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TMI Blog2005 (12) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. On the facts and the circumstances of the case, we are of the view that the exemption u/s 54F deserves to be allowed. Accordingly, we direct that the same should be allowed. The appeal of the assessee is allowed. - N.V. VASUDEVAN AND G.S. PANNU, JJ. Ved Jain for the Appellant. L.K.S. Dahiya for the Respondent. ORDER N.V. Vasudevan, Judicial Member - This is an appeal by the assessee against the Order dated 23-4-2002 of CIT(A)-XXII, New Delhi relating to the assessment year 1998-99. 2. The only issue for consideration in this appeal is as to whether the revenue authorities were justified in denying the benefit of exemption under section 54F of the Income-tax Act to the assessee. The facts which are not in dispute are as follows. The assessee who is an individual had sold a commercial property at GT Karnal Road, Delhi on 5-9-1997 for Rs. 10 lakhs. The assessee purchased basement in property No. 3/27, Roop Nagar, Delhi for Rs. 5,35,680 on 24-9-1998. The assessee claimed that since the assessee had invested the capital gain in purchase of residential house, he was entitled to exemption under section 54F of the Act from taxation of the capital gain. The Assessing Officer was of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and he agreed with the view of the Assessing Officer for the reasons, which reads as follows : "The appellants arguments are not acceptable. Although the property was constructed as a residential property, the basement has been separately sold by the owner. Under the Bye-Laws of the MCD, use of a basement for residential purposes is not allowed. A basement cannot be allowed to have a kitchen, bathroom or a toilet as per MCD Rules. Therefore, there is no force in the appellant s arguments that the basement was a separate residential unit. The appellant has also admitted that it was actually being used by him for commercial purposes. Therefore, the Assessing Officer s action is confirmed. The appeal is dismissed". 4a. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal. We have heard the submission of the learned counsel for the assessee as well as the learned DR. The assessee has filed an affidavit before the Tribunal in terms of rule 10 of the ITAT Rules, 1963. Under Rule 10 of the ITAT Rules, it has been provided that where a fact that cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and consc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 54F should be allowed. 5. The learned DR however, submitted that the provisions of section 54F "contemplate purchase of a residential house". According to him, the residential house should be a place capable of living besides being actually used as residential house. He pointed out that the purpose of introducing section 54F was to boost construction of residence in the country. He drew our attention to the plan of the property which is annexed to the sale deed under which the basement was purchased by the assessee. The learned DR pointed out that the plan contains only a big hall within no facilities such as kitchen, bathroom or a toilet. He drew our attention to the order of the MCD and submitted that prior to the purchase by the assessee the basement as well as the ground floor was one unit and this was considered as residential unit while finalizing the assessment to be made on this property. According to him, the sale of the basement alone by the erstwhile owner of the basement and ground floor will change the character of the basement area, therefore, it has to be ascertained as to whether the basement area can be considered as residential area. Besides the above the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The provisions of section 54F(1) reads as follows : "Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt within accordance with the following provisions on this section, that is to say. The assessee had purchased the basement of the property under a sale deed on 24-4-1998. One Smt. Amita Garg owned the basement as well as the ground floor portion of the property. She sold the entire basement floor to the assessee. The sale deed recites that the basement is fitted with water and electric connection. The assessee has also been given some rights to be enjoyed with the other co-owners of the building in property at No. 3/27, Roop Nagar, Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has held that the expression house property takes into account an independent residential unit. To this extent, the said decision is of some assistance to the case pleaded by the assessee. The decision in the case of Pushpalata Kanodia ( supra ) is in the context in the provisions of Wealth Tax Act and in the context of the definition of a house under the said Act and they are therefore, are not of much of use to the case pleaded by the assessee. In the case of Purshottam Das ( supra ) in the context of the provisions of section 23( i )( b )( ii ) of the Act, the court held that to determine as to whether a property is residential or not the intention at the time construction intended user, actual user, potentiality for a different user and several other related factual aspects have to be considered. The court held that the actual user is only one of the factors but not conclusive factor to determine whether a particular unit is residential house. The court held that a temporary use for office purpose did not render the property as non-residential unit. The case relied upon by the learned DR namely Dr. A.S. Atwal s case ( supra ) is again of no assistance to the case of the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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