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TMI Blog2014 (5) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... in coming to the conclusion that the assessee has completed construction of the first and second floors prior to the sale of original asset solely relying upon the application made before the municipal authorities under BPS scheme - the CIT (A) has not given any specific finding – thus, the matter is required to be remitted back to the CIT(A) for fresh adjudication – Decided in favour of Assessee. - ITA. No. 523/Hyd/2013 - - - Dated:- 2-5-2014 - Shri B. Ramakotaiah, A. M. And Saktijit Dey, J.M.,JJ. For the Petitioner : Mr. Solgy Jose T. Kottaram For the Respondent : Sri K. C. Devdas ORDER Per Saktijit Dey, J. M. This appeal filed by the assessee is directed against the order dated 18-2-2013 of CIT (A)-II, Hyderabad pertaining to the assessment year 2009-10. 2. The only issue in the present appeal of the assessee is with regard to the denial of claim of deduction u/s 54F of the Act. 3. Briefly the facts are the assessee an individual is director in M/s Ayyappa Oxygen Gas Company Pvt. Ltd. For the assessment year under consideration, the assessee filed her return of income on 1-8-2009 declaring total income of Rs.4,38,380/- after claiming ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floor. The Assessing Officer after verifying the details found difference in plinth area between the approved plan and the valuer s report in respect of all three floors. He therefore issued another letter to the assessee proposing to disallow deduction u/s 54F of the Act. The Assessing Officer also referred the valuation to the valuation cell for ascertaining the cost of construction. As noted by the Assessing Officer as the assessee did not co-operate with the valuation officer by furnishing the required information The valuation Officer vide her letter dated 20-12-2011 expressed her inability to furnish the valuation report by 31/12/2011 in absence of required particulars. The assessee however in reply to the notice issued by the Assessing Officer stated that the first and second floors have access from the ground floor only from inside the building. Though separate bedrooms, kitchen etc are available, the assessee was using the entire building for her own residence. Assessee claimed that deduction u/s 54F is allowable on the basis of ratio laid down in case of Meera Jacob vs. ITO (313 ITR 411). 6. It was submitted that application under BPS though was submitted prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction can be allowed in cases of construction of new houses provided the construction is completed within three years after the date of transfer of the original asset and in the assessee s case, the construction was completed prior to the transfer of the original asset, deduction u/s 54F will not be admissible. The Assessing Officer further held that deduction u/s 54F in any case would not be available to the assessee as the first and second floors constructed over an existing house. Therefore, in case new construction including existing ground floor is considered as one unit, for the reason that there was no independent access to 1st and 2nd floor and they are not self contained, then it would be a case of extension of existing house for which deduction u/s 54F is not available. Alternatively, if the assessee s claim that the first floor and second floor are to be considered as separate and independent units, since the assessee is having more than one house, deduction u/s 54 of the Act will not be available to the assessee. Accordingly, the Assessing Officer completed the assessment disallowing the claim u/s 54F of the Act. Being aggrieved of the order of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. Therefore, the disallowance of the claim of exemption u/s 54F made by the Assessing Officer is hereby confirmed. 9. Being aggrieved of the order so passed by the CIT (A) , the assessee is before us. Though the assessee has raised as many as 8 grounds before us, they basically cover the following two issues. i) Conclusion arrived at by the revenue authorities that the construction has been completed prior to the sale of original asset are without any basis. ii) Construction of first and second floors cannot be considered as improvement/development of existing house so as to deny deduction/s 54F of the Act. 10. So far as first issue is concerned, the learned AR submitted before us that the assessee had sold the land on 15-9-2008. Though the application for regularisation was made on 24-8-2008 but actually the construction has started much after the sale of original assets. Explaining the reason for applying for BPS regularisation on 22-4-2008, it was submitted that the assessee has made unapproved building, the assessee has also made some construction on the existing ground floor by utilising the funds out of advance of Rs.7,50,000/- received by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer has denied claim of deduction u/s 54F of the Act on the following two reasons:- i) The assessee has completed construction of first and second floors prior to the sale of original asset. ii) Since the first and second floors constructed over an already existing house it cannot be considered to be a new asset. 14. Alternatively, if at all the first and second floors are to be considered as independent units then the assessee is having more than one house, hence it is not eligible for deduction u/s 54F of the Act. The CIT (A) has also sustained the disallowance by holding that since the assessee has failed to prove that construction of first and second floors was not completed prior to the sale of original asset, disallowance is justified. So far as the first issue is concerned, it is obvious from the orders of the revenue authorities that they have come to their respective conclusions mainly relying upon BPS application made by the assessee before the Municipal Authorities. Since the original asset was sold on 15-9-2008, the departmental authorities have concluded that the construction of new house was completed prior to the sale of original asset, hence the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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