Sri Omkar Chadha, New Delhi V. ITO, New Delhi

ITA 346/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8507 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 23-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Cost of acquisition; Capital Gains
• Section: 54F; 208; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (E-COURT MODULE) ITA NO. 346/DEL/2017 : ASSTT. YEAR : 2012-13 SH. OMKAR CHADHA, I-39, JANGPURA EXTN., NEW DELHI-110014 VS INCOME TAX OFFICER, WARD-54(3), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAEPC8329G ASSESSEE BY : SH. K. SAMPATH, ADV. REVENUE BY : MS. RAKHI VIMAL, SR. DR DATE OF HEARING: 25.06.2020 DATE OF PRONOUNCEMENT: 13.07.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-18, NEW DELHI DATED 05. 12.2016. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. CONFIRMING THE FOLLOWING ADDITIONS MADE BY THE ASSESSING OFFICER: A. RS.17,29,976/- ON ACCOUNT OF CAPITAL GAINS; B. RS.50,000/- ON ACCOUNT OF DISALLOWANCE OF BUSINESS LOSS. 2. ENHANCING THE INCOME FROM CAPITAL GAINS BY RS.73,18,424/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO LD A LAND THAT HE INHERITED WITH STATED CONSIDERATION IN THE SALE DEED AT ITA NO. 346/DEL/2017 OMKAR CHADHA 2 RS. 78.75 LAKH, THE CIRCLE RATE BEING RS. 118.55 LA KH, ON WHICH THE APPELLANT HAS MADE CLAIM OF EXEMPTION ON ACCOUN T OF TWO ASSETS UNDER SECTION 54F, WHICH IS DISPUTE BEFORE U S. 4. THE RELEVANT FACTS RELATED TO THESE TRANSACTIONS ARE: (1) THE LAND WAS PURCHASED BY THE FATHER OF THE AP PELLANT IN 1965 - 66 PER RS. 3800/-AND SUBSEQUENTLY INHERITED BY THE APPELLANT. (2) THE LAND WAS SOLD ON 02.12.11 TO ONE MR. ANUJ KUMAR FOR A SALE CONSIDERATION OF RS. 78.75 LAKH AS PER THE S ALE DEED. (3) THE MINIMUM VALUE AS PER THE CIRCLE RATE WAS R S. 1,18,55,480/- (AND THE STAMP DUTY OF RS. 7.2 LAKH T HEREON WAS PAID BY THE BUYER), TAKEN AT RS. 1.20 CRORE. (4) THE APPELLANT THEREAFTER ENTERED INTO AN AGREE MENT FOR PURCHASE OF A FLAT WITH THE BUILDER M/S ANSAL HOUSI NG AND CONSTRUCTION, AND THE BOOKING AMOUNT WAS PAID ON 20 /1/2012. (5) THE TOTAL CONSIDERATION FOR PURCHASE OF THIS F LAT WAS RS. 65,41,210/- (6) THE APPELLANT MADE PAYMENTS FROM TIME TO TIME AND DEPOSITED RS. 890760/- IN CAPITAL GAINS ACCOUNT SCH EME FOR BALANCE PAYMENT. (7) THE APPELLANT ALSO IS CLAIMED TO HAVE CONSTRUC TED NEW RESIDENTIAL HOUSE OVER AND ABOVE THE EXISTING RESID ENTIAL PROPERTY OF THE APPELLANT AT JUNGPURA EXTENSION, SP ENDING IN THE PROCESS RS. 24.2 LAKH FOR ADDITIONAL CONSTRUCTION O F AREA 40 M2. IN THIS BACKDROP, THE APPELLANT HAS MADE THE COMPUT ATION OF CAPITAL GAINS AND THE CLAIM OF EXEMPTION UNDER SECT ION 54F AS UNDER: ITA NO. 346/DEL/2017 OMKAR CHADHA 3 MINIMUM VALUE AS PER CIRCLE RATES 1,18,55,480 ACTUAL SALES