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TMI Blog2015 (11) TMI 1850X X X X Extracts X X X X X X X X Extracts X X X X ..... rent persons as land appurtenant to the residential building situated on the first plot of land (purchased from Shri Y.J.Alex) and the first plot of land itself possess a large area of land appurtenant to the residential house. 4. It is submitted that A.O. has allowed exemption u/s 54F to the extent of one plot of land with residential building. The subsequent purchase of plots by the assessee from six different persons has rightly not been considered for deduction u/s 54F. 5. The Id. CIT(A) ought to have appreciated the fact narrated by the A.O. in the assessment order that each transaction on purchase of land is independent and payments are also made separately. Hence, the reason that the family members sellers family) insistence for buying land is not a valid ground. 6. The Id. CIT(A) ought not to have considered assessee's submission that the different pieces of land are contiguous whereas the AO has clearly found the assessee has not purchased a single plot but a huge tract of land and the reason for non allowability of claim on this ground has been mentioned in para. No.16 of the asst. order. 7. It is submitted that the provisions of Sec.54F read with CBOT's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there were only two sheds in some other properties which cannot be treated as residential buildings and therefore, assessee is entitled for exemption under section 54F of the Act as she has purchased all the properties belonging to one family though under separate deeds and there is only one residential house in such property and the land is contiguous though there are ponds in the lands purchased. However, the Assessing Officer restricted the deduction under section 54F of the Act only to the plot purchased by the assessee from Mr. Y.J.Alex and the building thereon and did not consider the sale consideration paid in respect of the property purchased from other six family members holding that residential house is situated at the land bearing survey numbers 98/9, 98/10, 98/11, 98/2-3 purchased from Mr. Y.J.Alex. As per the assessee, there is no property to be called as residential house in any other part of the land. Section is inserted in the Act to encourage construction of residential houses and meant for those who owns only one house as on the date of transfer of capital asset from where capital gains get accrued. The Assessing Officer was of the opinion that spirit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-divisions. Therefore, according to the Commissioner of Income Tax (Appeals) it cannot be said that different pieces of land are not contiguous. The Commissioner of Income Tax (Appeals) observed that existence of water bodies on the plots of land cannot be a reason to conclude that assessee had acquired more than one residential house because such water bodies like swimming pool or well are required to be maintained for daily necessities of occupants in Kerala. The Commissioner of Income Tax (Appeals) held that cost of vacant land appurtenant to and forming part of residential unit has to be considered for claim under section 54F of the Act, even if no construction has been done for residential house on the appurtenant land. The new residential house is not debarred from having a land appurtenant to any size for claiming exemption under section 54F of the Act when especially land was purchased from one family though consisting of seven members. Thus he allowed the claim of the assessee without any restriction. Against this order, the Revenue is in appeal before us. 7. Departmental Representative submits that assessee has purchased the said property from seven persons all on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which contain buildings. Referring to the sale deed in respect of Mr.Y.J. Alex and the description of property mentioned therein Departmental Representative submits that it is clear from the narration of the sale deed that the extent of land which is contiguous with the building is 2 acres 18.500 cents of land equivalent to 88.30 acres and nothing more. Therefore, he submits that assessee's claim that entire extent of land of 5.61 acres is contiguous to the residential property purchased is factually incorrect. He submits that since the land appurtenant to 2.18.500 cents the Assessing Officer has rightly considered only this property as eligible for claim of exemption under section 54F of the Act. 8. He further submits that Commissioner of Income Tax (Appeals) erred in holding that different pieces of land are contiguous though there are water bodies in survey numbers 98 and 99 with some sub-divisions. He further submits that observation of the Commissioner of Income Tax (Appeals) that "section 54F does not debar new residential house from having a land appurtenant to of any size." Referring to the decision of Kerala High Court in the case of Smt.Asha George reported in 351 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not arise and consequently, the Assessing Officer was justified in denying exemption in respect of the other six properties which the assessee has purchased. In this context, it may be relevant to note that though Courts/Tribunals have held that in the context of the expression 'a residential property' mentioned in Section 54F, the use of the singular 'a' used in the section includes 'plural', it has also been held that even in such cases, where there are more than one property, they should be adjacent, attached and not disparately placed( Hon'ble ITAT, Chennai in the case of Shri A. Kodanda