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TMI Blog2023 (7) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... , toilet having electricity and water connection and a borewell with a septic tank which was being used as residential unit. Therefore, we are unable to agree with the basis taken by the ld CIT(A) that in proportion to the size of plot/ land the constructed portion is very small and thus, the exemption benefit u/s 54F of the Act cannot be extended to the cost of land appurtenant to the house. Therefore, on the basis of foregoing discussion we reach to a legal conclusion that the assessee, for claiming deduction u/s 54F submitted sufficient and all possible documentary evidence under his command, before authorities below to show that the assessee purchased land, constructed a residential unit consisting of two rooms, kitchen and bathroom with electricity and water facility supported by connection of borewell and septic tank built therein. The change of land use certificate reveals that the assessee before construction of said unit obtained permission from the competent authority before using agricultural land for the purpose of construction of residential house pertaining entire 1.26 hectre of land. Therefore, authorities below have erred in dismissing the claim of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablish such claim of cost of improvement on the property sold during FY 1996-97. 5. On careful of the above submission from relevant para 4.2 and 4.4 of the first appellate order we clearly note that the ld CIT(A) after considering the facts and circumstances of the issue and by reproducing relevant part of the assessment order held that the appellant has not been able to controvert the observation of the AO in the assessment order and therefore, the same are accordingly rejected. For the sake of completeness we find it appropriate to reproduce the said para 4.2 of the first appellate order which reads as under:- 4.2 The Assessing Officer asked the appellant to furnish evidence with regard to investment in construction in immoveable property and to justify the claim of deduction u/s 54F. The appellant filed copies of vouchers and bills in support of construction. The Assessing Officer considered the appellant's submissions and pointed out as under:- At the outset, the claim of assessee with regard to Rs. 10 lakhs to be included in cost of acquisition is rejected as the assessee cannot include the expenses incurred on property purchased for the purpose of computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so well known to all that 'Bestech Flats on Palam Vihar Road were constructed in the year around 2011 whereas date of material supplied on Bills is mentioned as year 1996 which is not possible at all practically. Bills do not have any sales tax registration number or PAN through which identity of seller can be authenticated. The contact number mentioned thereon were not in existence in year 1996 (Mobile no. 7827711182 and 8860702411). The mobile number series starting from 7 or 8 was introduced in year 2009 only. In view of above discussions, the bills/vouchers submitted by the assessee are not accepted and claim of incurring said expenses are hereby disallowed. Copies of all vouchers are annexed alongwith this order. 7. In view of the findings recorded by the AO and ld CIT(A) we have no hesitation that the AO examined and verified a note book mentioning the date and amount of labour bills and vouchers submitted by the assessee and thereafter drawn a sustainable conclusion that the bills/ vouchers submitted by the assessee are not acceptable documentary evidence to substantiate the fact of incurring of Rs. 4 lakhs as cost of improvement of the land during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) e. The Ld CIT(A) has relied on two decisions one of Delhi High Court and other of Hydrabad Tribunal, ignoring that both are rendered in reference to section 54 and that too for the transaction of sale of property and not new investment f. Lastly the CIT(A) held that exemption claimed only restricted to the land beneath under constructed portion and no deduction for vacant portion of land (See Page number-13 Para(a) g. Lastly the CIT(A) allowed the deduction of 54F but restricted the deduction to constructed portion Finding of the CIT(A) in Para-4. 18 Page number-20 15 Submissions of the assessee on section 54F exemption are as under a. The observation of the CIT(A) that the legislature want that the exemption should only be allowed to an assessee who intended to use the new residential house for residence purpose is legally incorrect in as much no such requirement is mentioned in section 54F The marginal notes of section 54F and provisions of section 54F nowhere suggest that investment should be in such residential house where assessee intends to reside. This issue has been examined by the various benches of the ITAT, in the following decisions:- i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to have incurred by the assessee were in cash and there was no approval for construction has been taken by the assessee from the competent authority which could show that the house was actually built, therefore, the assessee has not been able to establish that he is eligible for deduction u/s 54F of the Act. The ld Sr. DR prayed to dismiss the grounds of assessee. 10. On careful consideration of the above rival submission, from the submission particularly, from the written submission of assessee, we note that the assessee has relied on three orders of coordinate benches of the Tribunal to support his claim of deduction u/s 54F of the Act. In the case of Mahavir Prasad Gupta Vs. JCIT 101 TTJ 1078 it was held that while non-residential use of residential house mere non-residential use would not render a property ineligible for benefit of section 54F of the Act, if it otherwise a residential house, and the assessee is found to have constructed a residential house, whatever might be the house it had been put to, the assessee can be said to have fulfilled the conditions envisaged u/s 54F of the Act. 11. Further, the assessee has also relied on the order of the coordinate bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly reveals that the character of land has been mentioned as residential. The change of land (CLU) use order/ permission in respect of land purchased by the assessee from the previous owner Sh. Om Prakash reveals that the competent authority has authorized change of land use to the assessee pertaining to the land constructed by the assessee. Valuation report submitted by the assessee at pages 27 to 35 reveals that the valuer in his report has mentioned the property is residential in column 9 and 16 before submitting the valuation report. The valuer is also considered the fact that there is a water and electricity connection as per bills submitted by the assessee. The valuer in para 44 estimated the life of constructed house as 65 years and in the annexure to the report while submitting technical details the valuer mentioned that walls are brick load bearing walls, type of foundation brick stepped foundation, superstructure above ground floor brick wall in cement mortar, flooring with marble flooring, finishing with cement plaster. These details supports contentions by the assessee that the house constructed by the assessee was not a simple dwelling house but the same was built wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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