CONSIDERATION 78,75,000 PURCHASE COST YEAR 11.03.1966 3,800 VALUATION ON 01.04.1981 3,76,000 INDEXED COST OF ACQUISITION AT CII 785 29,51,600 29,51,600 CAPITAL GAIN 89,03,880 DEDUCTION U/S 54F 1,18,55,480 INVESTMENT IN RESIDENTIAL PROPERTY- ANSAL 64,28,424 CONSTRUCTION OF RESIDENTIAL HOUSE 24,20,000 CAPITAL GAINS FDR 8,90,000 97,38,424 NIL 5. DURING THE ASSESSMENT, THE ASSESSING OFFICER NEG ATED THE CLAIM OF THE ASSESSEE IN RESPECT OF INVESTMENT IN T HE SECOND RESIDENTIAL HOUSE TAKING A VIEW THAT THE EXEMPTION IS LIMITED TO INVESTMENT IN ONE RESIDENTIAL PROPERTY ONLY. 6. AFTER GIVING OPTION TO THE ASSESSEE WHO CHOSE TO AVAIL THE BENEFIT IN RESPECT OF THE FLAT TAKEN FROM M/S ANSAL , THE AO RESTRICTED THE EXEMPTION TO INVESTMENT IN THAT FLAT , AND DENYING THE EXEMPTION IN RESPECT OF CONSTRUCTION IN THE EXI STING RESIDENTIAL PROPERTY, WHICH IS UNDER CHALLENGE. A R ELATED ISSUE ON WHICH AN ENHANCEMENT OF TAXABLE INCOME OF THE AS SESSEE, WHEREIN THE LD. CIT (A) DENIED THE DEDUCTION COMPLE TELY, FOR ITA NO. 346/DEL/2017 OMKAR CHADHA 4 VIOLATION OF REQUISITE CONDITIONS STIPULATED IN CLA USE (A)(II) TO SEC. 54F. 7. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 8. WE ARE TAKING UP THE ISSUE OF COMPLETE DENIAL OF EXEMPTION U/S 54F BY THE LD. CIT (A). THE SECTION 54F READS A S UNDER: [PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTI ON SHALL APPLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER TH AN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN TH E NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANS FER OF THE ORIGINAL ASSET: OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TR ANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER T HAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PRO PERTY'.] 9. THE LD. CIT (A) OBSERVED THAT THE HAS MADE A CLA IM U/S 54F FOR INVESTMENT OF RESIDENTIAL PROPERTY AT ANSAL FOR RS.64,28,424/- AND ALSO CLAIMED DEDUCTION ON ACCOUN T OF CONSTRUCTION OF RESIDENTIAL HOUSE FOR RS.24,20,000/ -. THE LD. CIT (A), INVOKED THE CLAUSE (B) MENTIONED ABOVE AND DEN IED THE DEDUCTION COMPLETELY. THE LD. AR IN RELATION TO THE SUB-CLAUSE (III) OF THE CLAUSE (A) SUBMITTED THAT THE ASSESSEE HAS ADDED TWO ROOMS IN HIS ALREADY EXISTING RESIDENTIAL PROPE RTY AND THE ITA NO. 346/DEL/2017 OMKAR CHADHA 5 SUB-CLAUSE (III) IS NOT APPLICABLE AND HENCE THE PR OVISION (A) TO SECTION 54F IS NOT APPLICABLE. 