9911796707
TMI Blog2021 (7) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... nied. Payment made towards construction of the house - As a proof of this, in support of this expenditure, assessee filed payment vouchers before us - These evidences were also filed before the lower authorities. The lower authorities have brushed it aside on the reason that these are self-made vouchers or are not having sufficient details regarding the various expenditure incurred by the assessee. In our opinion, without examining the parties concerned, lower authorities have precluded in rejecting the evidence submitted by assessee in the form of bills and vouchers. Being so, the assessee s property No.9 at 100 Ft. Road, BTM Layout, Bengaluru, cannot be considered as a residential property and also expenditure incurred by assessee towards construction of new residential property cannot be brushed aside - evidence brought by assessee in the form of Khatha show that originally at the time of acquisition of property, there was only 500 sq. ft. of built-up area at 3646/8/8/1 as per Khatha extracted at pages 22, 23 of written submissions, the construct area in property bearing No. 8/1, Kattigenahalli Village, Bengaluru, was 500 sq. ft. - as per Khatha dated 23.12.2014 issued by BBMP, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Part -III of the Valuation Report dtd: 31-05-2014 Same as above The Ld. ,CIT(A) has erred in not admitting the additional evidence of Bills and Vouchers relating to the expenditure of ₹ 8,05,876/- incurred for land levelling, compound and gate expenses without appreciating the fact that the Ld. AO has not given sufficient opportunity to the Assessee. Same as above The Ld. CIT(A) ought to have appreciated the fact that the Assessee cannot be held to be disentitled for deduction u/s. 54F of the Act without appreciating the fact that the inspection by the Inspector was carried out in the year 2018 whereas the relevant Assessment year was 2012- 13. Same as above The Assessee craves leave to add, alter, amend and delete any of the grounds at the time of hearing. 2. The facts are that the assessee sold property at Sy.No.149, Bukkasagara Village, Anekal Taluk for a sale consideration of ₹ 1.87 Crores and purchased a residential property at 8/1, Kattigenahalli Village, Bengaluru on 02.06.2012 for a consideration of ₹ 1,33,28,405/- (including construction on it). The assessee claimed exemption under section 54F of the Income Tax Act, 1961 (hereinafter called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding of ₹ 48,10,594/-) out of which the assessee had claimed deduction u/s. 54F on prorate basis amounting to ₹ 1,28,18,405/- as detailed below. Sale Consideration of Property 1,87,00,000/- Situated at Bukkasagar Village Less: Land Levelling and Compound Cost 8,05,876/- Sale Consideration 1,78,94,124/- Less: Indexed Cost of Old Asset Sold 6,84,275/- (26586 X 785 / 305) Net Sale Consideration 1,72,09,849/- Less: Pro-rata Basis Deduction in respect of Investment in New Asset claimed u/s. 54F 1,28,18,724/- (1,72,09,849 X 1,33,28,404 / 1,78,94,124/-) Capital Gains on Sale of Old Asset 43,91,125/- As on 31-03-2013 5. The assessee has further invested the entire Capital Gains mentioned above in construction of New Building in the subsequent Financial Year and thus the entire Sale Consideration of Old Asset was invested in acquisition of New Asset and therefore the deduction was claimed u/s. 54F of the Act. The assessee in support of the acquisition of Site together with Building measuring 500sq.ft has submitted a Copy of BBMP Katha Extract dtd: 14-06-2013 wherein the Built-up area and the extent of Vacant Land was mentioned measuring 500 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse as on the date of transfer of Old Asset and acquisition of New Asset during the period 2012 to 2014. In this view of the matter it is submitted that it is an undisputed fact that the assessee did not possess more than one house as on the date of transfer of the Old Asset and therefore the deduction disallowed as per para 15 of the Assessment Order by the AO was neither justifiable nor maintainable in law and hence the assessee prays that the Order of the Authorities below be set-aside and be pleased to pass orders that the assessee is entitled for deduction u/s. 54F of the Act. Change of Opinion and Substitution of New Colour and New Dimensions to the existing facts of the case:- 10. The Assessee submits that it is an undisputed fact that he did not possess more than one house as on the date of transfer and the same was also admitted by the AO in the Remand Report dtd: 06-07-2018. However, the AO in the Remand Report has shifted the stand and attempted to substitute New Colour and New Dimension to the existing fact in the Remand Report dtd: 06- 07-2018, that the New Asset being Land and Building was a Commercial Property which was not entitled for the deduction u/s. 54F of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule Property was 500 sq.ft which was constructed with Bricks and Cement Marter. It has RCC Roofing and Cement floor with electricity amenities. There is no mention in the said Deed the occupancy of the tenant Sri. Ismail and also running a Bakery Business in the name of Ayyappa Bakery. Without prejudice to the above submissions, the assessee begs to place reliance on the decision of the Hon'ble ITAT Hyderabad "B" Bench in the case of Shri. Shyamlal Tandon dtd: 21-01-2014 in ITA No. 1774/HYD/2012 and the relevant findings are reproduced