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TMI Blog2016 (8) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. In the present case, for denial of the claimed deduction under sec. 54F of the Act, the Assessing Officer should not have considered the property as residential on the basis of municipal record ignoring the actual user thereof. The authorities below were thus not justified in denying and upholding the denial of the claimed benefit to the assessee by way of deduction under sec. 54F of the Act on the basis that the assessee was owning more than one residential house (i.e. inclusion of E-575A, GK-II, New Delhi) on the date of transfer of the original assets. We thus setting aside the orders of the authorities below in this regard direct the Assessing Officer to allow the claimed deduction under sec. 54F of the Act. - Decided in favour of assessee - IT APPEAL NOS. 5474 OF 2014 & 2477 (DELHI) OF 2015 - - - Dated:- 11-7-2016 - I.C. SUDHIR, JUDICIAL MEMBER AND O.P. KANT, ACCOUNTANT MEMBER For The Assessee : Ajay Vohra, Sr. Adv. Gaurav Jain and Shambav Jain, CA For The Respondent : Smt. Anima Barnwal, Sr. DR ORDER I.C. Sudhir, Judicial Member - ITA No.5474/Del/2014: The assessee has questioned first appellate order on the following grounds: . 1. That Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities have rightly been allowing depreciation on earlier years as well as the year under dispute on E-575A G.K. II as this was the only property from where the appellant was running his office. Had the Learned CIT(Appeals) sought a clarification from the appellant it would have been explained by the appellant and such an incorrect conclusion by the Learned CIT(Appeals) would have been avoided. As a matter of fact the Learned CIT(Appeals) has factually come to an incorrect conclusion as regards the finding that the depreciation claimed is for some other property. The fact is that in page 14 of the impugned order the Learned CIT(Appeals) she herself has mentioned the properties which the appellant possessed during the relevant assessment year. (f) That the correspondence address in form 3CB and-3CD is treated as proof of appellant residing at E-575A G.K. II. However, the Learned CIT(Appeals) failed to appreciate the guidelines issued by the Institute of CA that the address given on such Forms is only an address for the purpose of correspondence. IT does not have to be a residential address; it ought to be a Permanent Address for the purposes of correspondence. 2. The Learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue with regard to deduction which in any event is available to the appellant u/s. 54E of the Income-tax Act, 1961 . 2. During the course of hearing, the Learned AR at the outset submitted that the appellant does not wish to press ground Nos. 1(a) to 1(e) and 2 to 8 of the grounds. These grounds are accordingly rejected. Thus, ground Nos. 1 and 9 are to be addressed by the parties. 3. In ground No.1, the assessee had questioned first appellate order in deciding that the assessee is not eligible to claim deduction under sec. 54 of the Income-tax Act, 1961. 4. The relevant facts are that the assessee had sold his rights in a Gurgaon Flat on 29.10.2009 and earned long term capital gain of ₹ 1,48,23,645. The assessee invested the same in a residential property within the specified time and claimed deduction under sec. 54F. The assessee also invested ₹ 50 lacs in REC Bonds for deduction under sec. 54EC. The Assessing Officer disallowed the claimed deduction under sec. 54F of the Act resulting into the addition of Rs.l,48,23,645 on the basis that a residential property cannot be used as an office, only sale deed of the property can determine the use of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessment year 2008-09, the assessee purchased front portion of E-575A, vide two sale deeds. First front half portion was solely owned by assessee, whereas the second front half portion was jointly held by the assessee and his daughter. In that year, the assessee established his own office for carrying on legal professional in E-575A (comprising of rear portion and first front half portion) and capitalized the purchase price of aforesaid two portions, amounting to ₹ 51,36,000 under the head office building ₹ 24,07,500 and under the head office land ₹ 27,28,500) in the books of account ( On 28.8.2007) and claimed depreciation thereon in the return of income. The second front half portion was let out by the assessee to his son for professional use from 1.10.2007 till 31.3.2009, income whereof was offered to tax under the head income from house property 5.4 During the year under consideration i.e. assessment year 2010-11, the second front half portion of E-575 A given on rent to his son was taken back and put to assessee1 professional use. Accordingly, the purchase price of such portion amounting to ₹ 25,92,000 (under the head office building S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. P.K. Vasanthi