10. WE FIND THAT THE DECISION OF THE LD. CIT (A) DE NYING THE ENTIRE CLAIM IS NOT IN CONSONANCE WITH THE PROVISIO NS OF THE ACT. THE ASSESSEE HAS TO BE ALLOWED FOR AT LEAST ONE OF THE INVESTMENT MADE. 11. HAVING SAID SO, THE ISSUE OF ALLOWABILITY OF TH E DEDUCTION ON THE INVESTMENT MADE IN TWO DIFFERENT PROPERTIES OUT OF THE CAPITAL GAINS IS BEING EXAMINED. A. CLAIM U/S 54F FOR INVESTMENT FOR RESIDENTIAL PRO PERTY FOR RS.64,28,424/- OR B. CLAIM FOR CONSTRUCTION OF RESIDENTIAL HOUSE OF R S.24,20,000/- OR BOTH. 12. WE HAVE EXAMINED THE CASE OF GITA DUGGAL 257 CT R 208 WHEREIN THE HONBLE HIGH COURT HELD THAT THE EXPRE SSION A RESIDENTIAL HOUSE SHOULD BE UNDERSTOOD IN A SENSE T HAT BUILDING SHOULD BE OF RESIDENTIAL NATURE AND A SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGULAR NUMBER. ALSO, SEC TION 54/54F USES THE EXPRESSION A RESIDENTIAL HOUSE' AND NOT A RESIDENTIAL UNIT. SECTION 54/54F REQUIRES THE ASSESSEE TO ACQU IRE A RESIDENTIAL HOUSE AND SO LONG AS THE ASSESSEE ACQ UIRES BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER A CONSIST OF SEVERAL UNITS WHICH CAN, IF THE NEED ARISES, BE CONVENIENTLY AND INDEPE NDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTION SHOULD BE TAKEN TO HAVE SATISFIED. THERE IS NOTHING IN THESE SECTIONS WHICH REQUIRE THE RESIDENTIAL HOUSE CONSTR UCTED IN A ITA NO. 346/DEL/2017 OMKAR CHADHA 6 PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE FOR RESIDENTIAL USE AND NOT FOR COMMERCIAL USE. IF THER E IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SEEMS THAT THE INCOME AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORDING HIS PLANS, REQUIREMENTS AND COMPULSIONS. A PERSON MAY CONSTRUCT A RESIDENTIAL H OUSE IN A MANNER THAT HE MAY USE THE GROUND FLOOR FOR HIS OWN RESIDENCE AND LET OUT THE FIRST HAVING AN INDEPENDENT ENTRY S O THAT HIS INCOME IS AUGMENTED. IT IS QUITE COMMON TO FIND ARR ANGEMENTS, PARTICULARLY POST-RETIREMENT. ONE MAY BUILD A HOUSE CONSISTING OF BEDROOMS (ALL IN THE SAME OR DIFFERENT FLOORS) I N SUCH A MANNER THAT AN INDEPENDENT RESIDENTIAL UNIT CONSIST ING OF TWO OR THREE BEDROOMS MAY BE CAWED OUT WITH AN INDEPENDENT ENTRANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARR ANGE FOR HIS CHILDREN AND FAMILY TO THERE, SO THAT THEY ARE NEAR BY, AN ARRANGEMENT WHICH CAN BE MUTUALLY SUPPORTIVE. HE CO NSTRUCT HIS RESIDENCE IN SUCH A MANNER THAT IN CASE OF A FUTURE NEED HE MAY BE DISPOSE OF APART THEREOF AS AN INDEPENDENT HOUSE . THERE MAY BE SEVERAL SUCH CONSIDERATIONS FOR A PERSON WHILE C ONSTRUCTING A RESIDENTIAL HOUSE. THE PHYSICAL STRUCTURING OF THE RESIDENTIAL HOUSE, WHETHER IT IS LATERAL OR VERTICAL, CANNOT CO ME IN THE WAY OF CONSIDERING BUILDING AS A RESIDENTIAL HOUSE. THE FACT THAT THE RESIDENTIAL HOUSE CONSISTS OF SE INDEPENDENT UNITS CANNOT BE PERMITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF DEDUCTION UNDER SECTION 54/ 54F. IT IS NEITHER EXPRESSLY NOR BY NECESSARY IMPLICATION PROHIBITED. 13. WE HAVE ALSO EXAMINED THE CASE OF CIT VS SYED A LI ADIL 260 CTR 219 WHEREIN IT WAS HELD THAT EXPRESSION A RESIDENTIAL ITA NO. 346/DEL/2017 OMKAR CHADHA 7 HOUSE IN SECTION. 