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TMI Blog2013 (4) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled for deduction u/s. 54F of the Act. (b) Whether the Ld CIT(A) is justified in confirming the reduction of agricultural income and consequent assessment of such reduction as income under the head income from other sources . 3. The facts relating to both the issues are stated in brief. During the year under consideration, the assessee, along with other co-owners, sold a land and received a sum of ₹ 1,85,06,635/- as his share in the sale consideration. In consonance with the provisions of sec. 54F of the Act, we shall also refer the land sold by the assessee as original asset . While computing the capital gain, the assessee claimed deduction u/s. 54F of the Act in respect of a flat acquired from M/s. JGT Constructions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The expenses claimed by the assessee worked out to 40% of the Gross receipts. The assessing officer noticed that another assessee named Sri Jose Dominic, who is also closely related to the assessee herein, had claimed expenditure to the tune of 77% of the Gross receipts. Accordingly, the AO took the view that the assessee herein is in the process of Capital building and hence the assessee has considerably reduced the expenditure in order to boost up the agricultural income. Hence, the assessing officer estimated the expenses @ 60% of the gross receipts and accordingly determined the net agricultural income at ₹ 5,32,667/-. The difference between the agricultural income declared by the assessee and that quantified by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter, the assessee has purchased a flat from M/s JGT Constructions and claimed deduction u/s 54F of the Act. The assessee also completed the construction of the building located at Kadavanthara within three years after the date of transfer of original asset. Hence the assessee has violated the condition prescribed in the proviso to sec. 54F of the Act by constructing another residential building within three years of transfer of original asset. 7. In the rejoinder, the Ld A.R submitted that the words constructs any residential house used in the proviso have not been defined in the Act. Accordingly, the Ld A.R submitted that the said condition shall be attracted only if the construction of any residential building is commenced af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property . 10. There should not be any dispute that the residential building constructed at Kadavanthara is chargeable under the head Income from house property . The dispute betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject the contentions raised in this regard by the assessee. 12. Now we shall examine the dispute relating to the interpretation of the words constructs any residential house used in clause (iii), referred above. On a careful perusal of the relevant provisions, we are of the view that the words constructs any residential house contemplate completion of construction. Only upon completion of the construction of the building, it acquires the status of a residential house , since it becomes capable of residing therein. Our view is reinforced on reading clause (b) extracted supra, which states that the income from such residential house is chargeable under the head Income from house property. The income from a residential house can be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine the expenses claimed by the assessee, unless parity of facts are established. He further submitted that the assessing officer has determined the expenses @ 60% of gross receipts in the place of 40% claimed by the assessee, without any basis. He further submitted that the assessing officer has made the estimate arbitrarily without calling for any explanation from the assessee. On the contrary, the Ld D.R submitted that the assessee could not contradict the findings given by the assessing officer by bringing any material on record. Accordingly, the Ld D.R strongly placed reliance on the order of Ld CIT(A) on this issue. 15. We have heard the rival contentions on this issue and perused the record. Admittedly, the AO did not disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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