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TMI Blog2022 (5) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the AO, by relying upon the decisions of Hon ble High Court, as are mentioned in its appellate order. It is also undisputed that the property which was sold was an residential house property. The apportionment to be done between land and building was required to be done, as land is long term capital asset in the instant case, while constructed residential house was held for not more than thirty six months. Further, the asset sold is composite being land and residential house constructed by the assessee, and hence for granting deduction u/s 54 of the 1961 Act, it is to be considered that the property sold was residential, and hence benefit u/s 54 will be available while reckoning the entitlement of the assessee for benefit u/s 54, while it is different matter, the same shall be restricted to long term capital gains arising on sale of land being long term capital asset for computing eligibility of deduction u/s 54 and its computation thereof, as the residential building/house constructed on the said land cannot be considered for grant of deduction u/s 54, being a short term. capital asset. Thus, this appeal filed by the assessee lacks merit. - Decided against asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authority about the determination/working of capital gain is totally incorrect as the facts were not properly considered hence on this count the addition so made and confirmed is wrong and liable to be deleted. 5. That in any view of the matter the interest charged under different sections of the IT Act is highly unjustified and illegal in the facts and circumstances of the case. 6. That in any view of the matter the appellant reserves his right to take any further ground of appeal before hearing of the appeal. 3. This appeal is almost five years old. The appeal was first fixed for hearing on 21.12.2107, when the Counsel of the assessee requested for adjournment before the Division Bench, and based upon the request of the assessee s counsel, the Division Bench was pleased to adjourn the appeal. Thereafter, the appeal was fixed for hearing before Division Bench on 19.07.2018, and on this day none appeared on behalf of the assessee and the appeal was again adjourned by the Division Bench. The appeal was again fixed for hearing before Division Bench on 13.11.2018, and on this day fixed for hearing none appeared on behalf of the assessee, but on the written request o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mail was sent by Registry on 22.05.2022, which are placed on record, informing/intimating the assessee about the next date of hearing i.e. 23.05.2022. The RPAD notice was not received back by Registry and it can be presumed that it was served in normal course by postal authorities. When this appeal came up for hearing before the Division Bench on 23.05.2022, none appeared on behalf of the assessee nor any adjournment application was moved. Since this appeal is an old appeal which is pending before the Division Bench for last almost five years, and the assessee has sought adjournment(s) on last several occasions on one ground or the other, while earlier adjournments were not denied by the Division Bench keeping in view COVID-19 disease, but now the physical hearings have started /restored, but the again the assessee is continuously seeking adjournment(s) on one ground or another. Even the last opportunity was granted to the assessee when the appeal came up for hearing before the Division Bench on 22.03.2022, but still the assesse is not willing to argue the matter. Thus, it is now abundantly clear that the assessee is not interested in pursuing this appeal and hence the appeal is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sold constructed area of 2150 square feet, as against the contractor bill of Rs. 26,00,000/- for total constructed area of 4000 square feet. The assessee filed reply before the AO that the contractor has given bill for only sold constructed area of 2150 square feet(duplex), but the AO was not convincedas the bill of contractor clearly stipulated that constructed area was 4000 square feet with total billed amount of Rs. 26 lacs. The AO gave benefit of proportionate deduction of cost of construction to the assessee, while computing capital gains chargeable to tax. The construction was done by the assessee in the financial year 2013-14(ay: 2014-15), and the house was also sold in the financial year 2013-14(ay: 2014-15), which leads to computation of short term capital gains on the sale of constructed house(Building/house, excluding land ) by the AO and at the same time deduction u/s 54 was denied to the assessee on the short term capital gains so computed on sale of building/house, while the AO allowed the deduction u/s 54 to the assessee on long term capital gains computed on the sale of land, as the plot of land was purchased in financial year 2006-07 which stood sold in financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on behalf of the assessee, when this appeal was called for hearing before the DB on 23.05.2022.We have elaborately discussed about the several adjournments sought by the assessee on earlier occasions, and finally taking up this appeal for final hearing on 23.05.2022, in para 3 of this order. The assessee has filed paper book containing 109page. which is placed on record. 6.2 The ld. Sr. DR has vehemently supported the orders of the authorities below and submitted that the assessee was rightly denied the deduction u/s. 54 of the Act on the short term capital gain earned on the sale of residential building constructed on plot of land, as the said building/house(excluding land) was held by the assessee for less than thirty six months. The assessee constructed the house in financial year 2013-14, which was sold in the financial year 2013-14 itself. 7. We have heard ld. Sr. DR and perused the material available on record. The brief facts of the case are that the assessee was owner of property being land Araji No.116-37, and residential house constructed on the said land being house number B/37/1-F-2Kha, Birdopur, Ward Bhelpur, Varanasi, U.P.. The plot of land was purchased by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that the assessee has claimed cost of construction of Rs. 26,00,000/- as against the sold constructed area of 2150 square feet, as against the contractor bill of Rs. 26,00,000/- for total constructed area of 4000 square feet. The bill of contractor is reproduced by ld. CIT(A) in its order. The assessee filed reply before the AO that the contractor has given bill for only sold constructed area of 2150 square feet(duplex), but the AO was not convinced as the bill of contractor clearly stipulated that constructed area was 4000 square feet with total billed amount of Rs. 26 lacs. The AO gave benefit of proportionate deduction of cost of construction to the assessee, while computing capital gains chargeable to tax. The assessee conceded before the ld. CIT(A) that only issue of dispute is with respect to claim of deduction u/s 54 of the 1961 Act, but once again in grounds of appeal before tribunal, the assessee has raised the issue of cost of construction. We have carefully gone through the bill of contractor which is reproduced by ld. CIT(A) in its order, which clearly stipulate that constructed area was 4000 square feet, which also matches with the total constructed area of the hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 442(Raj.) d) Judgment and order of Hon ble Karnataka High Court in the case of CIT v. C.R.Subramanian 242 ITR 342(Kar.) In our considered view, the Assessing Officer has rightly brought to tax gains on the sale of land as long term capital gain as the land was purchased in financial year 2006-07(ay: 2007-08) which was sold in financial year 2013-14(ay:2014-15) on which the Assessing Officer has rightly allowed the deduction u/s. 54 of the Act. So far as the residential building/house constructed on the said land is concerned, it was constructed in ay: 2014-15 on the aforesaid land, and the residential house was sold in ay: 2014-15 itself, the residential house was held for less than thirty six months, it is to be classified as short term capital asset and the gains arising therefrom shall be short term capital gains. The plain language of Section 54 clearly stipulate that deduction u/s 54 shall be allowed only on long term capital gains arising from sale of residential property, and the said deduction can no stretch of imagination be allowed on the short term capital gains. The ld. CIT(A) has rightly affirmed the assessment order passed by the AO, by relying upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has rightly classified the gains arising from sale of building/house as short term capital gains. The AO has allowed deduction u/s 54 on long term capital gains earned by the assessee on sale of land, the language of Section 54 is clear, plain and unambiguous and the benefit u/s 54 can only be allowed on long term capital gains earned by the assessee. So far as apportionment of the sale consideration between land and building, the AO has rightly apportion the total sale consideration keeping in view circle rate of government for stamp duty purposes for land and residential building, as also keeping in view the total sale consideration actually received by the assessee. The apportionment to be done between land and building was required to be done, as land is long term capital asset in the instant case, while constructed residential house was held for not more than thirty six months. Further, the asset sold is composite being land and residential house constructed by the assessee, and hence for granting deduction u/s 54 of the 1961 Act, it is to be considered that the property sold was residential, and hence benefit u/s 54 will be available while reckoning the entitlement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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