TMI Blog2016 (4) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... uation Report to the assessee. In view thereof, we have no option but to uphold the finding of the ld. CIT (A). In view of the above, the appeal of the revenue is required to be dismissed and is accordingly dismissed. Since we are upholding the valuation made by the Valuation Officer as well as the order passed by ld. CIT (A), therefore, the ground no. 2 of the assessee is also dismissed. Deduction u/s 54F - proof of purchase of new asset within the period of two years after the date of transfer of original asset - HELD THAT:- It is the admitted case that sale of unauthorized commercial land was effected on 31.1.2011 and the agreement to sale for purchase of agriculture land was executed between Shri Khiv Singh and the assessee on 2.6.2011 of the land bearing Khasra No. 1262 at village Muhana admeasuring 1.99 hector and 0.37 hector. If Shri Khiv Singh and Shri Naurat Singh were the owners of the property, how the agreement can be executed solely by Shri Khiv Singh and how the entire sale consideration was received by Shri Khiv Singh on 2.6.2011 in the absence of any registered power of attorney in his favour executed by Shri Naurat Singh , prior to the agreement . Moreover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.02.2015 passed by the learned CIT (A)-2, Jaipur for the A.Y. 2011-12. The assessee has raised the following grounds of appeal :- 1. On the facts and in the circumstances of the case and in law the ld. CIT (A) erred in confirming the disallowance of deduction of ₹ 83,54,434/- claimed by the assessee u/s 54F of Income Tax Act by holding that the assessee is not eligible for deduction u/s 54 of Income Tax Act as the investment in new asset for claiming deduction u/s 54F of Income Tax Act is not a residential house with land appur5tenant thereto. The order of ld CIT (A), confirming the disallowance of deduction claimed by assessee u/s 54F is arbitrary, whimsical, capricious, perverse and against the law and facts of the case. The order of ld. CIT (A) in this regard deserves to be set aside and addition made by the ld AO by disallowing the deduction u/s 54F deserves to be deleted. 2. On the facts and in the circumstances of the case and in law the ld. CIT (A) erred in sustaining the addition of ₹ 2,24,863/- (₹ 2,04,78,163/- minus ₹ 2,02,53,300/-) under section 50C of Income-tax Act, 1961 on the b asis of value adopted by the Valuation Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of land for construction of a residential house. The deduction u/s 54F amounting to ₹ 83,54,434/- has been claimed on account of said investment in the land. Copy of the agreement to purchase and registered purchase deed are enclosed herewith. The assessee got constructed a residential house in the F.Y. 2012-13 i.e. within the statutory time limit allowed by the I.T. Act, 1961 i.e. before the due date of February, 2014. 2. Copy of bills for construction of house along with Map of the house is enclosed herewith. 3. The total area of land is about 4090 sq. mtr. And the constructed area is about 1504 sq. ft. 4. No approval is required for construction of the above said residential house. 5. Copy of registered sale deed is enclosed as per point No. 1 of this letter. The AO without awaiting for the Valuation Report of the Valuation Officer had passed the assessment order on 13.03.2014 and held that the assessee has under reported the sale consideration by ₹ 1,07,89,217/-. The reasons given for not awaiting and not considering the report of the valuation officer is mentioned in para 4.5 of the assessment order which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the Assessing Officer passed the order u/s 143(3), well before the limitation date for passing this order. Therefore, in my view, the report of the Valuation Officer cannot be ignored, on this ground. Also, in my view, the Assessing Officer cannot object to the valuation, made by the Valuation Officer, on merits. In other words, the Assessing Officer cannot sit in judgment over the report of the Valuation Officer and is duty bound to follow the same. In view of the above, it is held that the full value of consideration accruing as a result of transfer, is the valuation submitted by the Valuation Officer u/s 50C, on 13.03.2014, at ₹ 2,04,78,163/-. Therefore, addition of ₹ 2,24,863/- (₹ 2,04,78,163 ₹ 2,02,53,300) is sustained on this issue under the head Capital Gains while the balance addition is directed to be deleted. The above grounds are allowed. 4. Now the revenue has challenged the order passed by ld. CIT (A) on the ground mentioned herein above and sought to contend that the order passed by the AO is required to be upheld. 4.1. Whereas the assessee has challenged the addition of ₹ 2,24,863/- on the ground that the capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. Section 142A provides as under :- Section 142A: (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B is required to be made section 69B or fair market value of any property referred to in sub-section (2) of section 56 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the appeal of the revenue is required to be dismissed and is accordingly dismissed. 