HC DELHI: ORDER PASSED WITHOUT DEALING WITH OBJECTIONS FILED BY THE ASSESSEE IS NOT VALID

In case of M/S JAY BHARAT MARUTI LTD vs. ASSTT. COMMISSIONER OF INCOME TAX AND ORS  High Court Of Delhi set-aside order passed by the lower authorities, holding that the order should be passed by any authority after taking into account the objections filed by the assessee as also after giving the assessee an opportunity of hearing.

Issue for Consideration

In this case assessing officer passed the order without considering the objection filed by asseesse and without given an opportunity of being heard to him.

Facts of the Case

· AO issued an notice dated 30.08.2011 u/s 148 to asseessee pertaining to the assessment year 2007-08.

·    Asseessee has filed objection against the same notice.

·   By the order dated 28.01.2013 the respondent has rejected the objections raised by the assessee and did not give opportunity of being heard to him pursuant to the receipt of the purported reasons behind the proposed reopening of the assessment for the said assessment year 2007- 08.

·    Then asseesee moves for higher authority.

Judgment of HC

·   The passing of an order dealing with the objections filed by the assessee is not an empty formality.

·   The assessing officer has to apply his mind to the objections raised and has to deal with the objections in the order.

·    This has not been done in the present case.
·   On going through the order dated 28.01.2013 we find that the same has been passed without any application of mind. 
·   There is no discussion of the points raised by the aseessee in its objections. In fact, portions of the objections furnished by the asseessee have been copied as it is by the AO.

·     Consequently, order dated 28.01.2013 is set-aside.

·  The matter is remitted to the AO to pass a fresh order after taking into account the objections filed by the asseessee as also after giving the asseessee an opportunity of hearing.

·     The order be passed by the respondent within three weeks.

·   High Court of Delhi has not commented at all on the merits of this petition with regard to the validity of the notice dated 30.08.2011. That issue is kept open.

Regards

CA. Mona Singhal
Partner

Arpit Gupta & Associates
Chartered Accountants

701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001

Mobile:- +91-9873082769 
Website: www.caaga.co.in

SECTION 54F EXEMPTION NOT AVAILABLE FOR ADDITION / MODIFICATION / EXTENSION MADE TO EXISTING HOUSE

In its judgment dated 22^nd August, 2012, HIGH COURT OF KERALA in the case of Pushpa vs. Income tax Officer held that exemption under section 54F in respect of Capital Gains will not be available for addition or modification or extension made to the existing house.

Facts of the Case

In the present case assessee i.e. pushpa was taking exemption U/S 54F in respect of capital gains for additions or modification in the existing house.

This is objected by ITO and now case is before High Court of Kerala.

Issue for Consideration

The issue raised in the present case is as to whether the exemption will be available to the assessee in respect of additions or modification made in the existing house under section 54F of the IT Act. 

Judgment

ü  Sec. 54F provides that capital gains on transfer of capital assets shall not be charged in cases of investment in new residential house. 

ü  The section pointedly says that such eligibility would be available if the assessee has, within the period prescribed, constructed or purchase, a residential house.

ü  For the purpose of that section, the residential house so constructed is referred to as new asset.

ü  The object sought to be achieved by that provision is to exclude capital gains on transfers of certain capital assets from being charged provided the new asset is a residential house.

ü  Obviously, a new house is not something which is either an extension or addition made to an existing structure.

ü  As noted by this Court in Mrs. Meera Jacob(supra), the exemption is available only when the investment is in the construction of a house and not for investment in modification or renovation.

ü  Sec. 54F does not provide for exemption on investment in renovation or modification of an existing house and what gains exemption is only construction of a house.

ü  Reverting to the case in hand, the Tribunal adverted to the entire materials and has categorically found that there is nothing on record to show that the capital gains was actually utilized for the construction of  a new house. 

ü  Therefore no exemption shall be given U/S 54F for any addition, modification or extension of existing house.

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates

Chartered Accountants

701, Nirmal Tower,

26, Barakhamba Road,

Connaught Place, Delhi-110001

Mobile:- +91-9873082769 

Website: www.caaga.co.in