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TMI Blog2021 (12) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... rities have grossly erred in not allowing the benefit of exemption u/ s. 54 at least qua the half of the property being apparently constructed and used for residence purposes. 2. That the CIT (A) has grossly erred in allowing deduction only of Rs. 2,00,000/- as against Rs. 5,24,602/- (i.e. 1,91,100 * 711/259) claimed by the assessee on account of construction cost incurred in construction of three shops, basement, one room (Kotari) as well as boundary wall all along 4 sides of the Plot. 3. That under the facts and in totality of the circumstances of the case the assessee is entitled to benefit of exemption u/s. 54 of the Act so claimed on the actual sale consideration of Rs. 35 Lacs received to the appellant instead of Rs. 43,08,360/- as assumed by the AO as per DLC Rates u/s. 50C of the Act." 2. Briefly stated, the facts of the case are that the assessment in the case of assessee was completed u/s 143(3) read with section 147 of the Act. The AO considered deemed sale consideration as per stamp duty value u/s 50C at Rs. 43,08,360/-, disallowed claim of cost of construction (after indexation) amounting to Rs. 5,24,602/- and disallowed claim of deduction u/s 54 amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partly as residential, the claim u/s 54 should be proportionately allowed to the assessee. 6. Regarding claim of cost of construction, our reference was drawn to the submissions made before the ld. CIT(A) which were reiterated and the same read as under:- ".......The AO has accepted the existence of the Construction of the Basement, Kotari & Shops in front of the Plot which is about 910 Sq Ft as per the Map being the forming part of the sale deed [Page No 21 to 26 & Specially page 26] but has taken the cost thereof at Zero Rupees on the pretext that the cost is unverifiable in absence of the Supporting Vouchers for Construction. The Construction took place in the year 1992 and the cost was duly depicted in the Balance sheets of the assessee filed in your good office (ITD OFFICE) as annexure to the Income Tax Return annexures for the year ending 31.3.2000 [Page No 93 to 96], 31.3.2002 (Audited u/s 44AB) [Page 97 to 103], & 31.3.2003 (Audited u/s 44AB) etc [Page no 104 to 107] No queries whatsoever were raised by the. Income tax Officials on the Tax Audit Report and Balance Sheet & Profit Loss account filed therewith for these years Thus Accepting the Construction but taking c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it, shall be dealt with in accordance with the following provisions of this section, that is to say,- (i ) .......... (ii)..........." 10. A reading of the aforesaid provision makes it clear that the property being sold, referred to as original asset, is described as buildings or lands appurtenant thereto and being a residential house. The emphasis is on the nature of the property being a residential house which may consist of building or land appurtenant thereto and secondly, the income of such residential house is chargeable under the head "income from house property." 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the legislative history of section 54, it is noted that prior to amendment by the Finance Act, 1982, there was a condition of residence by the assessee or his parent in the property which was transferred, as also residence by the assessee in the new property purchased or constructed by him. However, realizing certain practical difficulties, the legislature by way of amendment brought in through the Finance Act, 1982 removed such condition of residence by the assessee or his parent in the property which was transferred, as also residence by the assessee in the new property purchased or constructed by him as can be gathered from contents of the CBDT Circular No. 346, dated 30-6-1982. And the provisions of sub-section (1) were consequently amended to read, as contained in the current provisions, where it talks about transfer of a residential house, the income of which is chargeable under the head "Income from house property". 14. If we look at the provisions of section 22 and 23 of the Act relevant for the purposes of computation of income chargeable under the head "Income from house property", it talks about the determination of annual value of the property which is actually let o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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