4.3. Since we are upholding the valuation made by the Valuation Officer as well as the order passed by ld. CIT (A), therefore, the ground no. 2 of the assessee is also dismissed. Accordingly, we dismiss Ground No. 2 of the assessee. Ground No. 1 of the Assessee Appeal 5. Ground No. 1 of the Assessee appeal raised in the assessee s appeal is with respect to the capital asset, claiming deduction under section 54F of the IT Act. The AO has mentioned that the assessee had made the investment of ₹ 1,15,00,000/- in the property and had claimed proportionate deduction of ₹ 83,54,434/- under section 54F of the IT Act. When it was noticed by the AO, the assessee was called upon to furnish the details and accordingly the assessee has furnished the reply as under :- - The total area of land purchased by the assessee was around 37000 sq. ft. (4090 sq. mtr) and the assessee had shown construction area of 1504 sq. ft only. - The bills submitted by the assessee for construction were not proper. They are just computer printout without any details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sq.ft. construction claimed by assessee. The Assessing Officer, thus, concluded that investment was purely in land and not a residential house as required u/s 54F of I.T. Act, 1961 and so assessee is not entitled to claimed deduction u/s 54F. 4.4. The issue in question is whether the assessee is therefore, eligible for deduction u/s 54F, in this case. The objections raised by the Assessing Officer that the land purchased is agricultural, and not residential; that the house has been constructed without approval by Government Authorities; that the assessee does not have a permanent electricity connection; cannot by itself be a ground for denying deduction u/s 54F. However, while considering the claim of deduction, the entire conspectus of facts have to be taken into consideration. I agree with the appellant that there is no additional rider in section 54F that the land should not be agricultural, the plan of the house should be approved by the Government Authorities or that, there should be a permanent water and electricity connection. It is also not necessary that the property should be registered or that construction of the house should be made on the entire land and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on report, submitted by the appellant, this residential house consists of a tin shed measuring 1394 sq. ft. and a guard room measuring 159.5 sq. ft. and has costed the assessee a sum of ₹ 1,15,00,000/-. No prudent man will construct a residential house, made up of a tin shed for a sum of ₹ 1.15 crore. Also, during the site visit made by the Inspector, during the course of assessment proceedings it was seen that animals were tied in this tin shed. Obviously, a residential house, within the meaning of section 54F, would mean a house for humans and not animals. 4.5.4. In view of the above discussion, it is held that the investment in the new asset for claiming deduction u/s 54F is by no stretch of imagination, a residential house with land appurtenant, thereto. Therefore, the appellant is not eligible for deduction u/s 54F. The disallowance of deduction u/s 54F is upheld. This ground is dismissed. 7. Now the assessee is before us. 7.1. The ld. A/R for the assessee has reiterated that the authorities below have failed to appreciate that under section 54F there is no restriction to construct residential house on the agricultural land. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) 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 shall not be charged under section 45 ; (b) 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 not be charged under section 45 : Provided that nothing contained in this sub-section shall apply where-(a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset ; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset ; or(iii) constructs an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,-(i) the amount by which- (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of subsection (1), exceeds, (b) the amount that would not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon for any purpose in view of the provisions of section 17 read with section 19 of the Registration Act and Stamp Duty Act. Therefore, we are left with no other option but to ignore the agreement dated 2.6.2011 as the said agreement, in our view, do not confirm any right, title, interest and power of attorney in favour of the assessee. The Hon ble Supreme Court in the matter of Suraj Lamp and Industries Limited vs. State of Haryana (2011) 14 Taxmann.com 105 (SC) has reiterated in para 18 as under :- 18. We have merely drawn attention to and reiterated the well-settled legal position that SA/GPA/WILL transactions are not transfers or sales and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said SA/GPA/WILL transactions may also be used to obtain specific performance or to defend possession under section 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. We make it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l limit of the Jaipur Nagar Nigam. In our view, if the original character of the land sold by the assessee was agricultural, then the benefit of section 54F cannot be granted if the land purchased is used for Residential purposes, for that the benefit can only be given under section 54B of the Act. Further in view of the judgment of Hon ble Rajasthan High court in the matter of Kalya vs. CIT (2012) 22 Taxman.com 67 the benefit of 54F cannot be given to the Assessee. Moreover, if we look into the size of the agricultural land purchased by the assessee vide registered sale deed dated 29.3.2013, we find that the total size of the plot is 37,000 sq. ft. whereas the constructed portion of the entire complex was only 1553.50 sq. ft. (tin shed). Therefore, also the assessee cannot be given the benefit of section 54F within the meaning of law as the property purchased by him was an agricultural land and the house was constructed only of 1553.50 sq. ft. against the total size of land admeasuring 37,000 sq. ft. . The character of remaining property was continued to be the agricultural in nature. In view thereof ground no. 1 is dismissed. 8. In the result, appeals of reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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