54 (1) HAS TO BE UNDERSTOOD IN T HE SENSE THAT THE BUILDING SHOULD BE OF RESIDENTIAL NATURE AND A SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGULAR NUMBER. WHERE AN ASSESSEE HAD PURCHASED TWO RESIDENTIAL FLATS, HE IS ENTITLE, EXEMPTION UNDER SECTION 54 IN RESPECT OF CAPITAL GAINS ON SAL E OF ITS PROPERTY ON PURCHASE BOTH THE FLATS, DESPITE THE FA CT THAT THE FLATS, DESPITE THE FACT THAT THE FLATS WERE PURCHAS ED BY SEPARATE SALE DEEDS. DEDUCTION IS ALLOWABLE EVEN IF THE FLAT S ARE ON DIFFERENT FLOORS. ON FACTS, AS THE TWO FLATS PURCHA SED BY THE ASSESSEE ARE ADJACENT TO ONE ANOTHER AND HAVE A COM MON ME POINT, THE DEDUCTION CANNOT BE DENIED. 14. IN THE CASE OF ANAND BASAPPA 91 ITD 53, THE CO- ORDINATE BENCH OF ITAT AT BANGALORE OBSERVED AS TO WHETHER 'A RESIDENTIAL HOUSE' SHOULD BE TREATED AS 'ONE RESIDENTIAL HOUSE' OR WHETHER 'MORE THAN ONE RESIDENTIAL HOUSE' CAN BE CONSIDERED ELIGIBLE F OR DEDUCTION UNDER SECTION 54. THE TRIBUNAL OBSERVED AS UNDER: READING THE PROVISIONS OF SECTION 54-IT CAN BE HEL D THAT THERE IS NO BAR LIKE SECTION 54F TO CLAIM DEDUCTION FOR MORE THAN O NE RESIDENTIAL HOUSE. IF THE ASSESSEE IS HOLDING 'A RESIDENTIAL HOUSE' CALLE D BUILDING-A AND ON SALE OF SUCH HOUSE IF THE ASSESSEE ACQUIRES PROPERTY-X, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54. SIMILARLY, IN THE S AME YEAR, IF THE ASSESSEE SELLS RESIDENTIAL HOUSE 'B' AND ACQUIRES A HOUSE PROPERTY 'Y' OUT OF SUCH PROCEEDS, STILL THE ASSESSEE IS ELIGIBLE FO R DEDUCTION UNDER SECTION 54. THIS MEANS THAT THERE IS NO BAR IN ACQUIRING MO RE THAN ONE RESIDENTIAL HOUSE TO CLAIM DEDUCTION UNDER SECTION 54 UNLIKE SE CTION 54F. IF THIS BE THE CASE, THEN IT CAN BE HELD THAT IF THE ASSESSEE ACQUIRES EVEN TWO ADJACENT HOUSES TO MEET HIS NEEDS OUT OF THE PROCEE DS OF ONLY ONE RESIDENTIAL HOUSE, HE CANNOT BE DENIED EXEMPTION UN DER SECTION 54. WHAT IS TO BE EXAMINED IS WHETHER THE CONDITIONS OF SECT ION 54 ARE SATISFIED AT ITA NO. 346/DEL/2017 OMKAR CHADHA 8 THE TIME OF INVESTMENT IN EACH PROPERTY. IN THE PRE SENT CASE, IT CAN BE SEEN THAT BOTH THE PROPERTIES WERE ACQUIRED SIMULTA NEOUSLY I.E. WITHIN THE PERIOD SPECIFIED IN SECTION 54. TO PUT IT IN DIFFER ENT WORDS, WHEN THE ASSESSEE SOLD THE ORIGINAL PROPERTY AND EARNED CAPI TAL GAIN OUT OF SAME, WHAT IS TO BE SEEN IS WHETHER THE SALE PROCEEDS OF ORIGINAL ASSET HAS BEEN UTILISED IN ACQUIRING ANOTHER HOUSE PROPERTY. WE FI ND THAT BOTH THE APARTMENTS WERE ACQUIRED SIMULTANEOUSLY AND HENCE T HE CONDITIONS FOR ACQUIRING 'A RESIDENTIAL HOUSE' WITHIN THE TIME SPE CIFIED ARE COMPLIED WITH. THE ASSESSEE IS THEREFORE ELIGIBLE FOR DEDUCTION UN DER SECTION 54 IN RESPECT OF BOTH THE APARTMENTS SIMULTANEOUSLY ACQUIRED. WE, THEREFORE, EXAMINE