TMI Blog2015 (9) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... stered document and the agreement with the builder has already been noticed by the State Registration Authorities and the Assessee is contesting those proceedings. Those proceedings will not have any bearing with regard to the claim of the Assessee for deduction u/s.54F of the Act, as the factum of investment in acquiring a residential house and payment of ₹ 54,70,887 has been established and not disputed by the Revenue. - Decided in favour of assessee. - ITA No.82/Bang/2014 - - - Dated:- 26-8-2015 - SHRI N.V. VASUDEVAN AND SHRI ABRAHAM P. GEORGE, JJ. For The Appellant : Shri G.S. Prashanth, C.A. For The Respondent : Shri Sunil Kumar Agarwala, Jt. CIT(DR) ORDER Per N.V. Vasudevan, Judicial Member This appeal by the assessee is against the order dated 30.10.2013 of the Commissioner of Income-tax (Appeals), LTU at Bangalore relating to assessment year 2007-08. 2. The assessee is an individual. He derives income from salary, income from partnership business from two firms, called M/s Tyre Gallery and M/s Car Gallery, which is exempt u/s 10(2A) of the Income-tax Act, 1961 [ the Act ] and income from other sources. Return for assessment year 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Membership : ₹ 75,000 Sinking Fund towards Maintenance : ₹ 1,51,875 Service tax on Deposit : ₹ 28,042 Legal Fees : ₹ 10,000 Rs.4,57,292 GRAND TOTAL Rs.52,60,292 (c) Registered Sale deed by the developer, Esperanza by UKN dated 25/6/2008 wherein undivided share of land, residential apartment and 2 covered car parks proportionate share in common area was sold for a sale consideration of ₹ 22,05,000/-. 5. The Assessing Officer was of the view that the value shown in the registered sale deed can be considered as investment in a residential house for allowing exemption u/s 54F of the Act. The value as per registered sale deed was ₹ 22,05,000. The AO allowed registration charges and stamp duty and thus arrived at a total investment in residential house of ₹ 24,15,59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete in all respects, have to be incurred by the purchaser of flat. These amenities need not be included in the registered document. The value of these amenities if included in the sale deed would involve payment of stamp duty and registration charges on their value. These amenities need not be legally treated as part of immovable property. There is, therefore, no illegality on the part of the Assessee in making the claim for deduction u/s.54F of the Act as was made in the return of income filed by the Assessee. The Assessee also pointed out that the Developer confirmed the receipt of ₹ 52,60,292 towards the cost of undivided share of land, constructed apartment, car parks and other amenities. Therefore there was no reason for the AO to have restricted the deduction u/s.54F of the Act only to the extent of value as disclosed in the registered sale deed. 9. The CIT(Appeals), however, did not agree with the submissions of the Assessee. She was of the view that the Assessee was indulging in undervaluation of property to avoid stamp duty and registration charges on registration of the property at the correct value. Thereafter, the CIT(A) found that under the agreement dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in residential house. (1) Subject to the provisions of sub-section (4), where in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereinafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house in India] (hereinafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there can be no adverse inference drawn against the Assessee. 17. The fact remains that the Assessee has parted with a sum of ₹ 54,70,887 to acquire a residential house , in the sense, a house which is habitable. Therefore as far as proceedings under the Act are concerned, the Assessee cannot be denied the benefit of deduction u/s.54F of the Act. The fact that there was undervaluation of the value of the property for the purpose of stamp duty, is an issue which is alien to the question of allowing deduction u/s.54F of the Act, when the evidence on record clearly shows investment in construction of residential house to the extent of ₹ 54,70,887. 18. The AO and the CIT(A) have ignored the fact that the Assessee has in fact made investment to the extent of ₹ 54,70,887 and therefore the deduction claimed u/s.54F of the Act ought to be allowed. The fact that there was discrepancy between the amount set out in the registered document and the agreement with the builder has already been noticed by the State Registration Authorities and the Assessee is contesting those proceedings. Those proceedings will not have any bearing with regard to the claim of the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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