Babasaheb Dhondiba Bankar, Ahmednagar V. Assistant Commissioner of Income-tax, Circle - Ahmednagar, Ahmednagar

ITA 219/PUN/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0102 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 08-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 54F; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKASH AWASTHY, JM . / ITA NO. 219/PUN/2019 / ASSESSMENT YEAR : 2014-15 BABASAHEB DHONDIRAM BANKAR, PIMPALWADI ROAD, SHIRDI, TAL-RAHATA, AHMEDNAGAR. PAN-AOIPB3753M ....... / APPELLANT / V/S. ACIT, CIRCLE, AHMEDNAGAR. / RESPONDENT ASSESSEE BY : SHRI PRASAD BHANDARI & RAVINDRA DAREKAR REVENUE BY : SHRI SUDHENDU DAS, SR.DR / DATE OF HEARING : 13.05.2019 / DATE OF PRONOUNCEMENT : 17.05.2019 / ORDER PER D.KARUNAKARA RAO, AM : THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE ORDER OF THE LD. CIT(APPEALS)-2, PUNE DATED 03.10.2018 FOR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISED FOUR GROUNDS AND ALL OF THEM RELATE TO THE ISSUE OF ALLOWABILITY OF CLAIM OF DEDUCTION U/S 54F OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. BRIEFING THE FACTS, LD. COUNSEL SUBMITTED THAT THE ASSESSEE SOLD AGRICULTURAL LANDS AND EARNED THE CAPITAL GAINS OUT OF THE SAID TRANSACTIONS OF SALE. THE ASSESSEE CLAIMS THAT THE GAINS ARE INVESTED IN THE CONSTRUCTION OF A RESIDENTIAL PROPERTY AND CLAIMED OF DEDUCTION U/S 54F OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ISSUE RELATING TO THE 2 ITA NO. 219/PUN/2019 A.Y.2014-15 RESIDENTIAL NATURE OF NEW ASSET WAS A SUBJECT MATTER OF DEEP SCRUTINY. AT THE END OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE SAID RESIDENTIAL PROPERTY IS INFACT COMMERCIAL IN NATURE AS THE SAME WAS REMODELED AND IS BEING USED FOR RUNNING A LODGE/HOTEL AT SIRDI. INFACT, THE ASSESSING OFFICER OBTAINED A REPORT FROM HIS INSPECTOR AND ON THE SAME CONSTITUTES THE BASIS FOR TREATING THE SAID PROPERTY AS A COMMERCIAL PROPERTY. CONSIDERING THE COMMERCIAL NATURE OF THE PROPERTY, THE ASSESSING OFFICER DENIED THE BENEFIT OF DEDUCTION U/S 54F OF THE ACT. OTHERWISE, THE SAID SECTION ALLOWS THE CLAIM OF DEDUCTION IN RESPECT OF A RESIDENTIAL PROPERTY ONLY. THE CIT(A) CONFIRMED THE DECISION OF THE ASSESSING OFFICER. AGGRIEVED THE SAME, THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE OUTSET, LD. COUNSEL BROUGHT TO OUR NOTICE THE COMPUTATION OF INCOME AND SUBMITTED THAT THE ASSESSEE RECEIVED RENTAL INCOME AND THE SAME IS OFFERED TO TAX U/S 22 OF THE ACT IN ALTER YEARS. REFERRING TO PAGE 4 OF THE PAPER BOOK (PROCEEDINGS DATED 04.03.2013 RELATING TO REGULARIZATION TO PLOT NO.1). LD. COUNSEL SUBMITTED THE SAME MENTIONED ABOVE FACTS THE PLOT IN QUESTION, THE BUILDING IN QUESTION IS MEANT FOR RESIDENTIAL PURPOSES. FURTHER, REFERRING TO PAGE NO.10 OF THE PAPER BOOK, LD. COUNSEL DEMONSTRATED THE SAME CONSTITUTES PRIMARY PERMISSION OF SIRDI NAGAR PANCHAYAT. LD. COUNSEL DEMONSTRATED THAT THE PLAN IS APPROVED FOR RESIDENTIAL BUILDING ONLY. REFERRING TO PAGE 16 & 18 ETC., LD. COUNSEL DEMONSTRATED THAT THE COMPLETION CERTIFICATE WAS REFERRED TO THE RESIDENTIAL NATURE OF THE BUILDING. FURTHER BRING OUR ATTENTION TO THE ASSESSMENT ORDER AND THE ORDER OF CIT(A), LD. COUNSEL SUBMITTED THAT THE AUTHORITIES IGNORED THE ABOVE SAID FACTS BORNE OUT OF THE RECORDS OF THE LOCAL BODIES WHICH DEMONSTRATE THE RESIDENTIAL NATURE OF THE BUILDING UNDER CONSIDERATION. THE ABSENCE OF ANY DISCUSSION ON THESE PAPERS/EVIDENCES, THE ASSESSING OFFICER AND THE CIT(A) TOOK A WRONG DECISION ON FACTS BEFORE 3 ITA NO. 219/PUN/2019 A.Y.2014-15 COMING TO THE CONCLUSION THE BUILDING UNDER CONSIDERATION IS COMMERCIAL ONE. FURTHER, IT IS THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE THAT, CONSIDERING THE NON-SPEAKING ORDER OF ASSESSING OFFICER & CIT(A) AND THE ABOVE REFERRED EVIDENCES, THE MATTERS CAN BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AND DECISION ON THE ISSUES RAISED IN THE GROUNDS. ON THE OTHER HAND, LD.DR FOR THE REVENUE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE ON THE FACTS RELATING TO QUANTUM OF CAPITAL GAINS AND THE GENUINENESS OF THE INVESTMENT IN THE BUILDING. THE DISPUTE IS ONLY ON THE NATURE OF THE BUILDING IF THE SAME CONSTITUTES RESIDENTIAL OR COMMERCIAL. IT IS ALSO UNDISPUTED THE SAID BUILDING IS BEING USED FOR COMMERCIAL ACTIVITIES AS ON DATE I.E. RUNNING OF LODGE/HOTEL. IT WAS ALSO ADMITTED FACT THAT THE BUILDING WAS RESTRUCTURED PARTIALLY TO SUIT THE HOTEL ACTIVITIES BUT THE COUNSELS ARGUMENTS REVOLVE ON THE FACTS THAT THE REINVESTMENT ON THE GAINS WAS MADE ON RESIDENTIAL BUILDING AT THE TIME OF MANUFACTURING/CONSTRUCTION OF THE BUILDING. SUBSEQUENT TO THE COMPLETION, I.E. AFTER COMPLETION CERTIFICATE OF BUILDING I.E. SIRDI NAGAR PANCHAYAT AFTER FIVE MONTHS, THE BUILDING WAS LET TO THE TRUST FOR RENTAL PURPOSE. HE ALSO SUBMITTED THERE IS NO WRITTEN RENTAL AGREEMENT TO DEMONSTRATE THE COMMENCEMENT DATE OF THE RENTAL AGREEMENT. FURTHER, IT IS ALSO A FACT THAT THE EVIDENCES FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WERE NOT REBUTTED BY THE ASSESSING OFFICER OR THE CIT(A) BEFORE DEEMING THE SAID BUILDING AS COMMERCIAL BUILDING. CONSIDERING ALL THESE FACTS UNDER VIEWS OF THE ASSESSING OFFICER AND CIT(A), WE ARE OF THE OPINION THAT THERE IS A REQUIREMENT OF REASONING AS TO HOW THE SAID EVIDENCES ARE NOT ACCEPTABLE. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE SAID EVIDENCES AND GIVE A COGENT REASONING BY PASSING A SPEAKING ORDER 4 ITA NO. 219/PUN/2019 A.Y.2014-15 ON THE SUSTAINABILITY OF THE SAID EVIDENCES. THE ASSESSING OFFICER IS DIRECTED TO PASS A SPEAKING ORDER CONTAINING OF ALL THE REASONS GIVEN BY THE LD. COUNSEL BEFORE US. THE ASSESSING OFFICER SHALL EXAMINE, IF THE SAID TRUST IS THE FIRST OCCUPANT OF THE BUILDING AND IF THE BUILDING WAS USED FOR RESIDENTIAL PURPOSE. RESIDENTIAL USE OF THE BUILDING REVOLVES AROUND THE TEST ON THE FUNCTIONALITY OF IT. ASSESSING OFFICER SHALL EXAMINE IF THE USE OF THE BUILDING WAS EVER MODIFIED INTO COMMERCIAL ONE IN THE RECORDS OF THE LOCAL GOVERNMENT. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 17 TH DAY OF MAY, 2019. SD/- SD/- SD/- SD/- (VIKASH AWASTHY) (D.KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATED : 17 TH MAY, 2019. AMIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT-BABASAHEB DHONDIRAM BANKAR, PIMPALWADI ROAD, SHIRDI, TAL-RAHATA, AHMEDNAGAR. 2. / THE RESPONDENT-ACIT, CIRCLE, AHMEDNAGAR. 3. THE CIT(APPEALS), PUNE. 4. THE CCIT, PUNE. 5. , , / DR, ITAT, PUNE. 6. / GUARD FILE. / BY ORDER, SENIOR PRIVATE SECRETARY , / ITAT, PUNE.