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TMI Blog2024 (9) TMI 1621X X X X Extracts X X X X X X X X Extracts X X X X ..... l came up for hearing before it, passed a judicial order dated 21.11.2023 dismissing the appeal as withdrawn, noting the fact that the correct jurisdiction lay with the ITAT, Ahmedabad Benches. The assessee was given the liberty to file a fresh appeal on the same cause of action before the Bench of the Tribunal having jurisdiction. He pointed out that the ITAT allowed liberty to the assessee to avail the benefit of Section 14 of the Limitation Act for exclusion of time spent in Surat Bench. Copy of the order of the ITAT Surat Bench dated 21.11.2023 was placed before us. Noting the above facts, it is held that there was no delay in filing the present appeal before us. 3. Taking up adjudication of the present appeal, the grounds raised by the assessee are as under:- "(1) The Principal CIT has erred in law and on fact of the case in directing the Assessing Officer to substitute the long term capital gain at Rs. 5,74,66,137/- in place of long term capital gain adopted at Rs. 1,79,41,770/- in the assessment order passed u/s 143(3) of the Act dated 29.12.2017, by disallowing deduction u/s 54F of Rs. 3,86,86,482/- and disallowing cost of acquisition/improvement of Rs. 94,739/-. (2) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT for holding the properties to qualify as residential house in terms of section 54F of the Act. We shall elaborate the same hereunder. 5. The assessee had claimed exemption u/s 54F of the Act to the tune of Rs. 3,86,86,482/- from capital gains earned of Rs. 5,73,71,398/-. The computation of the same is reproduced at para 4(f) of the order as under:- Sale consideration received as per sale deed Rs. 6,71,05,250/- Indexed cost of acquisition Rs. 55,815/- Indexed cost of improvement Rs. 91,79,037/- Total Rs. 97,35,852 Rs. 97,35,852/- Long term capital gain before deductions claimed Rs. 5,73,71,398/- Less: Deduction claimed u/s 54F of the Act Rs. 3,86,86,482/- Taxable long term capital gain Rs. 1,86,84,916/- This exemption was claimed on account of investment in residential house being flat no.2601, World Residence, World Tower. 5.1 The other alleged residential houses found by the ld. PCIT to be owned by the assessee are the following:- (i) Flat No. B1,first floor building A1,known as Vastu Luxuria, Surat (ii) Agricultural lands at Village Patialps, Dahanu, Thane, Maharashtra, which find mentions in table of sub-para 7 of paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, disentitling the claim of exemption/deduction of the assessee u/s 54F of the Act. Having said so, we find that there is no basis in the above findings of the ld. PCIT at all. 8. With regard to the residential house property identified as Flat No.B1, 1st Floor of the building No.A1 known as 'Vastu Luxuria', the assessee had stated that the said flat to be in the nature of stock-in-trade. Copy of the financial statements of the assessee forming part of the return of income filed by the assessee, which were part of the assessment records and filed before the ld. PCIT, placed before us at paper-book page Nos. 6-14, reveals that the assessee had filed the balance-sheet in its individual name of proprietary concern 'Navpad Infrastructure', Rajtilak, Surat and shown the impugned property i.e. A/1 & B/1, as stock-in-trade. The ld. PCIT finds the impugned property to qualify as residential house in terms of Section 54F of the Act at paragraph No. 2.7 of his order as under:- "2.7 The assessee has contended that the house being Flat No. A/1.B1 located at Vastu Luxuria at Surat has been purchased on 25.03.2015 for Rs. 1,94,43,789/-. This house was purchased with an intention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 any residential house, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Counsel for the assessee on this account. The Ld.PCIT has given no reasoning or basis for holding the Flat No. A/1.B1 located at Vastu Luxuria at Surat, admittedly held as stock in trade by the assessee, as being residential house for the purposes of section 54F of the Act. Ld. Counsel for the assessee has on the contrary demonstrated that, as per law applicable in the impugned year, assets held as stock in trade do not qualify as residential houses in terms of section 54F of the Act. There is, therefore, we hold, absence of a valid basis with the ld. PCIT for finding the property at 'Vastu Luxuria' qualifying as residential house for the purpose of Section 54F of the Act. 17. As for the agricultural land purchased by the assessee, the assessee's contention was that the houses constructed thereon were of very small sizes and for the purpose of carrying out agricultural activities alone and not for residential purposes. The ld. PCIT, however, finds it otherwise at page No.18 of his order as under:- "(D) The agricultural lands purchased at Village Patiaipis, Dahanu, Dist. Thane, Maharashtra from various persons in the month of June, 2014 and October, 2014 and as mentioned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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