Rangrajan v. CIT - 23 Taxman.com 229 (Madras); 5.8 The Learned AR, in support of his above submission that the property E-575A in question was exclusively used for professional purposes has placed reliance on the following evidences, copies of which have been made available at the respective page numbers of the paper book shown against the each evidence: (i) The Hon'ble High Court of Uttrakhand under sec. 16(2) of the Advocates Act issued notification in May 2008 for designation of the assessee as Senior Advocate at his professional address at E-575A, Gr. Kailash-Il, New Delhi (Page Nos. 168 to 169 of P.B); (ii) The Delhi High Court Bar Association List - the official address of the assessee as E-575A and residential address as E-549-GK-1I, New Delhi (page No. 169 of P.B.); (iii) The professional invoices raised by the assessee also contain the said address; (iv) Claim and allowance of depreciation by Assessing Officer on the capitalized amount of respective portion (front and rear) of E- 575A, as and when put to professional use by the assessee, in the completed assessment, including the Assessing Officer for the year under consideration (pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was used by servant but not by the assessee as residence and so far as the decision in the case of Mahavir Prasad Gupta v. JCIT (Supra) by Delhi Bench, the decision of Hon'ble jurisdictional High Court of Delhi will prevail. The Learned AR may be clear that there are two properties in E-575A, GK-II, one is held by the assessee jointly with his daughter and the other one in his individual capacity. He submitted that it is an established position of law that for claiming benefit of deduction under sec. 54F of the Act actual user by the assessee and intention of assessee behind the purchase is to be seen. It is also an established position of law that incentive provisions like section 54F of the Act is required to be considered liberally. 8. Having gone through the above cited decisions, we find that the Hon'ble jurisdictional High Court of Delhi in the case of CIT v. Geeta Duggal (supra) has been pleased to hold as under: 9............There is nothing in these sections which require the residential house to be constructed in particular manner. The only requirement is that it should be for the residential use and not for commercial use. If there is nothing in the secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of many houses. So house means an independent unit where one can eat, drink and sleep. In view of this definition, we hold that flat at Sion, Mumbai, was a residential house since assessee along with his family was living in that house. 8.3 Again in the case of CIT v. Ouseph Chacko (supra), the Kerala High Court has been pleased to hold that if the building had been put to use for the purpose of business or profession and not for residential house, the same could not be considered as residential house for the purpose of sec. 54/54F of the Act, notwithstanding that the building was in the nature of residential building. In the case of Dr. Smt P.K. Vasanti Rangrajan v. CIT (supra), before the Hon'ble Madras High Court, the assessee was an individual practicing as a doctor by profession. She owned a property along with her husband in equal proportion. The said property consisted of a clinic on the ground floor and residential portion on the first floor. The assessee and her husband had shown 50% share with reference to the clinic and the residential portion in their respective return. The assessee also owned another property for which she entered into an agreement with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis that property at E-575A GK-II, New Delhi being a residential property as per municipal laws and as per sale deed registered at the time of purchase thereof was to be regarded as residential house . The Assessing Officer held that since on the date of transfer of Gurgaon Flat, the assessee owned more than one residential house (E-549 and E-575A), the assessee did not fulfill the necessary conditions for claiming deduction under sec. 54F of the Act viz. not having more than one residential house. The authorities below did not agree with the assessee that E-575A though shown as residential on municipal record and residential type in the sale deed but was actually used by him as his professional office being a senior lawyer. 8.6 Under the above background, the issue raised before us is as to whether the property E-575A, GK-II, New Delhi shown as residential on the municipal record and in the sale deed as residential type can be treated as official premises as per the actual user as such by the assessee? 8.7 There is no dispute on fact that the property E-575A, GK-II, New Delhi owned by the assessee was being used as his office during the relevant period but only dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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