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TMI Blog2023 (2) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... factory evidence. Under these circumstances, we are of the considered opinion that the benefit of deduction u/s. 54F was rightly denied to the assessee on the ground that the assessee owns more than one residential property on the date of transfer of the capital asset other than the new asset acquired. The flats are situated in residential societies and there is no evidence on record to show that local authorities have charged the taxes applicable for commercial use of the property or the electricity department levied the charges applicable for commercial properties. Therefore, the decisions relied on by the ld.counsel for the assessee, in our opinion, are not applicable to the facts of the present case. In this view of the matter and in view of the detailed reasoning given by the ld.CIT(A) on this issue, we do not find any infirmity in his order denying the benefit of deduction u/s. 54F of the I.T.Act. We, therefore uphold the order of the ld.CIT(A) on this issue and the grounds raised by the assessee are dismissed. - ITA No.326/Hyd/2018 - - - Dated:- 25-1-2023 - Shri R.K. Panda, Accountant Member AND Shri K. Narasimha Chary, Judicial Member For the Assessee : Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Flat No.204, Sai Lakshmi Nilayam, Serilingampally, Hyderabad 6. Swastik Apartment, Siliguri 7. House No.A-102, Noida, U.P 3.1 The AO asked the assessee to explain as to why deduction claimed u/s 54F should not be disallowed, since the assessee owns more than one residential house other than the new assets. The assessee in response to the same filed detailed written submission justifying the claim, the contents of which has been summarized by the Assessing Officer and which read as under: 1. Sai Nivas, Shaikpet Village, Hyderabad: The assessee has purchased a Flat in the year 2000 and the same was demolished by Municipal Corporation of Hyderabad during the year 2002-03 due to unauthorized construction. At present this is vacant site. Photograph is enclosed for your reference. 2. Sai Praveen Kuteer: 500 Sqft of one guest room which is not a residential house. There is no kitchen. Only one single room 3. Flat No.1, Sai Lakshmi Nilayam, Serilingampally, Hyderabad: property was given on rent for commercial purpose. This property is not used for residential purpose. Copy of rental agreement and Municipal tax receipts are enclosed. 4. Flat No.4, Sai Laksh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee is hit by proviso (a)(i) of section 54F of the I.T. Act. He therefore, disallowed the claim of deduction u/s 54F at Rs. 9,54,10,035/- and determined the taxable income at Rs.31,92,00,995/- and agricultural income of Rs.6,53,800/-. 6. Before the learned CIT (A), the assessee reiterated the same arguments as made before the Assessing Officer. So far as the property at Siliguri is concerned, it was argued that an Agreement of lease executed on 10.10.2008 between the assessee and Coastal Projects Limited, a company. The purpose of lease for six years is for the purposes of carrying on the business therein and according to the terms and conditions the premises was given on lease to use for the purpose of business. Secondly, the A.O has agreed that the Act does not create any distinction between rental income from a residential property and rental income from a commercial property, that is to say the income is assessable under the Head House Property whether it is put to use as residential or put to commercial use. It was argued that provisions of sec. 54F deny exemption only if the property earlier owned is a residential house. Therefore, the fact that inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has considered the said properties as residential merely because the income has been offered under the head Income from House Property' is incorrect. This is not the only reason for denial of the exemption, as discussed above, but it is an important reason, which further proves that the said properties are residential in nature. Neither do the case laws relied upon help the case of the appellant in any manner, since the facts are entirely different in the case at hand. Moreover, for the property at Sai Praveen Kuteer (Sr.No.2), the appellant has no explanation/evidence to offer whatsoever, except stating that it is a guest accommodation. I therefore find no infirmity in the order of the Assessing Officer in denying the claim of the assessee u/s.54F. The addition made on this account is therefore confirmed. 7.0 In the result, the appeal of the appellant for the AY 2010-11 is DISMISSED . 9. Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds: 1. The Learned Commissioner of Income Tax (Appeals 12 [CITA)] has erred on facts and in law while passing the appellate order. 2. The Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in that case there was no dispute that the two apartments are being put to commercial use, therefore, the aforesaid apartments were not treated as a residential apartment. He submitted that the companies who have taken the flats on lease from the assessee were using the premises for conducting their business operations. This fact is also stated in the lease agreement and the assessee has not received any adverse notice from the Municipal Authorities regarding the functioning of the office of the companies. 11. He submitted that the Hyderabad Municipal Authorities had levied taxes as per the schedule rates for the Flats bearing Flat No.01,04 204 at Sai Lakshmi Nilayam, Kavuri Hills, Hyderabad based on the valuation fixed by the Corporation. The Municipal Authorities, however levied a deferential tax for commercial use of the above premises and revised the taxes w.e.f. 2015. Referring to various pages of the paper book, he submitted that the taxes so levied at commercial rates are duly paid by the assessee. So far as the property at Siliguri is concerned, he submitted that the Municipal Authorities at Siliguri has not levied any differential taxes for commercial use. He acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at since the order passed by the ld.CIT(A) is a reasoned one, therefore, the same should be upheld and the grounds raised by the assessee should be dismissed. 13. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the assessee in the instant case is an individual and the Managing Director of Coastal Projects Ltd, a Private Ltd Company. On the basis of notice issued u/s. 153A, the assessee filed the revised return of income on 25.11.2011 declaring total income of Rs.22,31,37,160/- and the AO had accepted the returned income. Subsequently, the ld.PCIT invoked the provisions of section 263 on the ground that assessee has claimed deduction u/s. 54F of the I.T.Act and the AO without considering the number of flats owned by the assessee had erroneously allowed the claim of deduction u/s. 54F of the I.T.Act without making due enquiries and therefore, the order has become erroneous and prejudicial to the interest of the revenue. We find subsequent to the section 263 proceedings, the AO obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the flats are utilized for commercial use, they are not residential in nature and therefore, the assessee is eligible to get the benefit of deduction u/s. 54F of the I.T.Act. Even though, the properties situated at Flat No.505 Begumpet is accepted to be used for business purpose of the assessee being used for conducting meetings with the clients relating to his construction projects undertaken, however, the flats at Swastik Apartments, Siliguri and the three flats at Lakshmi Nilayam, Kavuri Hills in Hyderabad cannot be accepted to be commercial in nature in absence of any satisfactory evidence. Under these circumstances, we are of the considered opinion that the benefit of deduction u/s. 54F was rightly denied to the assessee on the ground that the assessee owns more than one residential property on the date of transfer of the capital asset other than the new asset acquired. 15. So far as the various decisions relied on by the ld.counsel for the assessee are concerned, the same in our opinion are distinguishable and not applicable to the facts of the case of the assessee. In the case of Sanjeev Puri(supra) decided by the Delhi Bench of the Tribunal, the flat was utilized b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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