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TMI Blog2012 (10) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... in the facts and circumstances of the case, the Tribunal was right in denying the appellant the benefit of Section 54 of the Income Tax Act on the ground that the residential house of the petitioner was not residential in nature due to lack of amenities when the rental income of the residential unit has been taxed as income from house property in the preceding years? (ii) Whether under Section 54 of the Income Tax Act, the term residential means a dwelling place with basic amenities fit for human habitation and which is actually habitable and does not include any other parameter to be called residential?" 2. Briefly, the facts as narrated in the appeal may be noticed. The assessee is a resident of Jalandhar. He filed his return on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant submitted that the property which was purchased by the assessee was a residential house as the assessee had built a room which was let at the rate of Rs.250/-per month, though to a labourer. According to the counsel, once it was habitable, it would fall within the parameters of a "residential house" and the benefit under section 54(1) of the Act was admissible to the assessee. 4. On the other hand, learned counsel for the revenue supported the order passed by the ITAT. 5. After giving our thoughtful consideration to the respective submissions made by learned counsel for the parties, we do not find any merit in the submissions made by learned counsel for the assessee-appellant. 6. It would be expedient to reproduce Section 54 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) If the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of capital gain which is or appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee who is either individual or Hindu undivided family. It is also essential that the income of the same is chargeable under the head 'Income from house property'. Further requirement under this provision is that the assessee within a period of one year before or two years after that date purchases or within a period of three years after that date constructs a residential house. 8. In the present case, in order to examine the entitlement of the assessee for exemption under Section 54 of the Act, it is to be seen whether assessee had constructed residential house within three years of the transfer of Delhi property. For doing so, the meaning of the term "house" is to be explored. What is the meaning of the word "house"? The term "house" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y boundary wall, no toilet, no electricity and no sewerage connection. The area of the plot is measuring 237.08 sq. yds which was purchased for Rs.4,32,500/-. Therefore, by any stretch of imagination, it cannot be presumed to be a residential house, it is not fit for habitation for any purpose. In the case of K.B. Pradhan (supra), the house which was in process of construction and was not complete was not considered to be a house. The facts of the present case clearly state that the assessee sometime in February 1999 constructed one muddy room which was let out to the tenant, Shri Ram Kishan on 1.3.1999. Shri Ram Kishan was a labourer at the time of construction of said muddy room. The CIT(A) has clearly recorded the findings in para 3.11 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have any latrine in the property which the assessee claimed to have raised in the property. He was also not aware of the name of the landlord. These facts would clearly prove that the assessee has not constructed any residential house. We may also mention that the assessee in the trading and profit and loss account in the assessment year 1999-2000, copy of which is filed at page 46 of the paper book has mentioned rental income of Rs. 250/- and added the same to the gross profit of the business. The showing of rental income in the profit and loss account of business would also prove that the assessee never raised construction of residential house. It would also contradict the submission of the assessee. Admittedly no amenities like bounda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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