Rami Reddy in I.T.A. No. 1865/Mds/2012 dated 04.07.2013) wherein it was observed as under: No doubt, the plethora of decisions relied on by the learned A.R. clearly mention that the term "a residential house" used in Section 54 has to be construed in plurality. But, as held by Hon'ble Apex Court in the case of CIT v. Sun Engineering Works Pvt. Ltd. (198 ITR 297), judgment of a court cannot be seen divorced from the fact situation. Its relevance is only when facts are on all four squares. In each of the case, relied on by the learned A.R., the residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submits as under:- "Brief facts are that (i) property comprising 5.61 acres of land housing 1 Residential Unit, was purchased by the Assessee on 3.4.2009 vide 7 Sale Deeds executed with 7 members of one family. (ii) The family members are:- Mrs. Mariyamma Alex (mother) and her 6 children Mr. Y.J. Alex, Mr. Alexander, Mr. Alex Mathew, Mr. T.G. Paul, Mr. T.G. Sebastian and Mr. Baiju. (iii) All the vendors, being family members, were insistent upon selling the property as a whole. (iv). Property in Survey now. 98/9, 98/11 and 98/10 sold by Shri Y.J. Alex, comprised land of 88.30 ares along with a residential unit thereupon. (v). Property in Survey No. 98/2/1 and 99/11 sold by Shri Y.M. Alexander comprised land of 63.08 Ares along with a tiled outhouse used as a store house by the family. (vi) Property in Survey No98/2/2 sold by Mrs. Mariyamma Alex comprised land of 35.61 ares with a shed wherein a shell grinding unit was located. (vii) The other 4 properties were vacant and formed part of the entire extent of land that was appurtenant to the residential unit. (viii) Out of a total extent of 5.61 acres, nearly 2 acres comprised of water. (ix) Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bastian and Baiju respectively do not qualify for the purpose of exemption in so far as the said properties do not contain any building. The nature of the property being vacant is admitted. Prima facie, however, this contention is incorrect in so far as the aforesaid four pieces of land are appurtenant to Survey No. 98 19, purchased from Y.J. Alex which is admittedly a residential property. The department relies on the description of the property purchased from Y.J. Alex to contend that only 2 acres and 18.5 cents is contiguous to the residential house comprised therein. This does not however take into account the other lands that are admittedly contiguous to the aforesaid properties. The position would not change merely because the other parcels of land have been transferred under different Deeds of Sale. As explained orally and confirmed elsewhere, all parcels of contiguous land belonged to 7 members of thesame family who were insistent upon sale simultaneously. This is supported by the fact that all 7 Deeds of Sale are dated 03.04.2009 registered on the same day. The interpretation of the department in this situation is hyper technical and grossly contrary to the letter and spir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendent properties, the land in Survey No. 98/2-2 and 98 / 2-1 are indeed contiguous to Survey No. 98/9, housing the residential property and relief u/s 54F is liable to be granted in connection therewith. At this juncture, it is necessary that this Hon'ble Tribunal appreciates that the certified copy of the Plan furnished indicates clearly that access to the residential house is possible only through the land in Survey No. 99/5-1, 99/5-2,99/5-3 and 98/2-2. Thus, the acquisition of the land in Survey No. /5-1, 99/5-2,99/5-3 and 98/2-2 is a necessity in order that the assessee approach the house. This situation applies equally with respect to the properties in Survey Nos. 98/9, 98/10 and 98/11. This position satisfies the provisions of s. 54F for the reason that the land acquired is not merely 'appurtenant to' but 'a necessity' in the present circumstances. The Assessee also produces a diagram of the topography the property in 2009 at the time of acquisition along with invoice from the Architect dated 14.11.2008 contemporaneous with the acquisition that establishes clearly that the properties in Survey Nos. 98/2/1 and 98/2/2 comprise land with a shed thereupo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch cases where there are more than one properties, the benefit will not be available in case of disparately placed properties. Incidentally, in the case of the assessee the three residential properties are disparately placed. The Map: At the outset, it is seen that the map furnished by the learned counsel is not prepared by any Government agency or authority. Therefore no reliance can be placed or credence can be given for the contents of the same since it cannot be considered as authentic. Secondly, the reason for allowing the admission is stated to the new submission that has been made not even by the Assessing Officer. Your Honours, it has already been pointed out that no new submission (that there were three residential buildings on the property and not one) was made. I reiterate that I had only brought certain facts to light which already existed on record. Therefore, the map as well as the invoice should not be admitted as additional evidence and I hereby record my objection. My reply to the written submissions of the assessee on the contention of the Department in the Typed set of documents dated 2nd July 2015, are as under: The Counsel for the assessee claims that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the plot on which the farm house stands and the land appurtenant could also be considered. The tribunal has categorically found that the appellant has not produced