as under for immediate reference. "5. The learned counsel for the assessee reiterating the contentions urged before the lower authorities submitted that the assessee is very much entitled for relief under S.54F of the Act. He submitted that the assessee has given land for development and got in return constructed residential property, which is eligible for relief under S.54F of the Act. He further submitted that the land was given by the assessee to the developer for construction of a residential building. In this behalf, he furnished before us a copy of the approved plan of the building. He also placed reliance on the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) at page 4 at para 2.4 of his order. b) The plan attached to the sale deed shows the construction of bed room, Kitchen, study etc., showing that the property is residential one. c) The MCH permission dated 10.05.2000 has approved the property as "residential complex" d) The bank guarantee for security deposit given by State Bank of India to MCH also refers to the property as residential complex. e) Permission / No objection certificate given by the Fire Service Department also refers to the property as residential complex f) The memorandum of understanding dated 14.01.2001 entered for the joint development and construction of the said property also refers to the construction of residential complex. We find no infirmity in the view taken by the CIT(A) as to the residential nature of the property purchased by the assessees, considering the factual aspects noted above. Even though the property was subsequently leased out to M/s.APP Lab Technology P Ltd, and it has been used for nonresidential purposes, on that ground, the deduction u/s.54F cannot be denied. Mere non residential use subsequently would not render the property ineligible for benefit u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the New Asset. The AO, upon such report has submitted a Remand Report without causing any enquiry by herself except placing reliance on third party report which is not permissible in law. 11.4 The Assessee submits that the Garnet of whole exercise of conducting the sport inspection by a sub-ordinate officer of the AO and reporting the existence of a commercial property in the year 2018 after lapse of 6 years was based upon the jurisdiction assumed by the AO on the strength of the directions given by the CIT(A) during the Appellate Proceedings. However the assumption of the jurisdiction for conducting enquiry and submitting a remand report was not permissible under the law since the CIT(A) himself has rejected the Additional Evidence. When that being the case the AO or his sub-ordinate officials cannot assume the jurisdiction after the completion of the Original Assessments and the same amounts to assumption of jurisdiction not permitted under the law to redo the Assessment in the guise of submission of Remand Report which was considered by the Ld. CIT(A) without jurisdiction since he cannot travel being the Grounds of Appeal where the Assessee contended that the AO who has comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 12. Under these facts and circumstances the orders of the authorities below are arbitrary, unreasonable and opposed to law and facts of the case and hence they are liable to be cancelled in the interest of justice and equity. 12. The assessee submits herewith the details of the following Buildings mentioned in the Assessment order. Sl. No. Location of the Buildin. Ownership Nature of the Building Remarks 1. No.82/10, RBI Colony, 2nd Cross, Jaianagar, East, 8th Main, Bangalore - 560011 Riyaz Ahmed Residential The Assessee was a tenant and the building was owned by One Sri. Riyaz Ahmed. The AO in the remand report dtd: 06-07- 2018 placed at page 1 of the Paper Book in para 3 has accepted the factual position that the building was owned by One Riyaz and property tax and Encumbrance Certificate were examined. Therefore the Assessee was not the owner of the said building No. 82/10, RBI Colony, 2nd Cross, Jayanagar, East 8th Main, Bangalore - 560011 as on the date of purchase of new property situated at No. 8/1, Kattigenahalli, Bangalore. 2 CITB No. 186, (Renumbered as Site No. 11 after Formation of BDA) BDA Extension, Byrasandra, Jayanagar 1st Block East, Bang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the date of purchase. In this regard the assessee submits that the Ld. CIT(A) has relied upon the AO's Report which was based on Inspector's Enquiry Report and held that at the time of purchase the new Asset was a commercial building occupied by Ayyappa Bakery as per the Google Earth Map and the Ayyappa Bakery existed prior to F.Y 2012-13 and still exists at the same place and therefore the building was said to be a commercial building and not a residential house as on 02-06-2012. Further the Ld. CIT(A) held that the purchase deed refers the site as house site but does not refer the building as residential house but the house was construed with the bricks and cement marter. If it were a residential house the sale deed would have indicated the same. A Lease deed was drawn on 09-01-2013 (wrongly mentioned as 09-10- 2013) shows that the Ayyappa bakery was a tenant. In this regard the assessee submits that the Ld. CIT(A) has wrongly construed that the Ayyappa Bakery was in existence prior to the date of purchase of the new Asset No. 8/1, Kattigenahalli Bangalore which was purchased on 02-06-2012. The Ld. CIT(A) has misconstrued the facts to hold that the Ayyappa