TMI Blog1999 (11) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... ng term capital gains on the sale of the above land as follows : "Sale consideration 36,00,000 Less : Indexed Cost of acquisition 61,925 X 244/100 1,50,197 Less: Proportionate amount of capital gain on account of investment in residential properties 3449003/ 2422643 X 3600000 23,21,028 ---------------------- Net long term capital gains : 11,27,975 ---------------------- From the above calculations, it is evident that the assessee's claim before the Assessing Officer was that he was entitled to deduction of Rs. 23,21,028 from the capital gains on account of investment in the residential properties at Lohagaon as per provisions of section 54F of the Income-tax Act, 1961. The claim of the assessee was based on the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Thus, the appellant will not be entitled to the deduction under section 54F of the Income-tax Act. (ii) If the appellant's contention in this regard that the shares of WPCL and the appellant were defined as per Agreement dated 12-5-1989, and that the land exclusively belongs to the appellant and super structure belongs to WPCL is accepted, then the investment made by the appellant was not for the purchase of a residential house, but for purchasing a super-structure built on his own land. The purchase of mere super-structure without land cannot be equated to the purchase of a residential house. On this account also, therefore, the appellant will not be entitled to deduction under section 54F. (iii) The appellant's contention that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn land rather than purchase of a property constructed by somebody else. Since the said construction is completed before the transfer of the land at Varale, I agree with the Assessing Officer that the appellant is not eligible for the deduction under section 54-F." 3. Shri C.V. Khandelwal, the learned counsel for the assessee submitted that both the authorities below have not correctly appreciated the facts of the case. He submitted that the assessee was absolute owner of the land at Lohagaon and he had simply permitted the lessee company M/s. Weikfield Products Co. (I) Ltd. to put up super-structure on the said land. The super-structure was in the nature of residential house meant to accommodate the guests of the said company and only th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cket Club [1934] 2 ITR 209, decision of the Rajasthan High Court in the case of CIT v. Vimal Chand Golecha [1993] 201 ITR 442 and decision of the Gujarat High Court in the case of Sakarchand Chhaganlal v. Controller of Estate Duty [1969] 73 ITR 555 at page 559. He therefore submitted that the assessee did purchase the super-structure, i.e., residential accommodation for the said company on 25-2-1993 for a consideration of Rs. 34,49,003. The learned counsel also placed reliance on the opinion of Mr. Rajiv Patel, Advocate, an expert in the field of land cases which is placed on record. 4. Shri Jayant Diddi, the learned Departmental Representative strongly supported the orders of the authorities below. He maintained that both the lands at Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, it is treated as a separate asset. In the case before us, it is an admitted fact that the land at Lohagaon was owned by the assessee, the super-structure on the land was built by the company. These were two distinct assets -- (i) that the land belonged to the assessee; and (ii) the super-structure belonged to the company. The super-structure was admittedly a residential house for use by the company for its guests. The assessee purchased the superstructure from M/s. Weikfield Products Co. (I) Pvt. Ltd. on 24-2-1993. It is not the case of the Department that the assessee did not pay for the super-structure or that the purchase of the super-structure by the assessee was a colourable device. The whole case of the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er' has been used in the said deed but that is just to cover the land owned by one party and the super-structure owned by the other party to the exclusion of each other. This fact is very clear from the statement of wealth-tax/wealth-tax returns filed by the assessee upto Assessment year 1992-93 referred to supra and the balance-sheet of the company to which reference has been made in para 3 above, Accordingly, we hold that the authorities below fell in error in assuming that the assessee was the co-owner of the super-structure. 7. In the light of the above discussion, we hold that the assessee is entitled to proportionate amount of deduction (Rs. 23,31,028) under section 54F of the Act. The Assessing Officer is directed accordingly. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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