TMI Blog2013 (5) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... n attached to the Land Revenue records as per Section 157 of the Maharashtra Land Revenue Code, 1966 and also the factum of declaration of agricultural income by the assessee in the respective assessment years. The Assessing Officer has merely disbelieved the explanation furnished by the assessee without any credible material to negate the same. Having regard to the material and evidence on record and the legal position, in our view, the CIT(A) was justified in holding that the assessee discharged the burden cast on him to establish that the land was being used for agricultural purposes in the two years immediately preceding the date of transfer. We hereby affirm the same and accordingly the Revenue has to fail on this aspect. - Decided in favour of assessee Claim for exemption under Section 54F denied - Held that:- No justification on the part of the Revenue to deny exemption under Section 54F of the Act merely on the ground that the residential building constructed by the assessee consisted of several independent residential units. The calculation of cost of construction of the residential portion of the new building, and it also asserted that such details were placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration of ₹ 5,31,40,000/- to M/s Broadway Integrated Park Pvt. Ltd. vide sale deed dated 23.05.2007. The assessee declared long term capital gain of ₹ 3,48,70,434/- and the Assessing Officer computed the same at ₹ 3,49,34,327/- after making an addition of ₹ 63,893/- on account of variation in the computation of cost of acquisition, and the said addition has since been deleted by the CIT(A) and on this aspect no further dispute has been raised by the Revenue. 5. The dispute before us is with regard to the claim of the assessee for exemptions under Section 54B and Section 54F of the Income Tax Act, 1961 (in short the Act ) amounting to ₹ 1,59,09,583/- and ₹ 1,83,17,378/- respectively. The assessee had claimed the aforesaid exemptions with respect to the long term capital gain and Assessing Officer denied both the claims. The assessee carried the matter in appeal before the CIT(A) who allowed the claim of the assessee for exemption under Section 54B of the Act amounting to ₹ 1,59,09,583/- whereas the other claim of the assessee for exemption under Section 54F of the Act was denied by the CIT(A) amounting to ₹ 1,83,17,378/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival submissions. Section 54B prescribes that where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes, and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, the said capital gain shall not be charged to income tax and shall be exempt from tax. In terms of Section 54B of the Act, assessee claimed exemption in relation to the long term capital gain earned on the sale of agricultural land situated at village Tathavade, Taluka Mulshi, District- Pune. The Assessing Officer while scrutinizing assessee s claim for exemption under Section 54B of the Act required the assessee to furnish proof that agricultural activity was being carried out by him on the said land for two years prior to the date of transfer. The assessee made two-fold submissions. Firstly, as per the assessee the said land was agricultural land and was situated in no development zone and he also filed the copy of the Land Revenue records, namely, 7/12 ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s claim for exemption under Section 54B of the Act. The aforesaid position articulated by the CIT(A) in the impugned order is the subject-matter of consideration before us. Admittedly, one of the pre-conditions for availing of exemption under Section 54B requires that the land which is the subject matter of transfer ought to have been used by the assessee or a parent of his for agricultural purposes during the period of two years from the date of transfer. In the present case, the assessee putforth the 7/12 extract as per the Land Revenue records for the financial years 2001-02 to 2008-09 to establish that the land was being cultivated and was also classified as an agricultural land. Copies of 7/12 extract have also been placed before us by the assessee at pages 50 to 53 of the Paper Book. A perusal of the same does give a reflection that the crops were being grown on such land namely, Rabbi, Jawar, Rice etc. As correctly noted by the CIT(A) there is a presumption of correctness of entries in the Land Revenue records in terms of Section 157 of the Maharashtra Land Revenue Code, 1966, the relevant extract of which has been noted by the Assessing Officer also in his assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A). In this regard, brief facts, are that in the return of income, assessee claimed exemption under Section 54F of the Act amounting to ₹ 1,83,17,378/- on the ground of having invested the requisite sale consideration for construction of his residential house at Thergaon. The Assessing Officer has denied the claim of the assessee on two grounds and in the alternative, as per the Assessing Officer even if assessee is to be held eligible for the exemption under Section 54F, the same was liable to be allowed only to the extent of ₹ 10,80,123/- and not as claimed by the assessee. 12. Firstly, as per the Assessing Officer, the assessee does not fulfill a basic pre-requisite for claiming exemption under Section 54F of the Act, which is to the effect that the construction of the new residential house is to be completed within 3 years from the date of transfer of old asset. As per the Assessing Officer construction of the new residential house was to be completed by 23.05.2010 whereas in the present case when the assessee was asked to furnish the necessary completion certificate from the municipal authorities, the assessee failed to furnish the same and merely a cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) to sustain the disallowance of exemption under Section 54F of the Act is to the following effect. As per the Assessing Officer, assessee had invested the sale consideration in a commercial-cum-housing complex and not in residential house as mandated by Section 54F of the Act. The Assessing Officer noticed that assessee had entered into a contract with one Shri S.D. Dagrekar, for construction of a commercial-cum-housing complex , which comprised of construction of two buildings one, having 18- one BHK flats and other having 18 two BHK flats along with 9 shops. As per the Assessing Officer since the investment was for a commercial-cumhousing complex and not in a residential house as required by Section 54F of the Act, the exemption was not allowable. 15. In appeal before the CIT(A), on this aspect assessee submitted that the entire building was owned by the assessee and his two daughters and that the buildings were not submitted either to the provisions of Maharashtra Apartment Ownership Act, 1970 or the Maharashtra Co-operative Societies Act and therefore each dwelling unit in the building could not be termed as a separate residential immovable property. It was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the CIT(A) to deny the assessee s claim for exemption under Section 54F of the Act, which we have already noted in para 14 above, and is not being repeated for the sake of brevity. 18. We have carefully considered the rival submissions. Section 54F of the Act prescribes exemption of capital gain arising from the transfer of any long term capital asset, not being a residential house; the exemption is provided in case, within a period of one year before or two years after the date of which the transfer took place assessee purchases or within a period of three years after that date constructs a residential house, and 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 is exempted and 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 be exempted from tax. The case made out by the assessee is that he has undertaken construction of commercial-cum-housing complex on his land at Thergaon which involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention raised by the revenue before that Courts was rejected in the following terms : A plain reading of the provision of section 54(1) of the Income-tax Act discloses that when an individual-assessee or Hindu undivided familyassessee sells a residential building or lands appurtenant thereto, he can invest capital gains for purchase of residential building to seek exemption of the capital gains tax. Section 13 of the General Clauses Act declares that whenever the singular is used for a word, it is permissible to include the plural. The contention of the Revenue is that the phrase a residential house would mean one residential house and it does not appear to the correct understanding. The expression a residential house should be understood in a sense that building should be of residential in nature and a should not be understood to indicate a singular number. The combined reading of sections 54(1) and 54F of the Income-tax Act discloses that, a non residential building can be sold, the capital gain of which can be invested in a residential building to seek exemption of capital gain tax. However, the proviso to section 54 of the Income-tax Act, lays down that if the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consist of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited. [underlined for emphasis by us] 20. From the aforesaid discussion, it is to be understood that the presence of the expression a residential house under Section 54F of the Act is not to be understood to mean that the assessee is to acquire a single residential unit. Section 54F requires the assessee is to acquire a residential house and so long as the assessee acquires a building, which may be constructed in a manner so as to consist of several units which can, if the need arises be used as independent units as residences the requirement of Section 54F should be taken to have been satisfied. In our considered opinion, the aforesaid decision of the Hon ble Delhi High Court supports ..... X X X X Extracts X X X X X X X X Extracts X X X X
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