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TMI Blog2014 (4) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under S.54 of Rs.22,73,732. 3. Brief facts of the case leading to the filing of the present appeal are that the assessee, an individual, deriving income by way of rent from property and capital gains from sale of residential house during the year under appeal, has filed return declaring a loss of Rs.4,54,269 from house property. During the course of assessment, the Assessing Officer noted that the assessee inherited a house property situated at Banjara Hills, Hyderabad from her father through a will deed in the year 1997. The said property was transferred through a Exchange Deed on 24.5.2004, with one Mohd. Khudrath Khan for a consideration of Rs.49,46,000. The sale proceeds were bifurcated as Rs.25,00,000 in cash and the balance consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the provisions of the Hyderabad Municipality Act, 1955, the developer was directed to bring the building construction to conform with the original plan. The Assessing Officer noted that as against sanctioned plan area, the assessee constructed 20,000 sft. approximately, and the assessee purchased super built up area of 10,490 sft. on different floors as per Schedule 2 annexed to the sale deed dated 29.5.2004, which was made part of the assessment order. It was also noted that as per the schedule, the assessee got entire three flats constructed with an area of 4,479 sft each on 3rd and 4th floor, 8 car parkings, 7620 and 830 sft. in 1st Floor. The Assessing Officer further noted that the assessee acquired built up space in different floor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also contended that once the investment is made in a building constructed by taking permission as residential, assessee becomes entitled for relief under S.54, irrespective of the end user of the said property which become immaterial. The Assessing Officer, not concurring with the contentions of the assessee, denied the claim of the assessee for exemption under S.54 of the Act, observing that the construction of the building in which the assessee acquired the property was in total violation of the municipal permission and the property has been converted into commercial property as against the sanctioned plan of residential flats, and also the fact that the end use by the assessee in leasing out such constructed area by commercial exploitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. He submitted that the assessee has given land for development and got in return, constructed residential property, which is eligible for relief under S.54 of the Act. He further submitted that the land was given by the assessee to the developer for construction of a residential building. In this behalf, he submitted that in several decisions of this Tribunal it has been consistently held that subsequent change in the usage of the property does not disentitle the assessee to the relief under S.54, if what was acquired was originally a residential property. The learned counsel for the assessee, in support of this contention, placed reliance on the decision of the A.P. High Court in the case of Dr. J.V.Desai V/s. CIT(154 ITR 828). He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the property remained 'residential' only. Merely because of change in the user of such property for non-residential purposes by an educational institution or an automobile dealer to whom it was leased out, it cannot be said that what was acquired by the assessee was not a residential property, but a commercial one. The show cause notices issued by the civic authorities merely took cognizance of the deviations made by the developer from the approved plans, and warned the developer to conform to such approved plans, and warned against any deviation. Such a show cause notice cannot clinch the issue against the assessee In this view of the matter, we are of the view that the intention of the parties when the development agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding dated 14.01.2001 entered for the joint development and construction of the said property also refers to the construction of residential complex. We find no infirmity in the view taken by the CIT(A) as to the residential nature of the property purchased by the assessees, considering the factual aspects noted above. Even though the property was subsequently leased out to M/s.APP Lab Technology P Ltd, and it has been used for non- residential purposes, on that ground, the deduction u/s.54F cannot be denied. Mere non residential use subsequently would not render the property ineligible for benefit u/s.54F, if it is otherwise a residential property, as held by the Delhi Bench of the Tribunal in the case of Mahavir Prasad Gupta Vs JCIT (5 S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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