9911796707
TMI Blog2009 (6) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... without any foundation, flooring and plastering and devoid of any basic facilities like water and electricity for a decent human habitation; qualify for exemption u/s. 54. 4. The CIT(A) has also failed to appreciate that when even after 10 years the area is very difficult for human habitation then 10 years earlier how bad the living condition would have been. 5. The CIT(A) has also failed to appreciate the contradiction in the assessee's arguments that on the one hand, the assessee claims to have invested in a residential property, 10 years ago for which development expenditure of ₹ 79.70 lakhs were incurred for developing the land including 4 house properties. He also claims that rent ranging from ₹ 800 to ₹ 2000 p.m. were received by him for each of these properties for which he could not produce any receipts or rental agreements. On the other hand, the description of the properties bought and sold subsequently in the sale deeds both by the seller from whom the assessee purchased and by one of the purchaser to whom they were sold by the assessee refer to these 'house properties' as mud structures with mangalore tiles. It is the intent of the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the process had paid a sum of ₹ 20 lakhs to the tenant being compensation, thus the net consideration received was ₹ 1.5 crores. While computing the capital gains [CG], the assessee had set off index cost of the property at ₹ 1,18,52,900/- leaving a CG of ₹ 31,47,100/- and also claimed exemption u/s 54F of the Act for having purchased residential properties amounting to ₹ 79,70,000/- which, according to the assessee, the computation had resulted in Nil income. On the other hand, the AO took a stand that the assessee had not declared the CG accruing on the transfer of the property resorting to incorrect computation. The case was reopened by issuance of notice u/s 148. In the reassessment proceedings, the AO had disputed the method of computation of CG on two folds, the one being the indexation cost of the property sold. The view of the AO was that the market value of the property as on 1.4.1981 would have been ₹ 1.35 lakhs as reflected in the wealth-tax records of the assessee as against ₹ 38,86,200/- as adopted. The second being the computation of exemption claimed u/s 54F of the Act. The claim of the assessee was that four residenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at least there must be one piece of structure. Shri Khanna, who has no any stake in the ongoing dispute between the revenue and the appellant, has stated that there was one small structure. The house tax payment also suggest that there was a house at No. 16. In the overall analysis, I am persuaded by the surrounding circumstances that there must be a small, temporary, kutcha structure which can also be called a 'residential property'. As argued by the appellant's representative, there is no definition or prescribed parameter to describe 'a structure' or 'a building'. As regards the rest of the residential structure, there are no credible evidences to establish that there are three other structures. Even the Panchayat tax payments could not establish the existence of the other three structures. Hence, I am willing to accept that there is a potential possibility that site No. 16 has a residential structure. .................... .................... 11....... Considering the surrounding circumstance and a small portion of material evidence it was concluded that the appellant is believed to have a residential structure at No.16. For this particular pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for developing the land including four house properties. He also claims that rent ranging from ₹ 800 to ₹ 2000/month were received by him for each of the house properties for which he could not produce any receipts or rental agreements; On the other hand, the description of the properties bought and sold subsequently in the sale deeds both by the seller from whom the assessee purchased and by one of the purchasers to whom they were sold by the assessee refer to these 'house properties and mud structures with Mangalore tiles. It is the intent of the Legislation that exemption u/s 54 be given when residential property is acquired or constructed and not for temporary mud structures. 8. During the course of hearing, the Ld. DR furnished a paper book containing 1-72 pages which consists of, inter alia, copies of deeds of sale executed by individuals in favour of assessee in respect of Plot Nos:7, 16 and 17, copies of deeds of sale in favour of individuals executed by the assessee in respect of Plot Nos:7, 16 and 17. The Ld. DR had placed strong reliance on the following decisions: (a) D.P. Mehta vs. CIT (2001) 251 ITR 529 (DEL); (b) Dr. A.S. Atwal vs. CIT (2005) 277 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t portion of the AO's report which is crucial to the issue on hand, is extracted as under: "1.3 ............. The assessee has sold the four sites to two different parties who have purchased two adjacent sites together in 2001. Site Nos:16 and 17 are purchased by Sri Vivek Khanna and his wife Smt. Mitra Khanna. The two sites were fenced together with cement bricks. A small house was being built in one corner with hollow cement bricks which will be around 10 ft. by 5 ft. Enquiries with the workers there at work revealed that the construction had started only recently. By the looks of it, it appears to be a temporary watchman's shed. Otherwise, there was no other sign of any house or foundation on the site. The site did not have the look of a well developed and maintained one. Wild grass had grown everywhere. Site Nos: 7 and 8 are purchased by Smt. Vijayarajeshwari and Smt. Jayalakshmi Iyer together from Sri M.B. Ramesh. The two sites together were fenced at the back with wire fencing and the other sides with hollow cement bricks, one side being common to Shri Vivek and Mitra Khanna's site. On this plot, there was no structure at all. The Site Engineer and the Insp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 in an identical issue has observed thus: "Property sold by the assessee i.e., plot with a tin shed, was not a house as the tin shed had no bath room or kitchen or electricity connection, and even if the same is considered as a house, assessee is not entitled to exemption under s.54 on the sale of said property as it was not occupied by the assessee or a parent of his for their residence in the two years immediately preceding the date of transfer." 13. Reliance was also placed on the decision of the Hon'ble H.C. of Rajasthan in the case of Rajesh Surana vs. CIT reported in (2008) 215 CTR 482. On a perusal of the said decision, we find that the Hon'ble Court had an occasion to consider an issue of claiming of exemption under section 53 for the assessment year 1992-93. Incidentally, section 53 is omitted from statute w.e.f. 1.4.1993 by the Finance Act. 1992. As such, we are of the considered view that this finding of the Hon'ble Court may not be of any help to the Revenue. With due respect, we have also perused the decision of the Hon'ble High Court of Karnataka referred supra on which the assessee had placed reliance. 14. In overall consideration of ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have invested an exorbitant amount of approx. ₹ 50 lakhs for development of the said properties, the LD. CIT(A) had observed in the impugned that the investment of development charges has not been substantiated; (viii) The CIT(A) in the concluding paragraph has stated that, "11.......Shri Khanna who eventually purchased the property clearly mentioned that this particular plot there was a kutcha mud structure of only about 250 sft. Does the investment of ₹ 28.60 lakhs befits a kutcha mud structure of 250 square feet dimension? Viewed from all probabilities of human judgment, this proposition is not possible......" Making such an observation, how did the CIT(A) come to a conclusion that the house at No. 16 would not be worth more than ₹ 11.60 lakhs and subsequently allowed exemption u/s 54 relating to Property No.16 is rather intriguing. (ix) For an argument sake without conceding, if there were a residential house at Plot No. 16 as alleged by the assessee for which the CIT(A) had allowed exemption u/s 54, even then the decision of the CIT(A) goes against the spirits of the principles laid down by the Hon'ble High Court of P and H referred supra, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
