2017 (3) TMI 946 - AT - Income Tax

Exemption claimed u/s 54F - assessee has sought relief under Section 54F in place of Section 54 originally claimed in respect of two residential properties - Held that - Assessing Officer has granted relief under Section 54F in respect of one residential property. We find the residential properties are situated at different places and the Assessing Officer has demonstrated that the residential houses are completely separate and unconnected and not adjoining each other. Therefore, in terms of Section 54F of the Act, the assessee cannot be said to be holding these two residential units as one residential property. Therefore, we find that the Assessing Officer has rightly determined the issue and restricted the relief as per law. We do not see any reason to interfere with the order of the CIT(A) sustaining the action of the Assessing Officer. - Decided against assessee Determination of ALV on vacant commercial premises qua the other commercial premises situated in the same building and adjoining to each other which are equipped with some amenities - Held that - We find from the building plan that all the commercial spaces are situated adjoining to each other and therefore, there is sound basis for estimation of ALV of the vacant premises. The assessee has not shown before us as to what amenities have been provided and what value thereof has been determined with reference to any rent agreement. In absence of any document that show that the amenities were part of the commercial premises rented out and the rent was determined factoring such special amenities, we are not in a position to ascertain the fact. In the absence of any corroboration from the assessee to show differential rent owing to purported equipments, we do not consider it expedient to interfere with the order of the CIT(A) sustaining the action of the Assessing Officer. - Decided against assessee

Summary

Issues:
1. Claim of deduction under Section 54F instead of Section 54 for reinvestment in two residential properties.
2. Determination of Annual Letting Value (ALV) on vacant commercial premises compared to rented commercial premises with amenities.

Analysis:

*Issue 1: Claim of deduction under Section 54F instead of Section 54 for reinvestment in two residential properties*

The assessee, a Non-Resident Indian, sold commercial properties and reinvested the sale proceeds in two residential properties. The Assessing Officer disallowed the deduction under Section 54 but reconsidered it under Section 54F. The AO allowed deduction for one residential property and denied it for the other, as they were not adjoining. The CIT(A) upheld the AO's decision, stating that the properties were separate and not eligible under Section 54F. The Tribunal concurred, finding the properties distinct and supporting the AO's decision. The appeal on this issue was dismissed.

*Issue 2: Determination of Annual Letting Value (ALV) on vacant commercial premises*

The Assessing Officer determined ALV for vacant commercial premises based on expected rent in the open market. The CIT(A) upheld this decision, noting that the ALV was calculated based on actual rent received. The Tribunal found that all commercial spaces were adjacent, and without evidence of special amenities in rented premises affecting rent, upheld the ALV determination. The appeal on this issue was dismissed.

In conclusion, the Tribunal upheld the decisions of the Assessing Officer and CIT(A) on both issues, dismissing the appeal of the assessee. The judgment was pronounced on 15th March 2017 at Ahmedabad.