2020 (11) TMI 933 - ITAT VISAKHAPATNAM - Income Tax

Head Note / Extract:
Denying deduction u/s 54F(3) - as per the joint development agreement dated 29/07/2010, the transfer of land given for development purpose amounts to transfer within the meaning of section 2(47) and thus development agreement dated 29/07/2010 is antivirus to the provisions of section 54F(3) - assessee stressed that she has purchased only land to construct a residential house and transferred the said land to the developer, therefore ld.AR argued that the assessee has not violated any of the provisions of section 54 F(3) - HELD THAT:- From combined reading of the development agreement, MoU and facts placed before us it is understood that the assessee has sold the 03 pieces of land and constructed a residential unit within the time specified in section 54F - As per the statement of facts placed before CIT(A) the entire transaction was completed within the time allowed u/sec. 54Fwhich clearly reveals that there were no separate transactions. By any stretch of imagination AC shed of 50 sq.ft. cannot be stated to be a residential house and at best it can be called as a security guard’s room for guarding premises. Residential unit comprises of kitchen, bed rooms, hall, toilets etc. Therefore we are of the considered view that the assessee has sold the 03 pieces of land and constructed a single residential unit comprising of 3296 sq.ft. as a duplex unit as mentioned in development agreement and MoU for which the assessee had spent a sum of ₹ 65,88,000/- + registration charges and additional sum of ₹ 40.00 lakhs as per MoU dated 29/07/2010 aggregating to ₹ 1,11,47,230/- and the assessee is entitled for deduction u/sec. 54F and withdrawal of deduction allowed u/sec. 54F by the AO is bad in law. Allow the appeal of the assessee.