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TMI Blog2022 (9) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... ection details to prove the nature of the above property however, the same is not produced before us or before the Lower Authorities. Therefore the claim made by the assessee is hereby rejected. Further the assessee has not offered the agricultural income/loss in its Return of Income. Therefore the claim of the assessee, it was a commercial property cannot be entertained. Therefore the grounds raised by the assessee are devoid of merits and the same are rejected. Appeal filed by the Assessee dismissed. - ITA No. 1443/Ahd/2019 - - - Dated:- 7-9-2022 - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Appellant : Shri Milin Mehta, A.R. For the Respondent : Shri A.P. Singh, CIT/DR ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- The present appeal has been filed by the Assessee against the order dated 07.08.2019 passed by the Commissioner of Income Tax (Appeals)12, Ahmedabad, as against the Assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2017- 18. 2. The brief facts of the case is that the assessee is an individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erandah and covered boundary and was equipped with all furniture/ furnishings, befitting of a house of an elite/rich person like that the assessee. The photographs of the above Vishubag properties are reproduced by the Assessing Officer in his assessment order at page nos. 7, 8 9. 2.3. The second argument of the assessee was that as he was only 1/3rd of the share in Vishubaug property following the Madras High Court in the case of CIT vs. Dr. Smt. P.K. Vasanthi Rangarajan reported in [2012] 23 taxmann.com 299 claimed that joint ownership of a property could not be held to stand in her way of claiming exemption u/s. 54F of the Act. 3. The assessing officer after considering the above submissions held that the detailed verification the assessee is owner of more than one house property which is one of the conditions of proviso (i) of Section 54F to debar the person from claiming deduction u/s. 54F. The Field Inspection Report and photographs of the property clearly show that Vishubag property is a residential house of Bungalow. Therefore the assessee is not eligible for reinvestment in a new property at Colaba, Mumbai u/s. 54F and therefore brought the sum of Rs. 14,14,55,783/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproved as a farm or a farm house, construction can be only upto a given percentage (typically 5% of the land area). Even if the property Vishubag is treated as a farm house and the alleged said bungalow for the Shroff family at the property at Vishubag is held as a residential house , the issue is whether it is capable of being treated as residential house for the purpose of Section-54F. 5.9 In this regard, reference is made to Section 54F dealing with the deduction which is the subject matter of the appeal and Section-2(lA) which defines the agriculture income. As per the proviso to Section-54F, an assessee shall not be entitled for deduction u/s.54F if he has more than one residential house on the date of transfer [Clause (a)(i) of the Proviso] and income from such residential house is chargeable under the head 'income from house property' [Clause (b) of the Proviso]. One thing is unambiguously evident that if the property is a commercial property and not a residential house, the assessee will not be hit by the Proviso to Section-54F. The income from house property chargeable to tax u/s.22 is the annual value of property consisting of any buildings or lands app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is sale of milk and vegetables in the farm is not supported by the return of income. It has also been noted by the AO that it was nowhere revealed that the appellant had carried out a commercial activity as claimed. 5.13 Otherwise also income from dairy farming is not an agricultural income. In State of Orissa Vs Ramchandra Chaudhary 46 ITR 246 (Orissa) it has been held that dairy farming will not be an agricultural operation and income from dairy farming will also not be agricultural income. Therefore income from milk derived from milk pouch maintained by the assessee, is not agricultural income . 5.14 Even if agricultural and diary activities claimed by the appellant is conceded, it is admitted by the appellant that he does not do these activities himself but they are done by the employees engaged by him. Thus the appellant has failed to establish that agricultural or commercial activities are carried out at the Vishubag property and therefore it cannot be subscribed that the bungalow reported by the Income Tax Inspector is a dwelling unit which can be treated as covered u/s 2(1A) of the Income Tax Act. Therefore it has to be construed that the bunglow at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to section 54F were fulfilled in the case of the Appellant. 5. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in invoking / proviso to section 54F and consequently disallowing the claim of deduction u/s. 54F without appreciating the facts in proper perspective. 6. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in invoking proviso to section 54F and consequently disallowing the claim of deduction u/s. 54F merely on the basis of assumptions, surmises and conjectures. Without prejudice to Grounds Xo. 1 to 6. the learned CIT(A) erred in fact and in law in confirming the action of the Id. AO in invoking proviso to section 54F and consequently disallowing the claim of deduction u/s. 54F despite the fact that the Appellant was a joint owner of the alleged residential house. 8. Without prejudice to the above, the learned CIT(A) erred in fact and in law in confirming the action of the Id. AO in disallowing the claim of deduction u/s. 54F based on the inquiry conducted at the back of the Appellant and without providing the documents/material collected through such inquiry before disallowing the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , benefit of Section 54F was denied. It was found from record that said piece of land was an agricultural plot consisting of huts and out-houses, which in turn were being used as cattle sheds and said huts were in a dilapidated condition and had never been used or occupied by the assessee. Therefore the assessee was not owner of another residential house and eligible for deduction under 54F of the Act. Applying the ratio of the above judgment, the assessee should be given the benefit of section 54F of the Act. 5. Per contra, ld. D.R. appearing for the Revenue submitted that the Field Inspection carried out by the Department and the photographs is reproduced in the assessment order clearly depict that there is a residential house namely a bungalow in the property which is habitat in nature, other than the one Raipura House. The assessee s claim of agricultural activity and dairy activity is not substantiated with proof of evidence and not declared in the Return of Income filed by the assessee. In the absence of the same, the assessee s claim of Vishubag Farm property as a commercial property cannot be accepted. The Hon ble Orissa High Court in the case of State of Orissa vs. Ramc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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