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TMI Blog2016 (8) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has been using it as his office and his residence was at E 549 Gr. Kailash 2 First Floor, New Delhi. As a matter of fact the address E 575E GKII being an office of the appellant was treated by the appellant at all times as his permanent address. (b) That the confirmation from his son who is a practicing lawyer for taking on rent appellant's claim that he has been using front half portion of E 575E Ground Floor, G.K.U till 31st March, 2009 as his office is self serving and not of much value. However, the Learned CIT(Appeals) failed to appreciate that the above fact does not concern the relevant assessment year. (c) That the sale deed in respect of property E-549 G.K. II shows the residential address of the appellant as E-575E G.K.II. However, the Learned CIT(Appeals) failed to appreciate that the said sale deed as in the case of the 2007 sale deed also mentioned the permanent address for correspondence and for identification purpose as E 575A Greater Kailash II. (d) That the electricity bill of E-575A is shown to be domestic. The use of residential premises as on office by an Advocate is permitted by MPD 2021. Thus merely because the electricity bill is on d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several documents including official documents establishing that the disputed premises was being used as office by the appellant. In the entire impugned order, there is not even a whisper of how the Learned CIT(Appeals) has dealt with the said documents except quoting the grounds of appeal in her order, in verbatim. Thus the impugned order is liable to be set aside on this ground alone. 5. The Learned CIT(Appeals) has factually gone wrong in stating that the appellant was using both E-575A and E-549, G.K. II properties as his residence & has falsely created evidence to justify that E-575A, G.K. II is a commercial building. In fact the appellant has never claimed E-575A, G.K.II as commercial building but has stated that this property was being used by him as his office, the income of which cannot be considered under the head income from house property. 6. The Learned CIT(Appeals) has gone wrong in concluding that the appellant is not entitled to deduction u/s. 54F as he has not conformed to the conditions laid down u/s. 54.She has erred in not considering the conditions laid down in proviso to sec. 54F of the Income-tax Act, 1961. 7. That on the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that there is no distinction between the expression "Type" and "actual use" of the property. He submitted that the finding of the Assessing Officer that only sale deed would determine the use of the property is contrary to the master plan for Delhi 2021 (MPD - 2021). In terms of Rule 15.8 of MPD-2021 professional activities such as those involving services based on professional skills namely that of Doctor, Lawyers, Architects, CAs, Company Secretaries etc. can be run in residential dwelling units. Thus, even as per MPD, 2021 which has fully statutory force, professional activities shall be permissible on any one floor of the residential building and/or in the basement of the residential building. These rules cannot be overlooked by stating that since the sale deed states the type of property as residential, it cannot be used by the professional for his office use. What the sale deed states is the type of the properties and not the use of property as contended by the Assessing Officer. 5.1 The Learned AR submitted that the assessee is a senior advocate deriving income from profession, house property, capital gains and other sources. During the assessment year 2002-03, he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,48,23,645. Proceeds from aforesaid sale were invested in purchase of new residential house entitling the assessee to deduction of Rs. 1,48,23,645 under sec. 54F of the Act The assessee had also made investment in REC Bonds, entitling him to deduction of Rs. 50 lacs under sec. 54EC of the Act. 5.7 The Learned AR contended that as per the terms of section 54F of the Act, the assessee is entitled to deduct proportionate capital gains arising from sale of long term capital assets, not being a residential house, which are invested in purchased/construction f new residential house, if on the date of transfer, the flsSessee doBsr^^dw^p^re than one residential house. He submitted that in the present case, the assessee did not own more than one residential house ( i.e. E-549 ) at the time of sale of Gurgaon property in as much as the other properties viz. E-575A was not used for residential purposes and was put to use for purpose of profession, being carried don by the assessee from the said premises. The authorities below have held the said property to residential house merely on the basis that the same was classified as residential property as per municipal laws and in the registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order for the year under consideration (page No. 32 of the P.B); 6. The Learned Senior DR on the other hand placed reliance on the orders of the authorities below with the submission that the assessee was owner of three residential house on the date of transfer. The premises at E- 575A, Gr. Kailash-II, New Delhi in question was earlier used as residential and later on was used as office. She submitted that property is undisputedly a residential house as per the municipal corporation and thus it will not change the character. She submitted further that manner of the construction will decide the nature of the house as to whether it is residential or commercial/official. The Learned Senior DR submitted that the decision relied upon by the Learned AR having distinguishable facts are not helpful to the assessee. She submitted that the premises capable of use as residential house is enough and it is not necessary to live there. She submitted that user of the property is immaterial if property is shown as residential on the record of the corporation. She submitted that undisputedly GK-II, New Delhi area is marked for residential use. She contended that joint ownership for convenience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of apart thereof as an independent house. There may be several such considerations for a person 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 consists 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". 8.1 The Hon'ble Supreme Court has been pleased to dismiss the appeal preferred by the Revenue against the aforesaid ruling of the Hon'ble High Court, reported in 228 Taxman 62 (SC). 8.2 The Mumbai Bench of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l house viz. 50% share is in ground and first floor of a residential property mentioned above, disentitling the claim of deduction under sec. 54F of the Act. The aggrieved assessee ultimately went before the Hon'ble High Court where assessee held a property jointly with her husband and she transferred another property owned by her individually for consideration under a development agreement. The issue was as to whether joint ownership of a property could be held to stand in her way of claiming exemption under sec. 54F. It was held in negative. The further question raised was as to whether since assessee did not own any property in status of an individual as on date of transfer, her claim was to be allowed. It was held in affirmative i.e. in favour of the assessee. 8.4 In view of the above ratios when we examine facts of the present case, we find that at the beginning of the relevant assessment year, the assessee had following properties which were put to different use: 1. E-549A - Residential purposes; 2. E-575 A- Office for purpose of carrying legal profession. 3. Gurgaon Flat- Under Construction. 8.5 During the year, the assessee sold his rights in Gurgaon Flat under con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e will be considered while adjudicating upon the eligibility of deduction under sec. 54F of the Act claimed by the assessee. In the present case, for denial of the claimed deduction under sec. 54F of the Act, the Assessing Officer should not have considered the property E-575A, G.K.II, New Delhi as residential on the basis of municipal record ignoring the actual user thereof, as held in the above cited decisions. The authorities below were thus not justified in denying and upholding the denial of the claimed benefit to the assessee by way of deduction under sec. 54F of the Act on the basis that the assessee was owning more than one residential house (i.e. inclusion of E-575A, GK-II, New Delhi) on the date of transfer of the original assets. We thus setting aside the orders of the authorities below in this regard direct the Assessing Officer to allow the claimed deduction under sec. 54F of the Act. The ground No.1 is accordingly allowed. 9. So far as ground No. 9 is concerned, it is alternative. In this ground, the grievance of the assessee is that the Learned CIT(Appeals) did not deal with the issue with regard to deduction available to the assessee under sec. 54EC of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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