AS TO WHETHER 'A RESIDENTIAL HOUSE' SHOULD BE TREAT ED AS 'ONE RESIDENTIAL HOUSE' OR WHETHER 'MORE THAN ONE RESIDENTIAL HOUSE' CAN BE CONSIDERED ELIGIBLE FOR DEDUCTION UNDER SECTION 54. READING TH E PROVISIONS OF SECTION 54-IT CAN BE HELD THAT THERE IS NO BAR LIKE SECTION 54F TO CLAIM DEDUCTION FOR MORE THAN ONE RESIDENTIAL HOUSE. IF THE ASSESSE E IS HOLDING 'A RESIDENTIAL HOUSE' CALLED BUILDING-A AND ON SALE OF SUCH HOUSE IF THE ASSESSEE ACQUIRES PROPERTY-X, THE ASSESSEE IS ELIGI BLE FOR DEDUCTION UNDER SECTION 54. SIMILARLY, IN THE SAME YEAR, IF THE ASS ESSEE SELLS RESIDENTIAL HOUSE 'B' AND ACQUIRES A HOUSE PROPERTY 'Y' OUT OF SUCH PROCEEDS, STILL THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54 . THIS MEANS THAT THERE IS NO BAR IN ACQUIRING MORE THAN ONE RESIDENTIAL HO USE TO CLAIM DEDUCTION UNDER SECTION 54 UNLIKE SECTION 54F. IF THIS BE THE CASE, THEN IT CAN BE HELD THAT IF THE ASSESSEE ACQUIRES EVEN TWO ADJACEN T HOUSES TO MEET HIS NEEDS OUT OF THE PROCEEDS OF ONLY ONE RESIDENTIAL H OUSE, HE CANNOT BE DENIED EXEMPTION UNDER SECTION 54. WHAT IS TO BE EX AMINED IS WHETHER THE CONDITIONS OF SECTION 54 ARE SATISFIED AT THE T IME OF INVESTMENT IN EACH PROPERTY. IN THE PRESENT CASE, IT CAN BE SEEN THAT BOTH THE PROPERTIES WERE ACQUIRED SIMULTANEOUSLY I.E. WITHIN THE PERIOD SPEC IFIED IN SECTION 54. TO PUT IT IN DIFFERENT WORDS, WHEN THE ASSESSEE SOLD T HE ORIGINAL PROPERTY AND EARNED CAPITAL GAIN OUT OF SAME, WHAT IS TO BE SEEN IS WHETHER THE SALE ITA NO. 346/DEL/2017 OMKAR CHADHA 9 PROCEEDS OF ORIGINAL ASSET HAS BEEN UTILISED IN ACQ UIRING ANOTHER HOUSE PROPERTY. WE FIND THAT BOTH THE APARTMENTS WERE ACQ UIRED SIMULTANEOUSLY AND HENCE THE CONDITIONS FOR ACQUIRING 'A RESIDENTI AL HOUSE' WITHIN THE TIME SPECIFIED ARE COMPLIED WITH. THE ASSESSEE IS THEREF ORE ELIGIBLE FOR DEDUCTION UNDER SECTION 54 IN RESPECT OF BOTH THE A PARTMENTS SIMULTANEOUSLY ACQUIRED. 15. WE HAVE ALSO EXAMINED THE RATIONALE ENUNCIATED IN THE CASE OF SARDARMAL KOTHARI 302 ITR 286 AS TO THE LIB ERAL CONSTRUCTION OF THE PROVISIONS OF THE ACT. 16. THE LD. DR ARGUED THAT THERE HAS BEEN AN AMENDM ENT IN THE PROVISIONS OF THE ACT WHEREIN A RESIDENTIAL HO USE HAS BEEN AMENDED AS ONE RESIDENTIAL HOUSE AND ARGUED THAT THIS AMENDMENT IS CLARIFICATORY IN NATURE, HENCE THE CAS E LAWS MENTIONED ABOVE ARE NO MORE APPLICABLE TO THE INSTA NT CASE. RELYING ON THE JUDGMENT OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS RAJENDERA KUMAR IN ITA NO. 65 /2013, THE LD. DR ARGUED THAT ANY AMENDMENT WHICH WAS INTRODUC ED TO RATIONALIZED AND CLEAR THE EXISTING AMBIGUITY AND D OUBTS ARE TO BE TREATED AS RETROSPECTIVE IN NATURE. WE FIND THAT THIS AMENDMENT IS CLEARLY MENTIONED TO BE W.E.F. 01.04.2 015 AND HENCE UNABLE TO AGREE WITH THE ARGUMENT OF THE LD. DR THAT THE AMENDMENT IS CLARIFICATORY IN NATURE. 