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TMI Blog2017 (1) TMI 1700X X X X Extracts X X X X X X X X Extracts X X X X ..... e years after the date of transfer of original asset as contemplated under section 54F of the Act, this by itself would not act as an handicap for availing benefit of 54F. Several objections on facts have been recorded by the CIT(A) while denying section 54F of the Act. The objections ranges from purchase of only plot of land and no evidence of construction cost tagged thereon to objection in the form of purchase of plot prior to transfer of original asset in derogation of condition stipulated u/s 54F whereby deployment of funds in construction activity only after the transfer of original asset is eligible for relief. These objections recorded by CIT(A) as extracted supra are essentially factual in nature. The money stated to be utilized and appropriated towards purchase of plot of land and construction of residential house thereon after the transfer of original asset in terms of S. 54F is required to be ascertained to determine the eligibility of claim. In the absence of factual details before us, we are unable to address the factual controversies involved. It was asserted on behalf of the assessee that the construction of a residential house has been eventually completed. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant, the arguments taken by the assessing officer and the material available on records. On careful analysis of the arguments of the appellant it is seen that the same are not supporting the case of appellant and hence the claim of deduction u/s. 54F is not permissible in this case to the extent the addition made by the A O is based upon correct understanding of the facts of the case and the contemporary law. Before proceeding further, it is pertinent to point out at this stage the statutory provisions of sec 54F. [Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.] 54F. (1) 64 [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or 65[two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital gains relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, 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 such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such new asset is transferred.] 70[(4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any residential house within the period of three years from the date of transfer other then the new residential house constructed and iv) The income from the residential house is assessed as income from house property. v) The assessee will be required to forfeit the deduction claimed u/s.54 in case he transfers the new asset, for which deduction was claimed within a period of three years from the date of its purchase or construction. 4.3.3 At the outset it is seen from a perusal of the material available on records that there is no evidence brought upon record by the appellant to indicate that it is satisfies the conditions prescribed in item No. i) to item No. iv) above. It is a settled principle of law that the primary onus to justify one's claim of deduction always rests upon the tax payer. 4.3.4 As far as the argument that the appellant had provided a reply to the A O by his letter dt 1-2-2013 is concerned, it is seen that the same suffers from vice of being an incorrect argument. As per the A O's records, the said letter was received in the office of A O on 1-2-2013. The assessment order has been passed by the A O on 28-1-2013. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that merely construction of a house within the mandatory period per se would not claim of deduction but evidences have to be placed on record by the assessee to justify demonstrate that the house had become actually habitable. Hon'ble ITAT, Hyderabad in the case of Nimmagudda Sridevi 58 SOT 54 have held that if the investment in the property for which deduction u/s. 54F is claimed was bought prior to the date of transfer then no deduction would be available. The Hon'ble Tribunal have held as under :- .....Further in the case of Chandru L. Raheja v. ITO [1988] 27 ITD 551 (Bom.) wherein held that when the assessee had already purchased land, started construction of a building then only that part of the investment in new house that was made out of the sale proceeds received after the transfer of the old house would qualify for exemption u/s. 54 of the Act. 16. Similarly, in the case of Smt. Shantaben P. Gandhi v. CIT [1981 J 129 ITR 218/ 6 Taxman 356 (Guj) held that where the construction of new residential property is completed before the date of transfer of the existing property, the assessee is not entitled to relief u/s. 54 in respect of capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows that no deduction u/s 54F is admissible to the appellant in this case. As per the information provided by the appellant it has made investment in plots of land by way of two purchase deeds dated 12/8/2009. The impugned purchase deeds have been examined. Thus, there are two purchase deeds bearing registration number 14044 dated 12/8/2009 and registration number 14045 dated 12/8/2009. The purchase deed bearing registration number 14044 dated 12/8/2009 is between the sellers (being 4 parties ) and the appellant and his brother as joint purchasers. As per the deed the appellant and his brother have agreed to buy a plot of land, which is a part of a scheme where plots are sold by the vendor's in a proposed residential bungalow scheme named as kalahar exotica at Ahmedabad, bearing plot number! 35 admeasuring 1208.19 sq mtrs for a consideration of ₹ 67,19,250/-. On the same date by another purchase deed bearing registration number 14045 the appellant buys from the same set of sellers another plot of land, bearing plot number136 admeasuring 1207.36 sq mtrs for a consideration of ₹ 67,14,600/-. The total investment in the two plot of lands comes to ₹ 1,00,74,225/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said purchase deed shows that only one residential unit is permitted to be made on the impugned plot of land. Now when the appellant was not the owner of the entire plot of land he is not in a position to construct any residential house for which he can justifiably claim deduction under section 54F of the act. Even hypothetically it is assumed that appellant is eligible for any claim of deduction under section 54F of the act in respect of the said product land then the amount invested by the appellant has to be restricted to only ₹ 33,59,625/- because that was the amount which was paid by the appellant as part of his contribution. As far as the second plot of land is concerned the same be irrelevant since only one house is allowed under the act. This without prejudice to the fact that upon neither of the two plots of land is there is any evidence of any construction. 4.3.13 In view of the discussions made in the preceding paragraphs clearly indicating that firstly the appellant in this case has only purchased a plot of land. Secondly the appellant did not provide to the assessing officer any evidence of having constructed any residential house on the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cupy the same within a period of three years after the transfer. The Ld.AR next submitted that the construction has eventually been completed on the plot of land, cost of which has been claimed as deduction for the purposes of section 54F of the Act. To substantiate the construction of residential house, he filed electricity bills showing outgo towards electricity charges. The Ld.AR accordingly pursued the Bench to set aside the issue to the file of AO to be decided afresh in accordance with law. 7. The Ld.DR Mr.Prasoon Kabra relied upon the order of the CIT(A) and submitted that the CIT(A) has dealt with the issue in length whereby the deduction under section 54F has been denied by a reasoned order. He submitted in furtherance that benefit under section 54F is governed by several conditions and fulfillment of which was not proved before AO or CIT(A). He therefore submitted that the deduction claimed under section 54F has been rightly denied to the Assessee. 8. We have considered the rival submissions. The controversy in the instant case revolves around the eligibility of deduction of S. 54F in the facts of the case. In this instant case, the assessee has claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he eligibility of claim. In the absence of factual details before us, we are unable to address the factual controversies involved. It was asserted on behalf of the assessee that the construction of a residential house has been eventually completed. Copies of some electricity bills were produced to lend support to such assertions. However, a bare reading of S. 54F would suggest that construction of house beyond stipulated time limit of 3 years is not the only condition precedent for eligibility of deduction claimed. The other conditions would thus continue to apply. 10. Pertinent here to note that investment made for the purposes of construction of new residential House prior to the sale of original asset would not be entitled for deduction under section 54F of the Act. The money deployed in purchase of land and construction of residential house thereon after the sale of original asset is however required to be considered for the purposes of determination of eligibility under section 54F of the Act subject to fulfillment of other conditions. 11. Thus, in the totality of circumstances, we consider it expedient that the matter is examined afresh after granting pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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