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2018 (12) TMI 1458 - AT - Income TaxIncorrect claim of deduction u/s 54F - assessee had received the equal amount of consideration in the form of land in exchange and the entire land was used for the purpose of construction - Held that:- The assessee had received 1089 sq. yds of vacant site at an agreed cost of ₹ 88,08,000/- for which the market value was ₹ 10,000/- per sq. yd and the aggregated deemed consideration was ₹ 1,08,90,000/- from Sri Dandamudi Suman Babu. From the recitals of the above exchange document dated 03. 08. 2009, it is evident that the deemed consideration for the property transferred by the assessee was ₹ 57,49,200/- against which the property was valued at ₹ 88,08,000/-. The assessee had received the vacant site valued at ₹ 1,08,90,000/- against the agreed consideration of ₹ 88,08,000/- which is less that the fair market value as per section 50C. It is established that the assessee had received the equal amount of consideration in the form of land in exchange and the entire land was used for the purpose of construction thus there is no case for capital gains and the assessee is entitled for the benefit of deduction u/s 54F. Reopening of assessment - Held that:- In the instant case, the assessee had received the land in exchange of land which is a kind component but not in cash and the entire land received by the assessee was applied for the purpose of construction of new residential house. There was no cash component received by the assessee for depositing in specified account and there was no investment. There was no finding either from the AO or by the Pr. CIT that the land was not fully utilized for the construction of the house. As per sub section 1 of Section 54, in case the assessee applied the entire net consideration for acquiring new asset, the entire net consideration is eligible for deduction u/s 54F of the Act. In the instant case, there is no dispute that the entire land received in exchange was used for the purpose of acquiring the new house and the assessee had completed the construction of the new house within the stipulated period u/s 54F. Therefore, we are of the considered opinion, that the assessee would be entitled for deduction u/s 54F as claimed. There is no error which causes prejudice to the interest of the revenue, accordingly, we set aside the order of the Ld. Pr. CIT and allow the appeal of the assessee. Non-admission of rental income - Held that:- During the reassessment proceedings AO has satisfied that there is no case for taxing the rental income due to non-receipt of the same from the tenant. Though the notional rent is taxable in the hands of the assessee as per section 23(1)(a), having examined the issue in detail during the reassessment proceedings and accepted the contention of the assessee regarding non receipt of rent there is no error in the assessment order. CIT is permitted to invoke the jurisdiction only if the assessment is erroneous and prejudicial to the interest of revenue. The twin conditions should be satisfied cumulatively for taking up the revision. In the instant case though the assessment is prejudicial but it is not erroneous thus there is no case for invoking the jurisdiction u/s 263. The order passed by the Ld. Pr,CIT u/s 263 is unsustainable and the same is quashed. - Appeal of the assessee is allowed.
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