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TMI Blog2017 (10) TMI 1435X X X X Extracts X X X X X X X X Extracts X X X X ..... ildings should she be given the benefit of deduction u/s 54F has not been examined by the lower authorities at all. In the case of Commissioner Of Income-Tax, Vs Zaibunnisa Begum [1984 (7) TMI 62 - ANDHRA PRADESH HIGH COURT] has laid the tests to be applied for the determination of the extent of land appurtenant to a building in the case involving sale of land and buildings, in sub para 18, supra, we are of the view that they could very well be applied in the case of purchase of land and construction of house as is involved in this case also We deem it fit to restore the matter for the determination of the extent of land appurtenant to a building (in this case the house) to the AO and direct him to re-determine the eligible deduction u/s 54F , afresh, on the lines on which the Honourable High Courts have laid the guidelines, supra, after giving adequate opportunity to the assessee. - Revenue’s appeal is treated as partly allowed for statistical purposes. - I.T.A. No. 886/Mds/2017 Assessment Year : 2011-12 - - - Dated:- 9-10-2017 - Shri N.R.S. Ganesan And Shri S. Jayaraman, JJ. Appellant by : Shri. AsishTripathi, JCIT Respondent by : Shri. N.R. Govindarajan, CA Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant material, the CIT(A) was of the opinion that there were reasons beyond the control of assessee, which prevented her from completing the construction work within the period of three years from the date of sale of original asset. The assessee also filed a certificate from the concerned contractor and submitted that the construction of residential house was completed on 24.03.2014. The CIT(A) found that the long term capital asset was sold on 04.11.2010 for ₹ 2,35,00,000/-. The assessee invested ₹ 2,59,64,300/- (including registration charges and stamp duty between 06.05.2011 to 04.06.2011) in the new asset and deposited ₹ 20,20,000/- in the capital gains account scheme before the due date for filing return u/s. 139 which was 30.09.2011. and filed her return on 22.09.2011. Relying on the decisions of the Hon ble jurisdictional High Court in the case of M/s. Seetha Subramanian vs. ACIT (1996) 59 ITD 94 and CIT vs Sardamal Kothari (2008) 302 ITR 286, the CIT(A) held that the assessee need not complete the construction and occupy the same within the period of three years from the date of sale of original asset, if the construction had commenced within the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book. On 04.11.2010, the assessee sold vacant land measuring, say ,2.64 grounds together with 1/20th share in the common passage measuring 2300 sq.ft. located in Neelangarai, Chennai for ₹ 2.35 crores. On the same date, she entered into a development agreement with the purchaser for ₹ 25 lakhs. So, the total value realised on the sale of vacant land was ₹ 2.6 crores. The capital gains worked out on this transaction was ₹ 2.15 crores. On 28.06.2011, the assessee purchased 1 acre and 25 cents of nanja land at Ottiampakkam Village, Sholinganalur Taluk, Kancheepuram District within the limits of St. Thomas Mount Panchayat Union for ₹ 2,40,00,000/- including stamp duty and registration charges. On 22.07.2011, she deposited ₹ 20,20,000/- in State Bank of Travancore (SBT) towards capital gains scheme account. Thus, the total investments as on 22.07.2011 was ₹ 2.6 crores. The assessee also obtained the planning permission on 04.07.2012 well before the due date for filing return u/s. 139(1) which was 30.09.2011. The other investments made by the assessee, as culled from the paper book , are as under: 1. Payments made to government auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1500 sqft only in the sprawling land of 1 acres 25 cents. 6.3 Though the assessee has made out a case for deduction u/s 54 F, as per the ratios of the jurisdictional HC , however, a question arises that when the assessee has invested in 1.25 acres of land but constructed a house in the land just about 1500 sq.ft. only and claims the benefit of deduction u/s 54F on the entire investments in the 1.25 acres land and its compound wall etc, on the investment of how much land and buildings should she be given the benefit of deduction u/s 54F has not been examined by the lower authorities at all. In the case of Commissioner Of Income-Tax, Vs Zaibunnisa Begum,151 ITR 320 AP, the brief facts were as under : The assessee and her three sisters were the joint owners of house property consisting of a fairly large building and extensive land, each one owning 1/4th share. The building has a built-up area of 17,136 sq. ft. and the total extent of land including the land on which the building stands is 13,029 sq. yards. The building as well as the entire extent of land was acquired by the Government under the Land Acquisition Act for construction of the office of the Accountant-General. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising on the transfer of the building and land, which is reasonably appurtenant to the building. The AAC was of the view that, if the land contiguous to a building is vast in extent, the entire extent of land could not be considered to be appurtenant to the building and only a reasonable portion of such land could be so considered under law. He, accordingly, directed the ITO to redetermine the capital gain on the transfer of the building and the land reasonably appurtenant to the same and, if such capital gain should be less than ₹ 75,000, restrict the deduction under s. 54(1) only to the extent of the restricted sum. The AAC obviously held the view that the capital gain derived on the sale of land, which is not reasonably appurtenant to the building should be taxed in entirety and no part of the sum of ₹ 75,000 spent on the construction of the new residential house should be set off against such capital gain. As the ITO did not examine the question from the above points of view, he directed the ITO to re-work out the capital gain on the aforesaid basis. This was the subject matter before the Honb le High Court of the AP . 6.4 The relevant portion of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontiguous to the building can be put to independent user without causing any detriment to the effective and proper enjoyment of the building as such. Such an enquiry should be conducted not based on any artificial considerations but from the point of view of the persons occupying the building. The number of persons or different branches of families residing in the building, the requirements of the persons occupying the building consistent with their social standing, etc., are relevant for the purpose. If any surplus is arrived at on such enquiry, then the extent of such surplus land may not qualify to be treated as land appurtenant to the building; (3) If there is any evidence to indicate that any portion of the land contiguous to the building was put to user other than the enjoyment of the building, then that provides a safe indication regarding the extent of land put for such user. For instance, the land used by the occupiers for commercial, agricultural and horticultural purposes, although forming part of the land adjacent to the building, does not qualify to be treated as land appurtenant to the building; (4) If the owner or occupier is deriving any income from the land which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of applying the provisions of s. 54 of the I.T. Act. We, therefore, return the reference unanswered with a direction that the ITO shall make an enquiry into the matter bearing in mind the principles set out above and come to an appropriate conclusion regarding the extent of land appurtenant to the building. 6.5 Though, the Hon ble High Court has laid the tests to be applied for the determination of the extent of land appurtenant to a building in the case involving sale of land and buildings, in sub para 18, supra, we are of the view that they could very well be applied in the case of purchase of land and construction of house as is involved in this case also. Further, in the case of Smt. Asha George versus Income-tax Officer, Ward 2(1), Thrissur, in IT APPEAL No. 114 OF 2012, Dt 16.01.2013 in the Ho ble High Court of Kerala, the facts ofthat case was as under : Assessee returned nil income for the assessment year 2005- 2006. Acting on information that the assessee had transacted a property on 05.11.2004, the assessment was reopened. Appellant had 1/4th share in 1.10 acres of land in Ayyanthole Village. The same was sold for ₹ 44 lakhs on 14.11.2004. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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