TMI Blog2017 (12) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... al, CAs For The Revenue : Ms. Bedobani, Sr. DR ORDER This is an appeal by the assessee against the order dated 14.10.2016 of ld. CIT (A)-19, New Delhi. 2. Following grounds have been raised in this appeal: 1. That under the facts and circumstances, both the lower authorities grossly erred in law as well as on merits in not allowing deduction u/s. 54 F for ₹ 36,65,714/- for the capital gain earned on sale of Indirapuram plot. 2. That without prejudice, alternatively, under the facts and circumstances, if in any case, capital gain issue was to be examined for its taxability, it could had been done only in A.Y. 2016 - 2017 as provided U/s. 54 F (4), being the year in which the period of 3 years from the date of transfer of original asset expires. 3. That under the facts and circumstances, no interest under section 234 A B should had been charged. Without prejudice, in any case, the calculations are grossly erroneous and excessive. 3. From the above ground, it is gathered that main grievance of the assessee relates to the deduction u/s 54F of the Income-tax Act, 1961 (hereinafter referred to as the Act) for ₹ 36,65,714/- on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to show cause as to why disallowance u/s 54F of the Act should not be made as no residential house seems to be constructed on the said plot. The assessee furnished the copy of the approved plan of construction and admitted that the report and photographs furnished by the Inspector were correct and belonged to Plot No. 300, Nitikhand-II, Indrapuram, Ghaziabad (U.P.). The assessee submitted to the AO that he was using 5 Kg LPG cylinder and used submersible pump for water supply. The AO, however was not satisfied from the reply of the assessee and held that the assessee had not able to justify the claim for deduction u/s 54F of the Act and had not produced LPG bills and completion certificate from any Government authority, therefore, no construction had taken place as per approved plan. The AO also held that the structure present on the said plot was not a residential house or it was not in a habitable condition, he, therefore, made the addition of ₹ 36,65,714/- on account of long term capital gain. 6. Being aggrieved the assessee carried the matter to the ld. CIT(A) and filed additional evidences in the form of pictures of the completed house, copy of bank statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences furnished by the assessee and observed that the bank statement had shown that there were cash withdrawals on the relevant dates but the withdrawal of cash did not mean that the same was paid to the contractor for construction. He further observed that the notice u/s 143(2) of the Act was served on the assessee on 18.09.2014, up to that date, the assessee had not taken any steps towards the construction of the property but took preliminary steps only to create a facade for completion of property before the AO. He further observed that the assertion that the labour ran away or the contractor fell ill was also unsubstantiated, nor believable, since there was no shortage of labour in the country, so as to hold up any activity. He also observed that the photographs of the complete house revealed that it was not an extension of the old house which disproved the argument of the assessee that only part work was done, which was completed later on. The ld. CIT(A) also pointed out that the steel gate on boundary wall of earlier photographs were different and that the assessee had filed completion certificate only on 30.06.2016 which would have been relevant date for completion of the ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruct only after the case was selected for scrutiny which shows the utter disregard to the provisions of the Act. The ld. CIT(A) held that the AO was correct in stating that the assessee had failed to complete the construction of house within a period of three years and violated the provisions of Section 54F of the Act. Accordingly, the addition made by the AO was sustained. 9. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee purchased a residential plot for ₹ 57,30,000/- on the same date i.e. 05.07.2012 when the Plot No. 76, Niti Khand-II, Indirapuram was sold for a sum of ₹ 44,80,000/-. Thus, the whole sale consideration was invested within three years and construction plan was got sanctioned from GDA vide approval dated 21.10.2014 and thereafter the construction was started in November 2014. However, construction of only one room residential set, consisting of living room, bathroom and kitchen got constructed within the specified period of 3 years upto March 2015 which stood proved from the certificate of architect/Government approved valuer dated 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e record. In the present case, it is not in dispute that the assessee sold Plot No. 76 at Niti Khand-II, Indirapuram, Ghaziabad on 05.07.2012 for a sum of ₹ 44,80,000/- and purchased the another residential Plot No. 300, Niti Khand- II, Indirapuram, Ghaziabad for ₹ 57,30,000/- on the same date i.e. 05.07.2012. The assessee got the construction plan sanctioned from GDA vide approval dated 21.10.2014 which is evident from the copy of sanctioned plan issued by Ghaziabad Development Authority available on the record wherein it is mentioned that the Map No. 74 was sanctioned for Zone 6/14-15 dated 31.10.2014 for residential building at Plot No. NK-300, Indirapuram, Ghaziabad (U.P.). The assessee started construction on the same plot and the approved valuer vide certificate dated 12.03.2015 (copy of which is placed at page no. 6 of the assessee s paper book) certified that the residential house of Mr. Rajpal Trehan and Smt. Anita Pal Gotra was completed existing of living room, bathroom and kitchen at Plot No. NK-II/300, Ghaziabad (U.P.). In the present case, it is also noticed that the AO deputed one Inspector to examine the site and give report of construction. Thereafter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- and invested in residential plot on the same date i.e. 05.07.2012, a sum of ₹ 57,30,000/- which was more than the total consideration of the plot sold. The assessee also constructed one room residential unit. Therefore, the conditions to claim the deduction u/s 54F of the Act were fulfilled prior to the time available for constructing the residential house from the sold plot which was upto 05.07.2015. The assessee along with the co-owner constructed a covered area of 40 sq. mts. by investing ₹ 8,25,000/- and constructed one living room with bathroom kitchen. The certificate given by the approved valuer is placed at page nos. 6 7 of the assessee s paper book. In the present case, the Inspector deputed by the AO, after visiting the site stated that a room measuring 15 15 ft. with a cement ceiling was erected on the plot which was locked and appeared not in use but the report given by the Inspector was dated 30.11.2015 while the valuer certified vide his report dated 12.03.2015 that one living room unit was constructed on the plot in question. 14. From the above facts, it is clear that the assessee invested in the residential plot which as per the aforesaid ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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