2013 (8) TMI 737 - AT - Income Tax

Disallowance of exemption u/s 54F - investment in residential house - The dispute is with regard to the area of the land which is required for convenient enjoyment of 254.94 sq.mts of residential house. - Deposit in capital gain deposit scheme - date of completion of the building.- Held that - the land appurtenant to the residential house has to be determined with regard to the locality where the residential house is situated, the social status of the individual assessee, profession of the individual and other factors for proper and convenient enjoyment of the residential house. - 5 cents of land determined by the CIT(A) is very less in the State of Kerala. - matter remitted back to AO for reconsideration. Computation of Capital Gains - Expenditure incurred towards development of the land which was sold and brokerage paid to the extent of Rs.11 lakhs - Held that - when the assessee withdrew the claim before the assessing officer by a letter dated 16-12- 2010, the same cannot be reagitated either before the CIT(A) or before this Tribunal. Deduction u/s 54B - No capital asset was subjected to agricultural operation - Held that - Merely because the assessee s brother has not made any claim u/s 54B that cannot be a reason for disallowing the claim of the assessee. When the assesee has produced certain material before this Tribunal and claimed that the land was subjected to cultivation, this Tribunal is of the considered opinion that the assessing officer has to examine the documents independently and record finding whether the land in question is subjected to cultivation or not? Therefore, the omission of the assessee s brother to claim deduction u/s 54B cannot be a reason to disallow the claim of the assessee. Accordingly, the order of the lower authorities are set aide and the issue is remitted back to the file of the assessing officer. The assessing officer shall reconsider the issue in the light of additional evidence filed by the assessee before this Tribunal and thereafter decide the same in accordance with law after giving reasonable opportunity to the assessee - Decided in favour of assessee.

Issues Involved:
1. Disallowance of exemption under Section 54F of the Income Tax Act.
2. Expenditure incurred towards development of land and brokerage.
3. Deposit in Capital Gain Account Scheme under Section 54F(4).
4. Completion of construction of the property within the specified period.
5. Deduction under Section 54B of the Income Tax Act.
6. Investment in construction of the house.

Detailed Analysis:

1. Disallowance of Exemption under Section 54F:
The first issue concerns the disallowance of exemption under Section 54F of the Income Tax Act. The assessee purchased land and constructed a residential house. The CIT(A) restricted the area of land to 5 cents for exemption purposes. The Tribunal opined that the area required for convenient enjoyment of the house should consider the social status, profession, and locality. The Tribunal found 5 cents to be insufficient in Kerala and remitted the issue back to the Assessing Officer to reconsider the extent of land required for proper and convenient enjoyment of the house.

2. Expenditure Incurred Towards Development of Land and Brokerage:
The assessee claimed development charges and brokerage fees, which were withdrawn before the Assessing Officer by a letter. The Tribunal held that since the claim was withdrawn, it cannot be re-agitated before the CIT(A) or the Tribunal. Therefore, these grounds were dismissed.

3. Deposit in Capital Gain Account Scheme under Section 54F(4):
The revenue contended that the deposit of Rs. 40 lakhs in the capital gain account scheme was beyond the due date specified under Section 54F(4). The Tribunal noted that both the Gauhati and Punjab & Haryana High Courts interpreted Section 54F(4) to allow deposits made within the extended time under Section 139(4). However, the judgment of the Apex Court in Prakash Nath Khanna was not considered by the lower authorities. The Tribunal remitted the issue back to the Assessing Officer for reconsideration in light of this judgment.

4. Completion of Construction of the Property:
The revenue questioned the completion of the construction within the specified period. The Tribunal held that the completion certificate issued by the local panchayat should be accepted unless there is material evidence to the contrary. The Tribunal found no infirmity in the order of the lower authority regarding the completion date of the building.

5. Deduction under Section 54B:
The assessee claimed deduction under Section 54B, which was disallowed by the Assessing Officer on the ground that the brother of the assessee did not claim such deduction. The Tribunal noted that the assessee produced additional evidence to show the land was under cultivation. The Tribunal remitted the issue back to the Assessing Officer to reconsider the claim in light of the additional evidence.

6. Investment in Construction of the House:
The assessee claimed investment in the construction of a house, which was partly disallowed by the CIT(A) by restricting the land area to 5 cents. The Tribunal found that 10.885 cents of land is essential for the convenient enjoyment of the house in Kerala and directed the Assessing Officer to allow the entire cost of the land as claimed by the assessee.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, directing the Assessing Officer to reconsider the issues related to the extent of land required for exemption under Section 54F, the deposit in the capital gain account scheme, and the deduction under Section 54B after considering the additional evidence and relevant judgments. The completion certificate for the construction was accepted, and the expenditure claims for development and brokerage were dismissed.

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