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TMI Blog2016 (4) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... r view, the AO has brazenly violated the provisions of law and has committed serious error in denying the benefit of Valuation Report to the assessee. In view thereof, we have no option but to uphold the finding of the ld. CIT (A). In view of the above, the appeal of the revenue is required to be dismissed and is accordingly dismissed. Since we are upholding the valuation made by the Valuation Officer as well as the order passed by ld. CIT (A), therefore, the ground no. 2 of the assessee is also dismissed. Deduction u/s 54F - proof of purchase of new asset within the period of two years after the date of transfer of original asset - HELD THAT:- It is the admitted case that sale of unauthorized commercial land was effected on 31.1.2011 and the agreement to sale for purchase of agriculture land was executed between Shri Khiv Singh and the assessee on 2.6.2011 of the land bearing Khasra No. 1262 at village Muhana admeasuring 1.99 hector and 0.37 hector. If Shri Khiv Singh and Shri Naurat Singh were the owners of the property, how the agreement can be executed solely by Shri Khiv Singh and how the entire sale consideration was received by Shri Khiv Singh on 2.6.2011 in the absence of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT (A)-2, Jaipur for the A.Y. 2011-12. The assessee has raised the following grounds of appeal :- 1. On the facts and in the circumstances of the case and in law the ld. CIT (A) erred in confirming the disallowance of deduction of ₹ 83,54,434/- claimed by the assessee u/s 54F of Income Tax Act by holding that the assessee is not eligible for deduction u/s 54 of Income Tax Act as the investment in "new asset" for claiming deduction u/s 54F of Income Tax Act is not a residential house with land appur5tenant thereto. The order of ld CIT (A), confirming the disallowance of deduction claimed by assessee u/s 54F is arbitrary, whimsical, capricious, perverse and against the law and facts of the case. The order of ld. CIT (A) in this regard deserves to be set aside and addition made by the ld AO by disallowing the deduction u/s 54F deserves to be deleted. 2. On the facts and in the circumstances of the case and in law the ld. CIT (A) erred in sustaining the addition of ₹ 2,24,863/- (₹ 2,04,78,163/- minus ₹ 2,02,53,300/-) under section 50C of Income-tax Act, 1961 on the b asis of value adopted by the Valuation Officer at ₹ 2,04,78,163/- as again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to ₹ 83,54,434/- has been claimed on account of said investment in the land. Copy of the agreement to purchase and registered purchase deed are enclosed herewith. The assessee got constructed a residential house in the F.Y. 2012-13 i.e. within the statutory time limit allowed by the I.T. Act, 1961 i.e. before the due date of February, 2014. 2. Copy of bills for construction of house along with Map of the house is enclosed herewith. 3. The total area of land is about 4090 sq. mtr. And the constructed area is about 1504 sq. ft. 4. No approval is required for construction of the above said residential house. 5. Copy of registered sale deed is enclosed as per point No. 1 of this letter." The AO without awaiting for the Valuation Report of the Valuation Officer had passed the assessment order on 13.03.2014 and held that the assessee has under reported the sale consideration by ₹ 1,07,89,217/-. The reasons given for not awaiting and not considering the report of the valuation officer is mentioned in para 4.5 of the assessment order which is reproduced herein below for the sake of convenience :- "4.5. It is again important to mention here that even if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignored, on this ground. Also, in my view, the Assessing Officer cannot object to the valuation, made by the Valuation Officer, on merits. In other words, the Assessing Officer cannot sit in judgment over the report of the Valuation Officer and is duty bound to follow the same. In view of the above, it is held that the full value of consideration accruing as a result of transfer, is the valuation submitted by the Valuation Officer u/s 50C, on 13.03.2014, at ₹ 2,04,78,163/-. Therefore, addition of ₹ 2,24,863/- (₹ 2,04,78,163 - ₹ 2,02,53,300) is sustained on this issue under the head Capital Gains while the balance addition is directed to be deleted. The above grounds are allowed." 4. Now the revenue has challenged the order passed by ld. CIT (A) on the ground mentioned herein above and sought to contend that the order passed by the AO is required to be upheld. 4.1. Whereas the assessee has challenged the addition of ₹ 2,24,863/- on the ground that the capital gains as calculated by ld. CIT (A) was incorrect. 4.2. We have heard rival contentions of the parties and have gone through the record. Section 50C provides as under :- "Section 50C. Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. Section 142A provides as under :- "Section 142A: (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B is required to be made section 69B or fair market value of any property referred to in sub-section (2) of section 56 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. (2) The Valuation Officer to whom a reference is made under sub-section (1) shall, for the purposes of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957). (3) On receipt of the report from the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 of the assessee. Ground No. 1 of the Assessee Appeal 5. Ground No. 1 of the Assessee appeal raised in the assessee's appeal is with respect to the capital asset, claiming deduction under section 54F of the IT Act. The AO has mentioned that the assessee had made the investment of ₹ 1,15,00,000/- in the property and had claimed proportionate deduction of ₹ 83,54,434/- under section 54F of the IT Act. When it was noticed by the AO, the assessee was called upon to furnish the details and accordingly the assessee has furnished the reply as under :- "- The total area of land purchased by the assessee was around 37000 sq. ft. (4090 sq. mtr) and the assessee had shown construction area of 1504 sq. ft only. - The bills submitted by the assessee for construction were not proper. They are just computer printout without any details of work done and all such bills were paid in cash only that too less than 20,000/- - The year under consideration is FY 2010-11 (AY 2011-12) and the last date for filing ROI was 31.07.2011 i.e. the assessee had to invest before this date for claiming deduction u/s 54F in FY 2010- 11. It is noticed that the assessee actually purchased t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land purchased is agricultural, and not residential; that the house has been constructed without approval by Government Authorities; that the assessee does not have a permanent electricity connection; cannot by itself be a ground for denying deduction u/s 54F. However, while considering the claim of deduction, the entire conspectus of facts have to be taken into consideration. I agree with the appellant that there is no additional rider in section 54F that the land should not be agricultural, the plan of the house should be approved by the Government Authorities or that, there should be a permanent water and electricity connection. It is also not necessary that the property should be registered or that construction of the house should be made on the entire land and no part of the land can be left vacant. 4.5.1. While the above contentions of the appellant are correct; these contentions do not flow from the facts of this case, as discussed below- 4.5.2. It has been held in the case of Narendra Mohan Uniyal (supra) that - "When the land is purchased and building is contructed thereon, it is not necessary that such construction should be on the entire plot of land, meaning t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shed. Obviously, a residential house, within the meaning of section 54F, would mean a house for humans and not animals. 4.5.4. In view of the above discussion, it is held that the investment in the 'new asset' for claiming deduction u/s 54F is by no stretch of imagination, a residential house with land appurtenant, thereto. Therefore, the appellant is not eligible for deduction u/s 54F. The disallowance of deduction u/s 54F is upheld. This ground is dismissed." 7. Now the assessee is before us. 7.1. The ld. A/R for the assessee has reiterated that the authorities below have failed to appreciate that under section 54F there is no restriction to construct residential house on the agricultural land. It was further submitted that there is no requirement of getting the plan sanctioned from the local authority. Further, it was mentioned that there was no provision for getting the permanent electricity connection. Lastly it was contended that it is for the assessee to decide the size of accommodation required by him and the revenue is not right in its rights to command the assessee to construct the house in a particular manner. It was also submitted that after the sale of the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45 : Provided that nothing contained in this sub-section shall apply where-(a) the assessee,- (i) owns more than one residential house, other than the 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". Explanation For the purposes of this section,- "net consideration", in relation to the transfer of a capital asset means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,-(i) the amount by which- (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of subsection (1), exceeds, (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires ; and(ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid." It is the admitted case that sale of unauthorized commercial land was effected on 31.1.2011 and the agreement to sale for purchase of agriculture land was executed between Shri Khi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs or conveyances. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said 'SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possession under section 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. We make it clear that if the documents relating to 'SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision. In view thereof also the agreement dated 2.6.2011 cannot be relied upon by the assessee to claim the purchase of capital asset within the statutory time limit provided by section 54F. Moreover there is no independent document or evidence to support the transfer of capital asset in favour of the assessee on 2.6.2011 or thereafter but before the registration of the sale deed dated 29.3.2013. 7.4. Since we have already held that there is no transfer or purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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