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2015 (6) TMI 563 - ITAT LUCKNOW

2015 (6) TMI 563 - ITAT LUCKNOW - [2015] 41 ITR (Trib) 593 (ITAT [Luck]) - Deduction under section 54F - CIT(A) allowed claim - Held that:- Assessing Officer has made disallowance of claim of deduction under section 54F of the Act without making necessary verification. Before the ld. CIT(A), the assessee has filed enormous evidence in order to establish that the alleged properties held by the assessee were not of residential nature, as they were used for commercial purposes. Revenue has not brou .....

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Disallowance of deduction of ₹ 30 lakhs paid to the seller through cheque for delay in execution of sale deed and handing over of possession within a specified period as per memorandum of understanding - Held that:- Undisputedly there was a clause in the agreement to sell that the assessee would pay ₹ 30 lakhs to the seller if the possession is delayed. The explanation has furnished for the delay in handing over the possession to the seller for which assessee has paid ₹ .....

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deduction. We accordingly set aside the order of the ld. CIT(A) and direct the Assessing Officer to allow deduction of ₹ 30 lakhs against sale consideration.- Decided in favour of assessee. - ITA No.211/LKW/2013,C.O. No.17/LKW/2013 - Dated:- 5-6-2015 - Shri Sunil Kumar Yadav, and Shri. A. K. Garodia,JJ For the Petitioner: Shri. O. N. Pathak, D.R. For the Respondent: Shri. Rakesh Garg, Advocate ORDER PER SUNIL KUMAR YADAV: This appeal is preferred by the Revenue against the order of the ld .....

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8377; 30 lakhs and computation of long term capital gain as per provisions of section 48(1) of the Act. 3. The appeal and cross objection were heard together and are being disposed of through this consolidated order for the sake of convenience. 4. The facts in brief borne out from the record are that the assessee has raised a claim of deduction under section 54F of the Act with regard to the capital gain earned on sale of property No.101-B, 1st Floor, Elegant Business Park, Andheri (East), Mumba .....

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he Act as well as claim of expenditure of ₹ 17,07,470/- and ₹ 30 lakhs as aforesaid. He allowed deduction of ₹ 5 lakhs only relating to transfer charges in respect of property sold at Mumbai. While disallowing the claim of deduction under section 54F of the Act, the Assessing Officer was of the view that the assessee is already having a self occupied property at Parwati Bagla Road, Kanpur and has also disclosed to have received rental income from the property No.83/140, Parampu .....

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; 30 lakhs relating to sale of Mumbai property. The Assessing Officer was of the view that it was penal charges for late possession, therefore, the same cannot be allowed for the purpose of deduction from the cost of transfer. 5. The assessee preferred an appeal before the ld. CIT(A) and filed written submissions explaining the nature of properties held by him at the time of purchase of residential house No.10/495, Khalasi Lines, Kanpur along with certain evidence relating to other properties. T .....

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view that the assessee owns only one residential house and the other properties are commercial properties and are not being used for residential purpose. Therefore, the assessee is entitled for deduction under section 54F of the Act. 6. With regard to the claim of deduction of ₹ 30 lakhs on sale of property at Mumbai, the ld. CIT(A) has not appreciated the contentions on behalf of the assessee and he treated this payment as penal in nature and not as compensation for late possession of pr .....

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e ld. CIT(A) in order to establish that the properties held by the assessee at the relevant point of time are commercial properties. 9. With regard to the property at plot No.14/6B, Gwalitoli, Civil Lines, Kanpur, the assessee has filed certificate of registration with Trade Tax Department, registration with Directorate of Industries, Unnao, Wealth Tax return for assessment year 2009-10 and valuation report of the DVO dated 15.7.2009 to prove that this property was used for commercial purposes. .....

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nd came to the conclusion that these properties were used for commercial purposes. 11. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the Assessing Officer has made disallowance of claim of deduction under section 54F of the Act without making necessary verification. Before the ld. CIT(A), the assessee has filed enormous evidence in order to establish that the alleged properties held by the assessee were not of residential nature .....

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by the Assessing Officer and the ld. AR, the legal position and case laws on the issues involved in the present appeal. After examining the various evidences relied upon by both the parties relating to the issue of claim of deduction under section 54F of the Act, I find that Assessing Officer has based his decision vide remand report dated 6.11.2012 simply on the narration given I the sale deed of the properties at Parampurwa & Civil Lines which mention the nature of the property as residen .....

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riginal asset ; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset ; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head ''Income from .....

