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TMI Blog2017 (11) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... 50% of labour expense (Rs 11,50,000/- ) which resulted in reducing the construction value of the residential property to ₹ 54,50,000/- and restricting the deduction u/s 54F of the Act to ₹ 52,63,756/- on the basis of 1/6th share of the assessee. Therefore, the appeal of the revenue is dismissed. Invoking provision of section 94(7) on account of disallowance of loss relating to short term loss on sale of Mutual Funds we find that the assessee failed to controvert the applicability the provision of section 94(7) to the fact of the case of the assessee, therefore, the cross objection filed by the assessee on this issue is rejected Also dismissed in view of the applicability of provision of section 2(22)(e) for accepting loan from the company in which he was a director and beneficial owner of holding 20% shares - ITA No. 3022 And CO No. 308/Ahd/2014 - - - Dated:- 10-10-2017 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For The Revenue : Shri K. Madhusudan, Sr. D.R. For The Assessee : Shri S.N. Soparkar, A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This Revenue s appeal assessee s CO for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any bank or institution specified by the central government with any scheme and proof of this record should be furnished along with return of income. After observing the above conditions the assessing officer noticed that the assessee has debited an amount of ₹ 66 lacs on 27th Sep, 2010 against the construction of residential house on land at Thaltej Survey No. 438/2. The assessing officer has asked the assessee to produce 10 persons from whom the construction work was carried out however, the assessee explained that it is not possible to produce 10 persons because they are not traceable since construction work has already been completed. The assessing officer has also carried out physical inspection and photograph of the property . He observed that plan for construction has been approved by AUDA on 8th November, 2007 but the construction has not been made according to the plan approved by the AUDA. He has also pointed to other deficiencies that construction has not been completed within three years from the date of transfer of original asset as per approved plan. He also pointed out there was only small room attached bath room and there was no water connection and no com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h there is a construction of a single room. The second photograph shows inner part of room which also have a window and the marks like paste on the wall. The third photograph is backside of the room showing certain shrubs just below the window. However, shrubs on an unoccupied house cannot discard the theory that the construction can be a residential house . The fourth photograph shows that there is a bathroom but do not show the commode, water connection or taps. In my opinion, the construction answers the quality of a residential house. A house is residential house where a person can live. There are walls, windows and there is a bathroom also. What has weighed in the mind of the Assessing Officer is that there is no kitchen and due to shrubs it is not fit for residence. In my opinion a kitchen need not be in a separate room in a platform or other facilities to be called as a residential house. Shrubs on the plot will not disentitle a person to reside in the house once such shrubs are removed. A bathroom is also existing and a water connection is also existing. A commode is not a prerequisite condition to be called a bathroom. Since the house is not occupied, inside pipes m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption u/s. 54F of the Act. Similarly, the decision of the ITAT,' Chandigarh in the case of Smt. Rajneet Sandhu (Supra) also supports the case of the appellant. Therefore, the first contention of the A.O. is that the appellant has not constructed a residential house is not tenable on the facts of the case. The construction carried on by the appellant answers the word a residential house in positive terms and hence the appellant is entitled to benefits of Section 54F of the Act. 3.7 In reference to denial of exemption on the ground that appellant incurred all the expenditure in cash and vouchers are produced with description of work and material for such expenditure but appellant failed to produce a single person who carried out such work, I am partly inclined with appellant. The existence of construction of room, bathroom, water tank, boundary wall and increase of level of ground is evident and undisputed. This work cannot be brushed aside and it cannot be held that no expenditure is carried out. The appellant as well as A.O. has not referred to any valuation report to substantiate that how much expenditure was incurred. I am inclined with A.O. that if such work wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /6th part was of appellant share which was sold and cost of acquisition was ₹ 1,17,020/-. The A.O. therefore correctly considered the cost of acquisition at 176th of 419696 i.e. 81391. The appellant in response to inquiry from ADIT(lnv.) II, Ahmedabad in 09/08/1995 vide reply dt. 28/08/1995 while giving details of all immovable properties admitted such cost of acquisition for his share of 1/6th part of this land which was sold. The A.O. at para 5.13 of impunged order considered sale consideration of ₹ 67,50,000/- and reduced indexed cost of acquisition of ₹ 2,30,669/- (81391 X 632/223) to work out LTCG of ₹ 65,19,331/-. It is therefore, considering the deduction u/s 54F of the Act is available for the expenses of ₹ 54,50,000/- the LTCG can be worked out as follows: ( i) Sale consideration ₹ 67,50,000/- ( ii) Indexed cost of purchase ₹ 2,30,000/- LTCG. ₹ 65,19,331/- Less: Deduction u/s 54F 6519331 X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 22, 88, 433/- by the appellant towards construction of the residential property. Ld. CIT (A) ought to have allowed total expenses as claimed by the appellant. It be so held now. 2. Ld. CIT (A) erred in law and on facts in restricting deduction u/s 54F of the Act by allowing construction expenses of ₹ 54, 50, 000/- from ₹ 66, 00,000/- as claimed by the appellant. Ld. CIT (A) ought not to have held any expenses incurred by the appellant as doubtful and unsubstantiated on the basis of surmises on conjectures. It be so held now. 3. Ld. CIT (A) erred in law and on facts in confirming disallowance of loss made by AO of ₹ 3, 82, 678/- while invoking provisions of section 94 (7) of the Act. Ld. CIT (A) ought to have deleted such unwarranted disallowance. 4. Ld. CIT (A) erred in law and on facts confirming addition of ₹ 1, 25, 000/-made by AO u/s 2(22)(e) of the Act. Ld. CIT (A) erred in treating the amount received purely towards business transaction as deemed dividend. Ld. CIT(A) ought to have deleted the addition made against sanction of law. 5. Ld. CIT (A) erred in law in holding levy of interest u/s 234B 234C of the Act as conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X
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