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TMI Blog2019 (6) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... fter allowance of deduction u/s.54F was eligible to be considered for deduction u/s.54F of the Act. 2.3 The learned CIT(A) erred in allowing the balance capital gains to be considered under 54F of the Act despite there being no provisions in the Act allowing benefits available under Sec.54 and 54F to a single transaction on which capital gains arose. 2.4 The learned CIT(A) failed to appreciate that the conditions to be satisfied by an assessee are different under the provisions of Sec.54 and 54F and therefore, the direction of the CIT(A) to allow benefit of Sec.54 and Sec.54F is not in order. 2.5 The learned CIT(A) further erred in directing the AO to compute eligible deduction u/s.54F in respect of the balance capital gains towards the investment made as eligible for deduction u/s.54F without considering whether the conditions in the proviso to Sec.54F were satisfied in the case of the assessee. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the A.O. restored." 2. Brief facts of the case are that the assessee is engaged in consultancy services and filed its return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. The assessee had owned lands at Muttukadu, ECR to the extent of 1.07 acres and 0.35 acres (both together 1.37 acre) vide Survey No.46/2A1 and 46/2A2 respectively. Adjacent to the land, Shri Binoy Joseph (brother-in-law of the assessee) held land to the extent of 1.02 acres. Out of the said lands 0.14 acres belonging to assessee and 0.08 acres belonging to Binoy Jospeh were acquired by the government for road extension. During the assessment year 2013-14, remaining land to the extent of 1.23 acres held by the assessee and 0.94 acres held by Shri Binoy Joseph were sold to M/s. VGN Developers Pvt. Ltd. As a result of sale, the assessee had declared Rs..9,79,72,382/- as long term capital gain. The deduction under section 54 to the tune of Rs..5,76,25,701/- was claimed by the assessee, based on the investment in property acquired from Shri D.H. Sarath situated at Chennai bearing Flat No.2, Block A, Rain Tree Apartment, Venus Colony, Alwarpet, Chennai. The assessee has submitted the copy of the purchase deed before the Assessing Officer. In addition to the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the above, the Assessing Officer restricted the quantum eligible for deduction to the value of building and the land appurtenant to such building. Since the area of the invested property was only 2,665 sq. ft. along with 1,449 sq. ft. of undivided share of land and the area of the sold property was 5,862 sq. ft. the Assessing Officer computed the reasonable area of land appurtenant to the building reasonably at 8228 sq. ft. (2 times of the area of the invested property) and thus, the value relating to 45,351 sq. ft. of land was excluded for the purpose of computation of deduction under section 54 of the Act. 6.4 During the course of assessment proceedings, the assessee had submitted that the capital gains earned on sale of land (as per the order) is eligible under section 54F of the Act and requested to consider the same. Since the assessee has not made any such claim in the return of income, the Assessing Officer rejected the claim of the assessee by holding that assessee is not eligible to claim deduction u/s.54 and 54F by making investment from sale consideration of two different properties into one residential house and therefore, assessed the capital gain on sale of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing a long-term capital asset. 6.6 To sum up, against the sale of 1.23 acres admeasuring 53,579 sq. ft. land with building, the assessee claimed deduction u/s 54 of the Act. The Assessing Officer held that building was only 850 (GF) plus 657 sft of First Floor(FF). The deduction u/s 45 of the Act is for transfer of residential building along with land appurtenant thereto. Hence the Assessing Officer fixed land appurtenant to the building at 8,228 sft and disallowed the claim u/s 54 of the Act on the sale of balance land of 45,351 sq. ft. Though the assessee made investment of Rs..5,76,25,701/- in a new apartment as well as Rs..50,00,000/- u/s 54EC which are not disputed by the Assessing Officer, the deduction was allowed only to the extent of Rs. 1,32,25,455/- under section 54 i.e., to the extent of long-term capital gains (LTCG) on transfer of residential building with appurtenant land. The balance investment of Rs..50,00,000 u/s 54EC and Rs..3,94,00,246/- under section 54F are eligible for deduction from LTCG on the sale of balance land. 6.7 The Assessing Officer rejected the claim of deduction under section 54F on the ground that no such claim was made in the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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