17. IN THE INSTANT CASE, THE ISSUE IS DIFFERENT FRO M WHAT HAS BEEN EXAMINED IN THE CASE LAWS CITED BY THE LD. COU NSEL OF THE ASSESSEE. IN ALL THE SITUATIONS, THE COURTS UPHELD THE DEDUCTION IN THE SITUATIONS WHERE THE MULTIPLE UNITS WERE EIT HER ADJACENT OR ON THE SAME FLOOR OR ON THE DIFFERENT FLOORS OR MULTIPLE UNITS IN THE SAME RESIDENTIAL COMPLEX OWING TO DIVISION O F PROPERTY. ITA NO. 346/DEL/2017 OMKAR CHADHA 10 WHEREAS IN THE INSTANT CASE, THERE WAS NO SUCH DIVI SION OF PROPERTY AMONG THE MEMBERS AND THE INVESTMENTS ARE AT DIFFERENT LOCATIONS ONE BEING THE INVESTMENT IN RES IDENTIAL PROPERTY AT JUNGPURA OF RS.24,20,000/- AND THE OTHE R BEING AT ANSAL PROPERTIES IN NCR. NO CASE LAW HAS BEEN BROUG HT TO OUR NOTICE WHEREIN TWO DISTINCTLY PLACED PROPERTIES HAV E BEEN ALLOWED FOR CLAIM OF DEDUCTION U/S 54F. KEEPING IN VIEW, THE GEOGRAPHICAL DISTANCES, THE INVESTMENT IN TWO DIFFE RENTLY PLACED PROPERTIES CANNOT BE TERMED TO BE A RESIDENTIAL HO USE EVEN AFTER RESORTING TO LIBERAL INTERPRETATION OF A RES IDENTIAL UNIT. ALL THE CASE LAWS RELIED BY THE COUNSEL ARE FOUND T O BE FACTUALLY DIFFERENT FROM THE INSTANT CASE. 18. HENCE, KEEPING IN VIEW, THE PROVISIONS OF SECTI ON 54F, THE AMENDMENTS, THE RATIO OF JUDGMENTS WHEREIN TWO RESI DENTIAL UNITS ARE CONSIDERED AS A RESIDENTIAL HOUSE AND K EEPING VIEW THE FACTS OF THE INSTANT CASE WHEREIN THE ASSESSEE HAS INVESTED IN TWO DISTINCTLY IDENTIFIABLE PROPERTIES AT SEPARA TE LOCATIONS, WE HEREBY HOLD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION ON THE INVESTMENT OF CAPITAL GAINS IN THE ANSAL PROPER TY OF RS.64,28,424/- AND RS.8,90,760/- INVESTED IN THE CA PITAL GAINS BONDS. THE INVESTMENT IN THE RESIDENTIAL PROPERTY A T JUNGPURA OF RS.24,20,000/- IS LIABLE TO BE TAXED UNDER THE H EAD CAPITAL GAINS. BUSINESS LOSS: 19. THE ASSESSEE WAS IN THE TRADING BUSINESS OF CAR SEAT COVERS. DURING THE YEAR, THE LOSS COMPUTED AT RS.3, 13,826/- HAS BEEN SET OFF AGAINST THE OTHER INCOME. THE AO OBSER VED THAT AS AGAINST RECEIPT OF RS.10,522/-, THE ASSESSEE HAS C LAIMED ITA NO. 346/DEL/2017 OMKAR CHADHA 11 EXPENSES ON ACCOUNT OF DEPRECIATION ON CAR, SALARY OF EMPLOYEE, PETROL AND OTHER EXPENSES. THE AO DISALLOWED 50% OF THE SALARY EXPENSES OF THE EMPLOYEES. WE HOLD THAT THE SALARY PAID BY THE ASSESSEE TO THE EMPLOYEES CANNOT BE DISALLOWED WITH OUT BRINING ANYTHING ON RECORD TO PROVE THAT SUCH PAYMENTS WERE BOGUS IN NATURE. HENCE, THE DISALLOWANCE MADE BY THE AO IS H EREBY DIRECTED TO BE DELETED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/07/2020. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 13/07/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR