SHRI SATISH KUMAR AGARWAL, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 270/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4024 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 26-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA JHA CIT DHK
• Keywords: Capital asset; Set aside
• Section: 143(3); 54F; 54

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 270/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 SHRI SATISH KUMAR AGARWAL, 406, BILALA BHAWAN, HANUMAN KA RASTA, JAIPUR-3. CUKE VS. A.C.I.T., CIRCLE-1, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ABSPA 0024 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKS J LS @ ASSESSEE BY : SHRI VIJAY GOYAL (FCA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA JHA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/08/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/08/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-I, JAIPUR DATED 20/12/2017 FOR THE A.Y. 2013-14 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE ASSESSEE IS BASICALLY AGGRIEVED FOR DECLINE OF DEDUCTION U/S 54F OF THE ACT. ITA 270/JP/2018 SATISH KR. AGARWAL VS ACIT 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVES INCOME FROM HOUSE PROPERTY, BUSINESS AND PROFESSION, CAPITAL GAIN AND OTHER SOURCES. THE ASSESSEE HAS FILED ITS RETURN OF INCOME U/S 139(1) ON 30/09/2013 DECLARING NIL TOTAL INCOME. THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 28/01/2016 ON A TOTAL INCOME OF RS. 28,60,171/- AS AGAINST THE RETURNED AT NIL INCOME BY MAKING THE DISALLOWING THE EXEMPTION U/S 54F OF THE ACT. BY THE IMPUGNED ORDER, THE LD. CIT(A) UPHELD THE ACTION OF THE A.O. AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SOLD A PLOT FOR RS. 32,00,000/- ON 29/10/2012 WHICH WAS PURCHASED BY THE ASSESSE DURING THE FINANCIAL YEAR 1998-1999 FOR THE CONSIDERATION OF RS. 1,40,000/-. THE ASSESSE HAD EARNED THE CAPITAL GAIN OF RS. 28,60,171/- AFTER CONSIDERING THE INDEXATION OF COST OF PURCHASE. THE ASSESSEE HAD INVESTED AMOUNT OF RS. 49,80,000/- ON 03/09/2013 INTO NEW RESIDENTIAL HOUSE PROPERTY AND CLAIMED THE EXEMPTION U/S 54F OF THE INCOME TAX ACT, 1961 (THE ACT). THE LD AO DURING THE COURSE OF ASSESSMENT ITA 270/JP/2018 SATISH KR. AGARWAL VS ACIT 3 PROCEEDING ASKED ASSESSEE TO FURNISH THE DETAILS OF IMMOVABLE PROPERTY HELD BY THE ASSESSEE AS ON DATE OF SALE OF PLOT. THE ASSESSE HAD SUBMITTED THE DETAILS OF EIGHT IMMOVABLE PROPERTY WITH THEIR CURRENT STATUS WHICH IS MENTIONED ON PAGE NO. 5 OF THE ASSESSMENT ORDER. OUT OF THE EIGHT PROPERTIES, RENTAL INCOME WAS RECEIVED FROM THREE PROPERTIES WHICH ARE USED FOR COMMERCIAL PURPOSE, TWO PROPERTIES WERE BEING FOR THE ASSESSEE BUSINESS PURPOSE, ONE OF THEM IS NOT IN POSSESSION OF THE ASSESSEE DUE TO SUIT PENDING THE COURT, ONE OF THEM IS AGRICULTURE LAND HAVING SOME SMALL CONSTRUCTION AND ONE RESIDENTIAL HOUSE IS SELF-OCCUPIED BY THE ASSESSEE FOR THEIR OWN RESIDENCE. HOWEVER, THE AO MADE DISALLOWING THE EXEMPTION U/S 54F OF THE ACT CONSIDERING THE PROPERTY SITUATED AT A-91, JANTA COLONY, JAIPUR AND AGRICULTURE LAND ALONG WITH SOME SMALL CONSTRUCTION OVER LAND AT DELHI ROAD AS RESIDENTIAL HOUSE PROPERTY FOR THE PURPOSE OF PROVISO OF SECTION 54F OF THE ACT. I DO NOT FIND ANY MERIT IN THE ACTION OF THE A.O. IN TREATING THE PROPERTY AT A-91, JANTA COLONY, JAIPUR WHICH IS CLAIMED BY ASSESSEE AS USED FOR THEIR BUSINESS PURPOSE AS RESIDENTIAL PROPERTY SOLELY RELYING ON THE INSPECTOR'S REPORT REPRODUCED AT PAGE 7 OF THE ASSESSMENT ORDER. FIRSTLY, THE REPORT OF THE INSPECTOR IS NOT RELYING EVIDENCE AS THE OPPORTUNITY OF CONFRONTATION WAS NOT GIVEN. EVEN ITA 270/JP/2018 SATISH KR. AGARWAL VS ACIT 4 OTHERWISE ALSO THE INSPECTOR'S REPORT NOWHERE STATE THE HOUSE WAS USED FOR RESIDENTIAL PURPOSE. IT HAS BEEN CLEARLY STATED IN THE REPORT THAT THE HOUSE IS USED BY THE ASSESSEE FOR STORING THE PARCEL/STOCK OF THE ASSESSEE. AS REGARD THE USE OF HOUSE BY THE GUARD I FOUND THAT THE GUARD WAS RESIDING ALONG WITH HIS FAMILY IN A SINGLE GUARD ROOM WHEREAS OTHER AREA OF THE PROPERTY IS BEING USED BY THE ASSESSEE FOR STORING HIS STOCK AND PARCEL FOR THE PURPOSE OF HIS BUSINESS AND COMMERCIAL ACTIVITIES. THE SECURITY GUARD IS TAKING CARE OF STOCK/PARCEL OF THE ASSESSEE FOR ALL DAY AND NIGHT, THE PROPERTY IS BEING USED BY THE ASSESSEE FOR HIS BUSINESS PURPOSE. MERELY GIVING A ROOM TO THE STAFF OF THE ASSESSEE TO RESIDE IN ORDER TO ENABLE STAFF TO PROVIDE SECURITY SERVICES DOES NOT TANTAMOUNT TO USAGE OF THE PROPERTY AS RESIDENTIAL PURPOSE. THE PROPERTY WAS BEING USED ONLY FOR THE BUSINESS PURPOSE OF THE ASSESSEE. 5. I ALSO OBSERVE THAT THE A.O. HAS WRONGLY CONSIDERED AGRICULTURAL LAND ALONGWITH 600 SQ FEET COVERED AREA AS MENTIONED IN THE SALE DEED OF THE AGRICULTURE LAND AT PAGE NO. 73 OF PB PAGE AS RESIDENTIAL HOUSE PROPERTY OF THE ASSESSEE. THE COVER AREA IN THE AGRICULTURE LAND IS FOR THE PURPOSE OF STORAGE OF THE AGRICULTURE PRODUCE AND OTHER STORAGE PURPOSE AND FOR CHOKIDAR. FURTHER THE CONSTRUCTED AREA WAS IN ITA 270/JP/2018 SATISH KR. AGARWAL VS ACIT 5 DILAPIDATED CONDITION AND HAD NEVER BEEN USED OR OCCUPIED BY THE ASSESSEE OR HIS FAMILY MEMBERS. THERE WAS NO BEDROOM, KITCHEN, BATHROOM OR AND OTHER BASIC AMENITIES WHICH IS ESSENTIAL FOR THE DWELLING PURPOSE CANNOT BE CONSIDERED A RESIDENTIAL HOUSE. FURTHER THERE WAS NO BED, TV, FREEZE AND OTHER BASIC AMENITIES. IN ORDER TO BE RESIDENTIAL DWELLING BASIC AMENITIES ARE ESSENTIALLY REQUIRED TO MAKE THE PLACE HABITABLE FOR THE LIVING PURPOSE WHICH IS NOT PRESENT AT THE AGRICULTURE LAND OF THE ASSESSEE. IN SUPPORT OF THIS PROPOSITION, RELIANCE IS PLACED ON THE DECISION OF THE ITAT HYDERABAD BENCH DECISION IN THE CASE OF SMT. USHARANI KALIDINDI V/S INCOME-TAX OFFICER [2013] 37 TAXMANN.COM 360 (HYDERABAD - TRIB.) WHEREIN IT WAS HELD THAT THE CONSTRUCTION IN INHABITABLE POSITION CANNOT BE EQUATED WITH A RESIDENTIAL HOUSE. IF A PERSON CANNOT LIVE IN A PREMISES, THEN SUCH PREMISES CANNOT BE CONSIDERED AS A RESIDENTIAL HOUSE. 