar is not applicable to the CIT(A) and other appellate authorities.  In the appeal proceedings one may claim the exemption.  The issue cannot be remedied by an application for rectification.

In computing income from "Other Sources" what is allowed as deduction is the expenses incurred for earning that income.  The interest paid on car loan cannot be said to be expenditure incurred for earning the interest income from the FDs.  In my view the AO is right

Dear Patelji

can u send me a copy of that judgement?  thanks

vsaiyar






















adsence, pandora,  limewire

is there any prescribed form in which application for no dduction of tax on interest on time deposits is to be made by a charitable trust - can one use 15G for this purpose and whether bankers will accept it.








utorrent, pandora,  limewireis ther

WOULD YOU KINDLY MAIL ME THE JUDGEMENT IN DOLAT PROTIENS CASE.  tHANKS




















frostwire, pandora,  limewire

If the purchase of the flat has not been shown/disclosed in the IT Return, then it will be treated as your undisclosed income.

If the source of investment could be explained as from his known sources, though one did not show in his books, the sale proceeds cannot be taxed as his income from undisclosed sources.  A residential flat being a personal asset need not reflect in his books of accounts.