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deed which was executed in financial year 2006-07 whereas the transfer of Mumbai property took place in financial year 2008-09. About the nature & use of the property the learned AR has furnished voluminous documents and most of them are the certificates issued by various Govt. agencies like Excise Department, Sales Tax, Labour Deptt., Pollution Deptt., etc. Apart from this the premises was also inspected by Department Valuer of Valuation Cell who had found the property as factory building i .....

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asis of narration in the sale deed reached to the conclusion that the property was a residential house. The Assessing Officer also did not make any effort to inspect the property during assessment as well as in remand proceedings. Decision: (With reference to Prampurwa Property) I have carefully considered the rival submission and evidences placed on record. The documentary evidences furnished by the appellant have not been disbelieved by the Assessing Officer. The Assessing Officer only on the .....

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t year 2009-10 with return of income 4. TDS certificate on rent for assessment year 2009- 10 5. Letter dated 26.5.2007 & 15.11.2007 of U.P. Pollution Board 6. Electricity Bill 7. License under Factory Act 8. Registration certificate dated 13.3.2006 9. Acknowledgement dated 3.5.2007 of Govt. of U.P. 10. Income statement filed for assessment year 2007- 08 & 2008-09. It is obvious that the property is commercial property. Considering the overwhelming documentary evidences filed by the appel .....

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property was also not a residential house. The nature of this property has been explained in written submission dated 24.9.2012 which is reproduced as under:- Evidence relating to house property No.14/6-B, Civil Lines, Kanpur. This was also not a residential property. It was a piece of land on which some old construction being garage and small verandah existed. It was being used for commercial purposes for installation of genset. It was not in a condition of living for residential purposes. Ther .....

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dential house and the old constructed portion was being used for business purposes by M/s Gemini Packagers are enclosed:- 1. Registration certificate dated 27.8.2002 under Central sales Tax ( Additional Evidence). 2. Roop Patra form No.15 (Trade tax) (Additional evidence) 3. Certificate of Directorate of Industries (Additional evidence) 4. Copy of wealth tax returns of the appellant. In the wealth tax return no exemption for residential house property was claimed for this property. The copy of w .....

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Civil Lines, Kanpur, in which assessee has submitted that the said property is a piece of land and not a residential property. Further, evidence i.e. Registration certificate under CST, Roop Patra Form No.15 (Trade Tax), Permanent registration certificate of Directorate of Industries and wealth tax returns for assessment year 2004-05 to 2009-10 have also been submitted by the assessee. On perusal and comparative analysis of wealth tax returns for the aforesaid assessment years, it is found that .....

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Civil Lines, Kanpur as additional evidence but on going through the same it is found that the same is on Estimate of proposed construction to be done in the premises 14/6-B, Civil Lines, Kanpur . Since the said document is an estimate which has no legal existence and in any case cannot be treated as valuation report. Keeping in view of the above, I am of the view that the said evidence is irrelevant in this case which may not be considered by your honour. Further, in respect of use of this prop .....

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d. AR in his counter reply has staed that the Assessing Officer has wrongly treated this property as residential house. The relevant portion of the reply is reproduced as under:- in his counter reply has staed that the Assessing Officer has wrongly treated this property as residential house. The relevant portion of the reply is reproduced as under:- About House Property no. 14/6B Civil Lines Kanpur:- Various documents showing the nature of property has also been filed. This property was also not .....

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was as per estimate of the approved value which always vary from year to year. Details of evidences furnished with paper book are as under:- S.No. Documents/Evidences Nature of such documents PB Page No. 1 Certificate of Registration dt. 27/8/02 with Trade Tax Department Certificate shows that the property was a commercial property 63 2 Registration Certificate dt. 27/08/03 with D.I.C. Unnao Certificate shows that the property was a commercial property 64-65 3 Wealth Tax Returns for Asstt Year 2 .....

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n view of this there was no justification in treating this property also as Residential House. Decision: (with reference to Civil Lines property) I have carefully considered the rival submission made by the AR and Assessing Officer. From the details and evidences furnished I find that the constructed portion was very old having one constructed room and verandah without electric connection, kitchen and the same was being used for keeping genset. I also find that Assessing Officer simply on the ba .....

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ty. Observations with regards to the valuation of the property are not relevant to the issue relating to the nature of property. On consideration of- 1. Certificate of Registration dated 27.8.2004 with Trade Tax Department. 2. Registration certificate dated 27.8.2003 with DIC, Unnao 3. Wealth Tax Return for assessment year 2004-05 to 2009-10 4. Copy of valuation report dated 15.7.2009 It is obvious that property is commercial property. Looking to the totality of the facts documents, evidences &a .....

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