material to show that the entire area of 1.92 acres should be considered as land appurtenant to it. It is in such circumstances, the Tribunal made estimation and directed that the value of the plot on which the farm house is located and the land appurtenant be fixed as Rs. 2 lakhs. We are unable to accept the contention of the appellant that the value of the entire land must be considered in arriving at the value of the residential building. We find no illegality committed by the Tribunal. (emphasis supplied) Therefore, in my humble view, the only property that could be considered for exemption under section 54 F is the property the assessee purchased from Y.J.Alex and the land appurtenant thereto. The alternate plea of the assessee, is also not tenable for the same reason that the lands in survey numbers 99/51,99-5/2,99-5/3 and 98/2-2 are not contiguous to the land appurtenant to property purchased by the assessee from Y.J.Alex. That it was out of necessity to access the house, the assessee had to purchase the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details are as under:- Date of purchase Doc. No Vendor Extent Acres Extent cents Survey No Land value Bldg. value Door No of Bldg 03.04.09 523/09 Y.J.Alex 2 18.500 98/9 14700000 300000 II/391 & 392 98/11 98/10 ----- 11.5 98/2-3 03.04.09 527/09 Y.M.Alexander 1 51 98/2/1 171,00,000 10,00,000 II/381, 382 & 383 99/11 03.04.09 525/09 Mariamma Alex -- 88 98/2/2 95,00,000 5,00,000 II/380 03.04.09 528/09 Alex Mathew __ 25 98/2/1A 27,00,000 No Bldg 03.04.09 531/09 T.G.Paul --- 20 99/5-3 3,00,000 No Bldg 03.04.09 529/09 T.G.Sebastian --- 20 99/5-3 3,00,000 No Bldg 03.04.09 530/09 Baiju ___ 2.612 99/5-1 3,00,000 No Bldg 4,99,00,000 18,00,000 13. As could be seen from the above details the assessee purchased several pieces of land from seven persons and all these pieces of lands were purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several resorts and tourism is a major activity in the surroundings. The land purchased by the assessee is surrounded by canals in which passenger boats ply which is common way of transport in this particular area, therefore approach should not be a problem to the assessee. The contention of the Assessing Officer is that circumstantially the assessee's land is not totally cut off from the main stream possibility of approach cannot be denied. 14. The assessee relying on the memorandum explaining the provisions of section 54F as reported in 184 ITR (Statue) submits that provision is intended to benefit an assessee that invests in acquisition of residential house. According to the assessee, this parameter is satisfied in this case. Therefore, interpretation given by the Revenue that assessee purchased several pieces of land by way of separate sale deeds and therefore not eligible for deduction under section 54F of the Act on the entire land is hyper technical and contrary to the intention of the provision. No doubt provision is intended to benefit the assessee that invests in acquisition of residential house. However, in this case the intention of the assessee appears to be not to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Vembanad lake in Alappuzha Dist. Many resorts are functioning successfully for years in this area. It is evident that the purchaser spent huge amount for buying this land with an intention to make a huge return from either running a resort or from resale of the land. Earlier before the advent of tourism the cost was only Rs. 20,000/- for a cent of land. But as this area become a major tourist attraction in the world, the land price in this area has gone up substantially. My findings in brief in the light of questionnaire envisaged in the letter of Hon.ITAT Chennai are as under:- 1. The very intention behind deduction u/s.54F is fully defeated as the assessee neither constructed any building in the land nor existing buildings were useful for residential purpose. Moreover, the intension of the assessee in purchasing the property is to start a resort thereon which is a commercial / business activity. The assessee has been keeping the land idle from the date of purchase till last month. 2. With regard to the investment in property after purchase. a) three side of the property is fenced with temporary compound wall (metal sheet) b) two medium type gate fixed. c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all the land purchased is contiguous land forms part of one property with one residential house though purchased from several individuals of a family should be considered as eligible for deduction under section 54F of the Act, it defeats the very purpose of introducing the provisions of section 54F of the Act which is enacted to intend the benefit to the assessee who invests in acquisition of residential house especially in the present circumstances where the assessee purchased huge extent of 5.61 acres of land stating to be contiguous which was later developed into a resort for commercial purposes. The assessee places reliance on the decision of Delhi Bench of the Tribunal in the case of Addl. CIT Vs. Narendra Mohan Uniyal (34 SOT 152) in support of her contention that vacant land appurtenant to and forming part of a residential unit should be considered for deduction under section 54F of the Act. We find the said decision relied on by the assessee is distinguishable on facts and has no application to the facts of the present case. Other decisions relied on by the assessee also have no application to the facts of the case. 16. The alternative submission of the assessee is that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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