2024 (12) TMI 121 - HC - Income Tax

LTCG - exemption u/s 54F denial as there was a brick-kiln existing on the new property and not a residential house - ITAT concluded that the Assessee s investment was not in a residential house - HELD THAT - ITAT had concluded that the word makaan used in the registry was not in a reference to a residential house. This view is supported by the fact that a brick-kiln and sheds had been constructed on the land in question and the registered sale deed does not mention any other structure on the new property, other than a makaan . The contention that the brick-kiln and the built up share has fallen to the shares of other co-owners and, therefore, is not required to be considered, overlooks this point. The present case is centered on appreciation of evidence on record. It is admitted that the registered sale deed of the new property is not confined to the share of the Assessee but also to the other co-owners. It is also admitted that it does not mention any structure other than a makaan and brick kilns and sheds stand on the new property. The learned ITAT noticed that the sale deed of the new property did not refer to the structure as rihayasi makaan, which would be a literal translation of a residential house . Therefore, concluded that the reference to a makaan in the registered deed was not a residential house. ITAT also found that the new property was described in the revenue records as agricultural land and the registration fee was paid on the said basis. The question as to whether a residential house existed on the land in question, is a question of fact. Assessee seeks to assail the factual findings of the AO and of the learned ITAT, as perverse. No substantial question of law.

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 challenging ITAT order denying exemption under Section 54F of the Act.

Analysis:
The appellant (Assessee) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an ITAT order regarding the assessment year 2014-15. The dispute revolved around the denial of the Assessee's claim for exemption under Section 54F of the Act. The Assessee had sold certain lands and claimed to have purchased a new property jointly with others. The Assessee contended that the investment in the new property should be considered as an investment in a residential house for claiming exemption. However, the AO rejected this claim, stating that there was a brick-kiln on the new property, not a residential house.

The ITAT, based on the evidence, concluded that the Assessee's investment was not in a residential house, making the Assessee ineligible for the Section 54F exemption. The registered deed did not mention any structure other than a "makaan," and photographs of the brick-kiln on the property were submitted as evidence. The Assessee argued that the brick-kiln was not on the portion claimed by them but on the co-owners' share. However, the ITAT upheld its decision, stating that the term "makaan" in the deed did not refer to a residential house, supported by the presence of a brick-kiln and sheds on the property.

The ITAT also noted that the new property was classified as agricultural land in revenue records, and registration fees were paid accordingly. The Assessee challenged the factual findings of the AO and ITAT as perverse, but the Court found no merit in this argument. The Court upheld the ITAT's decision, stating that it was not perverse and dismissed the appeal, concluding that no substantial question of law was raised in the case.