6. MOREOVER, THE ITAT MUMBAI BENCH IN THE CASE OF INCOME-TAX OFFICER, WARD 16(2)-1, MUMBAI V/S SMT. ANJALI MEHRA [2007] 16 SOT 440 (MUM.) HAS HELD THAT ASSESSING OFFICER ERRED IN DENYING EXEMPTION UNDER SECTION 54F ON GROUND THAT ASSESSEE WAS IN POSSESSION OF A PLOT OF LAND WHEREIN A FARM-HOUSE EXISTED AND AS FARM-HOUSE WAS A ITA 270/JP/2018 SATISH KR. AGARWAL VS ACIT 6 RESIDENTIAL HOUSE, BENEFIT OF SECTION 54F WAS NOT AVAILABLE TO ASSESSEE. THE FINDING OF THE HONBLE TRIBUNAL IS AS UNDER:- THE PROVISION OF SECTION 54F PROVIDES THE EXEMPTION FROM CAPITAL GAINS ON SALE OF ANY CAPITAL ASSETS OTHER THAN A RESIDENTIAL PROPERTY IF THE SALE PROCEEDS ARE INVESTED IN A RESIDENTIAL HOUSE. THE PROVISO TO SECTION 54F CATEGORICALLY PROVIDES THAT THE SAID EXEMPTION SHALL BE ALLOWED TO THE ASSESSEE ONLY IF THE ASSESSEE DOES NOT OWN ANY OTHER PROPERTY ON THE DATE OF TRANSFER OF THE CAPITAL ASSET OTHER THAN THE ONE PURCHASED BY THE ASSESSEE. IN THE INSTANT CASE, IT WAS FOUND FROM THE RECORD THAT THE SAID PIECE OF LAND WAS AN AGRICULTURAL PLOT CONSISTING OF HUTS AND OUT-HOUSES, WHICH IN-TURN WERE BEING USED AS CATTLE SHEDS. IT WAS FURTHER FOUND THAT THE HUTS WERE IN DILAPIDATED CONDITION AND HAD NEVER BEEN USED OR OCCUPIED BY THE ASSESSEE. IN VIEW OF SAID FACTS THERE WAS NO MERIT IN THE STAND OF THE ASSESSING OFFICER THAT A BUILDING EXISTED ON THE AFORESAID PIECE OF LAND, WITHOUT CARRYING OUT ANY ON-SITE VERIFICATION THOUGH DIRECTED BY THE COMMISSIONER (APPEALS). NO DOUBT, THERE MIGHT BE SOME HUTS AND OUT-HOUSES BUT THE SAME COULD NOT BE INTERPRETED AS A RESIDENTIAL PROPERTY OF THE ASSESSEE. THOUGH AT PRESENT THERE EXISTED A BUILDING WHICH HAD BEEN CONSTRUCTED ON THE SAID PIECE OF LAND BY PSEB, YET THE SAME IN NO WAY GAVE RISE TO ANY FINDING THAT ANY OTHER BUILDING EXISTED PRIOR TO THE ONE CONSTRUCTED BY THE PSEB. ACCORDINGLY, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS NOT THE OWNER OF ANY OTHER RESIDENTIAL PROPERTY, INCOME FROM WHICH WAS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THEREFORE, THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 54F AS CLAIMED. THEREFORE, THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN HIS ACTION. [PARA 8] 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, I DO NOT FIND ANY MERIT IN THE ACTION OF THE A.O. TREATING THE PROPERTY AT A-91, JANTA COLONY, JAIPUR AND AGRICULTURAL LAND AT CHIMANPURA AS RESIDENTIAL HOUSE FOR THE PROVISO TO SECTION 54 OF THE ACT WITHOUT CONSIDERING THE NATURE ITA 270/JP/2018 SATISH KR. AGARWAL VS ACIT 7 AND USES OF PROPERTY. ACCORDINGLY, I SET ASIDE THE ORDER OF THE A.O. AND DIRECT TO ALLOW CLAIM OF EXEMPTION U/S 54F OF THE ACT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST, 2019 SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL; @ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH AUGUST, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SATISH KUMAR AGARWAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 270/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR