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TMI Blog2024 (10) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... f 70 to 80% of the total cost of the project. Accordingly, an inference can be drawn that the assessee must have also incurred the expenses for the construction of the house in the year 2003 to the tune of Rs. 20 to 30% of the total project cost. Thus, in the present facts and circumstances, we are of the view that the assessee should have also incurred the expenses to the tune of Rs. 5.16 lakhs approximately as claimed by him and accordingly we hold that the expenses claimed by the assessee for Rs. 12.52 lakhs towards the cost of construction of the building is eligible for deduction while calculating the capital gain long term capital gain with indexation. Cost of construction whether 2/4th of such expenses have been claimed by the assessee relating to the depreciable assets and the balance relates to the residential properties - Assessee has attached the receipt of the property tax demonstrating that 2 units of the impugned property were used for residential purposes. The copies of the receipt of the property tax are placed on pages 27 and 28 of the paper books, which were not disputed by the revenue authorities. Accordingly, we hold that the 50% cost of the improvement is eligi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch property was predominantly used for the residential purposes. Thus we are inclined to hold that the assessee has made investment in the residential property and therefore the same is eligible for deduction under section 50/ 54F of the Act. Hence the ground of appeal of the assessee is hereby allowed. - Shri Waseem Ahmed, Accountant Member And Shri Soundararajan K., Judicial Member For the Appellant : Shri Anil Krishnan, Advocate For the Respondent : Smt. Girly Albert, Sr. D.R. ORDER PER BENCH This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 28.03.2024 for Assessment Year (AY) 2017-18. 2. The interconnected issue raised by the assessee is that the learned CIT(A) erred in confirming the addition Rs. 1,45,22,651/- under the head capital gain by disallowing exemption under section 54/54F of the Act and without giving the benefit of the cost of improvement. 3. The facts in brief are that the assessee is an individual who during the year under consideration sold immovable property being land building vide deed dated 6th April 2016 for consideration of Rs. 1.75 crore. The assessee further purchased immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and accordingly worked out short term capital gain after deducting WDV from proportionate sales consideration at Rs. 25,75,931/- only. Thus, the AO in view of the above made the addition of Rs. 1,45,22,651/- on account of long term and short-term capital gain. 8. On appeal by the assessee, the learned CIT(A) also confirmed the addition made by the AO. 9. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. 10. The learned AR before us filed a paper book running from pages 1 to 66 and contended that the investment was made by the assessee in the residential property. Therefore, the same is eligible for deduction under section 50/54F of the Act. It was also contended by the learned AR that the depreciable assets, if the period of holding exceeds 36 months, are also eligible for such deduction under section 50/54F of the Act. The ld. AR also contended that cost of improvement was incurred by the assessee at Rs. 12.52 lakhs which should be considered for the purpose of calculating the capital gain. 11. On the other hand, the learned Sr. DR before us vehemently supported the order of the authorities below. 12. We have heard the rival contentions of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 of the paper books, which were not disputed by the revenue authorities. Accordingly, we hold that the 50% cost of the improvement is eligible for indexation cost while calculating the capital gain. 15. The next controversy arises whether the gain arising on the sale of depreciable assessed is eligible for exemption under section 54/54F of the Act. It is a fact on record that the depreciable assets are subject to short-term capital gain in pursuance to the provisions of section 50 of the Act irrespective of the period of holding. However, there is no such distinction made under the provisions of section 54/ 54F of the Act and in the definition of long-term capital asset provided under section 2(29AA)/ 2(42A) of the Act. In other words, the gain arising from the depreciable asset shall be eligible for the exemption under section 54/ 54F of the Act if the period of holding exceeds 36 months as provided under the provisions of law. Accordingly, we hold that the assessee cannot be denied the benefit of exemption under section 54/ 54F of the Act with respect to the short-term capital gain arising from the sale of depreciable assets. 16. The next controversy arises whether the investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial or not the intention at the time construction intended user, actual user, potentiality for a different user and several other related factual aspects have to be considered. The court held that the actual user is only one of the factors but not conclusive factor to determine whether a particular unit is residential house. The court held that a temporary use for office purpose did not render the property as non-residential unit. The case relied upon by the learned DR namely Dr. A.S. Atwal s case (supra) is again of no assistance to the case of the revenue. It was a case under section 54 of the Act where the user of the premises as a residence was a condition, whereas under section 54F the user as a residential house is not the requirement. The decision of the Hon ble High Court in the case of Poonen (supra) was a case where residence at a particular place to decide jurisdiction of Court in amatrimonial proceeding under the Indian Divorce Act, 1869. The consideration are different in such cases. The decision of the Hon ble Mysore High Court in the case of Globe Theatres Ltd. (supra) is in the context of Residence under the Rent Control Legislation where again the considerations a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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