TMI Blog2018 (8) TMI 1724X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 54F - Held that:- The facts show that the property at 53&54, Priya Gardens, Simhachalam was registered in the name of the assessee’s wife and the property was enjoyed by the assessee’s wife and the same is not disputed by the department. Once the property was registered in the name of the assessee’s wife, the same should not be considered in the hands of the assessee and reject the claim of the assessee for deduction u/s 54F of the Act. It is for the department to establish that the property No. 53 and 54, Priya Gardens is constructed from the sources of the assessee and it was the property of the HUF. The same exercise was not done by the AO. Therefore, we are unable to accept the argument of the department to hold that the property was belonging to the assessee. Accordingly, the said argument is untenable and rejected. The next issue is property at D. No. 9-33/1, Gopalapatnam, Visakhapatnam as per the evidence available on record, the second property at Gopalapatnam is commercial property, but not a residential property - one property belonged to the assessee’s wife and the second property was a commercial property and the assessee owns only one residential house. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... againstRs. 1, 00, 000/- claimed by the appellant. b. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the disallowance of ₹ 21, 67, 658/- towards exemption u/s 54F of the Act in as much as the appellant does not own more than one residential house other than the one being acquired. 4 . Any other ground that may be urged at the time of appeal hearing. 3. Ground No. 1 and 4 are general in nature which does not require specific adjudication. Hence these grounds are dismissed as not pressed. 4. Ground No. 2 is related to the validity of the notice issue u/s 148 of the Income Tax Act, 1961 (hereinafter called as Act ). No such ground was raised by the assessee before the Ld. CIT(A) and no petition was filed by the assessee before this Tribunal for admission of the additional ground. The Ld. AR also did not make any argument, therefore, this ground is dismissed as not maintainable. 5. Ground No. 3 consists of two issues, one is related to the computation of capital gains adopting the fair market value (FMV) of ₹ 40, 000/- per acre as against ₹ 1, 00, 000/-claimed by the assessee as on 01/04/1981. The second issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence not applicable to the assessee. However, the AO conducted the independent search and found from the website of the sub registrar office that some instances of registrations took place in the vicinity of the area and opined that the market rate would be between ₹ 25, 000/- to ₹ 50, 000/- per acre. The Ld. CIT(A) considered the values of properties in the area and found that in survey No. 164/5 the value in May 1986 was ₹ 1, 06, 610/- per acre and the property in survey No. 164/3 the value in 1986 was ₹ 75, 000/- per acre and the value adopted by Tegala Murali as on 01. 04. 1981 was at ₹ 20, 000/- per acre and viewed that it is fair to estimate the value of the land at ₹ 40, 000/- per acre and accordingly directed the AO to recompute the capital gains. For the sake of clarity and convenience, we extract relevant part of the order of the CIT(A) in para No. 7. 1 which reads as under : 7 . 1 . The material on record indicate that there is no specific information as to the value of the impugned property situated in survey No. 161/1 as on 01 . 04 . 1981 . The assessee relied on value of properties with reference to property in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1, 00, 000/- per acre. Either during the assessment proceedings or before the Ld. CIT(A), the assessee could not establish and submit any evidence to support his claim of fair market value as on 01. 04. 1981 at ₹ 1, 00, 000/- per acre. The Sub Registrar Office also informed the AO that no information is available with regard to the valuation in Survey No. 161/1, Vepagunta as on 01. 04. 1981. However, the Sub Registrar Office has supplied the information with regard to the value as on 01. 04. 1987 at ₹ 9, 000/- per acre. Taking the basis from the Sub Registrar value as on 01. 04. 1987, the AO worked backwards by applying price index and arrived at the value as on 1. 4. 1981 at ₹ 6, 430/- per acre and accordingly allowed the cost of acquisition of the assessee s share at ₹ 1, 07, 690/-. Against the order of the AO, the assessee went on appeal before the Ld. CIT(A) and the Ld. CIT(A) estimated the fair market value as on 01. 04. 1981 at ₹ 40, 000/- per acre. During the appeal hearing, the Ld. AR vehemently supported the claim made by the assessee. The Ld. AR could not place any evidence to show the fair market value (FMV) as on 01. 04. 1981. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enclave, Visakhapatnam but not more than one residential unit as observed by the AO. The assessee submitted that house in 53 54, Priya Gardens, Simhachalam was not owned by the assessee and it was owned by his wife and the third house at D. No. 9-33/1, Gopalapatnam, Visakhapatnam was not a residential house and argued that it was a commercial property. Therefore, the assessee argued that he is entitled for the exemption u/s 54F of the Act. However, the AO rejected the assessee s claim stating that the house in the name of his wife also constitutes the property of HUF since the assessee s wife Smt. Ratna Kumari has no independent sources of income and she happened to be member of HUF. In the absence of any source of income to his wife the AO suspected that property was acquired from the funds of the HUF. The AO further observed that though the house at Gopalapatnam, Visakhapatnam is commercial property, but built as residential house and assessed under the head property therefore, viewed that the assessee owns more than one residential house, and accordingly rejected the claim made by the assessee. 12. Aggrieved by the order of the AO, the assessee went on appeal before the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the material placed on record. In this case, the revenue s argument is that the assesse owns three residential houses, therefore, deduction u/s 54F is not allowable u/s 54F of the Act. As per section 54F of the Act, the assessee would be eligible for claiming the deduction u/s 54F, if the assessee does not own more than one residential house at the time of transfer of property. In this case, according to the AO the assessee owns 3 houses, therefore, the assessee is not entitled for exemption u/s 54F. The assessee explained that the house located at 53 54 was belonging to the assessee s wife and the same cannot be included in it s properties. It is undisputed fact that the house was registered in the name of the assessee s wife which is evidenced from the assessment order. The AO has expected the assessee to prove that the property was constructed from the sources of the assessee s wife but not from the sources of HUF. The contention of the revenue to establish the sources of the assessee s wife for construction is illogical and untenable. The facts show that the property at 53 54, Priya Gardens, Simhachalam was registered in the name of the assessee s wife and the property was e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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