Bakery was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced at Page 45 of the Paper Book) and subsequently new building was constructed measuring 200 sq.ft and the total building old and new was measuring 2500 sq.ft which is evident from the BBMP Katha Certificate dtd: 23-122014 placed at Page 46 of the Paper Book. 17. The AR submits that the Ld. CIT(A) has relied upon the AO's Remand Report which was based on Inspector's Enquiry Report. The Inspector being a Subordinate to the AO has submitted her enquiry report against to the facts supported by the BBMP Katha Certificates and Lease Deeds. The Ld. CIT(A) has imagined that the Ayyappa Bakery was in existence in the New Asset purchased by the assessee prior to the date of purchase being 02-06-2012. The assessee submits that if Ayyappa Bakery were to be in existence prior to 02- 06-2012 there was no necessity for the Ayyappa Bakery owner to approach the assessee on 09-01-2013 the date on which the lease deed was drawn which clearly establishes the facts that the ayyappa bakery was not in existence in the new assets purchased by the assessee prior to 02-06-2012 and the Ld. CIT(A) has inferred the false facts in support of his uncalled for finding. It is further evident from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion claimed u/s. 54F of the Act since the requirement of the law is that the property is to be a residential house as on the date of purchase. The assessee begs to place reliance on the following decisions i. Decision of the Hon'ble ITAT Hyderabad in the case of Shyamlal Tandon v/s. ITO Ward - 7(4) in ITA No. 1774/HYD/2012 dtd: 21-01-2014 (placed at Page No 165 to 171 of Paper Book - 1) ii. Decision of the Hon'ble ITAT Delhi in the case of Mahavir Prasad Gupta v/s. JCIT (2006) 5 SOT 353 (ITAT(Delhi)) iii. Decision of the Hon'ble ITAT Jodhpur in the case of ITO v/s. Saida Mohammad in ITA No. 270/Jodh/2016 dtd: 22-052017 19. In view of the ratio laid down in the above cases the assessee cannot be held to be disentitled for deduction u/s. 54F of the Act on the ground that the New Asset was a Commercial Asset in view of the fact that the deduction was not disallowed in the Assessment Order on the nature of the New Asset but the claim was disallowed on the ground that the assessee had owned more than One residential property as on 02- 062012 being the date of purchase of new asset. The AO with her undue anxiety has stated to have caused enquiries through her Inspecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house on the site. * Although the assessee has claimed that he had spent an amount of ₹ 32,70,100/- in cash for purpose of construction (as per the details given in pares 7 of the assessment order), however no details regarding as to whom the payments were made, from where the material was purchased, the quantity of material purchased, details of labour engaged etc. were provided. * The cash book. produced by the assessee to explain the expenditure is forged one. This aspect is discussed by the AO in para 8 and 9 of the assessment order: * Despite being given sufficient opportunity, the assessee has failed to produce any copy of the permission taken from the competent authority for the construction of house and the completion of construction certificate from the competent authority. * The assessee has not carried out ant. construction of residential house on the said site, which already had a building as indicated in the sale deed in the 'schedule of property'. * The assessee was having more than one residential house at the time of the sale of the original asset. 21. Learned DR drew our attention to the assessee's letter dated 10.10.2018. In rejoinder the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of transfer of the original asset. * The assessee has submitted that the shops were let out in FY 2016-17 onwards and such finding of the AO would not have any bearing on the character of the residential property constructed earlier for the claim of benefit under Section 54F of the Act. The assessee has submitted that even if there was any alteration of the residential property in future time, the necessary action to disallow the benefit can be in such a year and not in the year under consideration. * The assessee also submitted that the AO had not given him proper opportunity during the remand proceedings (order sheet entry dt 12.11.2018). 22. The learned DR submitted that as regards the admission of additional evidence, the assessee had wrongly contended the documents like bills/invoices produced before the AO, however in the assessment order the AO had held otherwise. So, in the interest of justice the additional evidence is admitted. However, since the assessee had argued that sufficient opportunity of being heard was not given to him by the AO during remand proceedings, so a copy of the rejoinder filed by the assessee was forwarded to the AU and he was asked to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cient opportunity was not given to the assessee by the AO during remand proceedings. This argument of the assessee is without merit. This is noted that each and every document relied upon by the AO was duly confronted to the assessee and his replies were also considered by A.O. So, this argument of the assessee is rejected. Secondly the assessee has objected to the action of the AO in carrying out fresh investigation into the facts during remand proceedings. So the issue whether CIT(A) can direct the AO to carry out any inquiries during the pendency of the appellate proceedings or not. In this regard it is important to look into provisions section 250(4) of the Act. The same is reproduced as follows: "Procedure in appeal. 250. ------------------------------------- (4) The Commissioner (Appeals) may,- before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals)…... 26. The learned DR submitted that the next issue is regarding the basis of addition made in the assessment order. The assessee has wrongly contended that the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether there was construction of a- residential house on the land, as claimed by the assessee to had been carried out by him after demolishing the existing building on the land or not. In this regard the reliance of the AO is on the following facts: a. The assessee has not carried out any construction of residential house on the said site, which already had a building as indicted in the sale deed. b. Spot verification by the Inspector showed that only a commercial building existed on the site. The building as indicated in the purchase deed (a shop-of approx 500Sq Ft rented to Ayappa Bakery) was still existing and no demolished as claimed by the assessee. c. The Ayappa Bakery existed on the same location as per Google Map (Google Earth Pro Historical imagery) even during FY 2011-12 and the historical imagery also showed that no residential property ever existed on the site during any of the years after FY 2011-2012. d. The inquiries conducted by the Inspector showed that there wasn't. wiy residential property on the said site any time in earlier years. e. The purchase bills related to construction were fabricated. f. The assessee could riot produce any occupancy cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2000 sq.ft of residential house between the period 2012 to 2014 as evidenced by the BBMP Katha Extract dtd: 23-12-2014 ((Annexure D) mentioned above, that the extent of Residential Building measuring 2500 sq.ft was in existence as against 500 sq.ft of old building mentioned in the BBMP Katha Extract dtd: 14-06-2013 (Annexure - C). Therefore the Assessee submits that he has purchased the New Property situated at No. 8/1, Kattigenahalli Village, Bangalore consisting of 500 sq.ft of building and thereafter addition of construction of residential building was made within the prescribed time limit of three years from the date of transfer of Original Asset and further submits that he has retained the same property being residential upto a period of three years as per law without any transfer of alternation/ renovation/medication. Therefore the Assessee is entitled for deduction u/s. 54F of the Act since he has fulfilled the relevant conditions envisaged under he said provisions." 30. Thus, although the valuation report shows that the entire building of 2500 sq ft was newly constructed during 2012 to 2014 without referring to the old building, the assessee is now submitting that 500 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of the various sites on earth and it can clearly be seen from the same that the Ayyapa Bakery existed prior to FY 2012-13 and still exists at the same place. So, the building was a commercial building and not a residential house as being claimed by the assessee. In fact, the purchase deed refers to the site as 'House site' but does not refer the building as a residential house but a building constructed with bricks and cement mortar. If it were a residential house the sale deed would have indicated the same. The argument of the assessee that he had given the shop on rent to Ayyapa Bakery vide lease deed dt 09th October, 2013 is also found to be incorrect as the lease deed itself shows the date as 09th January 2013. The said lease agreement was entered into by the assessee as he had purchased the site and as discussed supra the Ayyapa Bakery was already there being tenant of the seller. 33. The DR submitted that it is further noted that all the investment in construction of building is stated to be in cash and there is nothing to show about the actual date of investment in construction so as to look into applicability of other conditions laid down in Section 54F of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity to adduce evidence. The ITAT Chandigarh vide order dated 23-05-2013 in the case of Rishi Sagar v ITO, 36 taxmann. corn 508 had held that where assessee had failed to produce documents during assessment and failed to establish reasonable cause thereof, additional evidence could not be accepted in appeal. This decision was affirmed by the HC in the case of Rishi Sagar v. Commissioner of Income-tax, Ludhiana[2o17] 88 taxmann.com 600 (Punjab & Haryana). Considering above, the additional evidence is not admitted. 35. We have heard the rival submissions. In the first ground with regard to denial of exemption under section 54F of the Act, the assessee claimed deduction under section 54F on the sale of property bearing survey No.149, Bokkasagara Village, Anekal Taluk on the reason that he has purchased another house on 02.06.2012 situated at 8/1, Kattigenhalli Village, Bengaluru. In support of this, the assessee filed purchased deed dated 02.06.2012. The claim of the assessee was denied firstly on the reason that the assessee has not constructed residential house at Kattigenahalli, Bengaluru and the payment said to be made towards construction was met by assessee by cash. Further, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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