Mrs. Usha Mohan, New Delhi V. ITO, New Delhi

ITA 4904/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3670 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 22-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: S D KAPILA; CHARU KAPOOR
• Keywords: Opportunity of being heard; Additional evidence
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH H DELHI ] BEFORE SHRI A. D. JAIN, JM AND SHRI SHAMIM YAHYA, AM I. T. APPEAL NO. 4904 (DEL) OF 2010 ASSESSMENT YEAR : 2004-05. MRS. USHA MOHAN, THE INCOME-TAX OFFICER , C 192, SARVODAYA ENCLAVE, VS. W A R D : 44 (1), N E W D E L H I 110 017. N E W D E L H I . PAN / GIR NO. AAF PM 7062 H. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI S. D. KAPILA, ADV.; & MS. CHARU KAPOOR, ADV.; DEPARTMENT BY : MS. MONA MOHANTY, SR. D. R. ; O R D E R. PER SHAMIM YAHYA, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT (APPEALS) DATED 30 TH JULY, 2010 AND PERTAINS TO ASSESSMENT YEAR 2004-05 . 2. THE ISSUE RAISED IS THAT THE LD. CIT (APPEALS) E RRED IN DENYING RELIEF UNDER SECTION 54 OF THE ACT ON THE GROUND THAT THE INVESTMENT MADE BY T HE APPELLANT WAS FOR COMMERCIAL PURPOSES AND NOT RESIDENTIAL PURPOSES. 2 I. T. APPEAL NO. 4904 (DEL) OF 2010 3.1 IN THIS CASE THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 54 WAS DENIED BY THE ASSESSING OFFICER ON THE GROUND THAT THE PROPERTY W AS COMMERCIAL. UPON THE ASSESSEES APPEAL, THE LD. CIT (APPEALS) HELD AS UNDER :- THE SUBMISSIONS OF THE APPELLANT AND THE FA CTS HAVE BEEN CAREFULLY CONSIDERED. THE AO HAS RIGHTLY POINTED OUT THAT BO TH THE SALE DEED AND THE DEVELOPMENT AGREEMENT REPEATEDLY REFER TO THE PROPE RTY UNDER CONSIDERATION, AS COMMERCIAL PROPERTY. IT IS APPARENT THAT PRAKRUTHI RESORTS IN WHICH THE APPELLANT HAS CONSTRUCTED A BUILDING, IS A COMMERCIAL PROPERT Y. THE APPELLANT HAS ARGUED THAT THE CONSTRUCTION PLAN CONSISTS OF ROOMS, ETC. AND THIS SHOWS THAT THE PROPERTY IS FOR RESIDENTIAL USE. THIS ARGUMENT IS NOT ACCEP TABLE BECAUSE ROOMS CAN BE USED FOR RESIDENTIAL AS WELL AS COMMERCIAL PURPOSES. TH E APPELLANT HAS ARGUED THAT THE SANCTION RECEIVED FROM THE LOCAL PANCHAYAT FOR CONS TRUCTION OF THE HOUSE, WHICH SHOWS THAT THE SANCTION IS FOR THE PROPOSED RESIDE NCE OF THE ASSESSEE. HOWEVER, A COPY OF THE SANCTION ORDER HAS NOT BEEN FILED. THE APPELLANT HAS ARGUED THAT IN KARNATAKA THERE ARE TWO DISTINCT C ATEGORIES OF PLOTS. ONE IS AGRICULTURAL AND THE OTHER IS COMMERCIAL. BY USING THE WORD COMMERCIAL, IT DOES NOT MEAN THAT IT CANNOT BE USED FOR RESIDENTIAL PUR POSES, RATHER IT IMPLIES THAT THE PLOT IS BEING USED FOR PURPOSES OTHER THAN AGRICULT URAL. HOWEVER, NO EVIDENCE HAS BEEN FILED IN SUPPORT OF THE CLAIM THAT IN KARN ATAKA, PROPERTY CLASSIFIED AS COMMERCIAL DOES NOT MEAN THAT IT CANNOT BE USED F OR RESIDENTIAL PURPOSES. IT IS SETTLED LAW THAT IN SUCH MATTERS, THE COMMON MEANIN G OF THE WORD HAS TO BE RELIED UPON. IN COMMON PARLANCE, THE WORD COMMERCIAL DO ES NOT INCLUDE RESIDENTIAL. THEREFORE, A BUILDING WHICH IS USED FOR COMMERCIAL PURPOSES CANNOT BE SAID TO BE USED FOR RESIDENTIAL PURPOSES. THE APPELLANT HAS FURTHER ARGUED THAT THE AR CHITECT OF THE BUILDING HAD GIVEN A CERTIFICATE THAT AS PER THE RULES AND REGULATION S OF THE LOCAL PLANNING AUTHORITIES, UTILIZATION OF LAND AND CONSTRUCTION OF RESIDENCE A T THE SPECIFIC SITE WAS PERMITTED. 3 I. T. APPEAL NO. 4904 (DEL) OF 2010 IN THIS REGARD, THE APPELLANT FILED A COPY OF A LETTER DATED 17/12/06 FROM M/S. KRUTHIKA, ARCHITECTS & INTERIOR DESIGNERS STATING A S FOLLOWS : THIS IS FOR THE INFORMATION OF WHOMSOEVER IT MAY CONCERN THAT AS PER THE RULES AND REGULATIONS OF THE LOCAL PLANNING AUTHORI TIES, UTILIZATION OF LAND AND CONSTRUCTION OF DWELLING UNITS FOR RESIDENTIAL PURP OSES IN CONVERTED LAYOUTS (MORE SPECIFICALLY COMMERCIALLY CONVERTED LAYOUTS LIKE PR AKRUTHI RESORTS) AND LEGAL . THE APPELLANT HAS STATED THAT IN THE PERIOD AFTER THE ASSESSMENT HAS APPROACHED THE ARCHITECTS & LOCAL AUTHORITIES. THE IR CERTIFICATE ARE ALSO BEING SUBMITTED AND THE HONBLE CIT (A) IS REQUESTED TO A LLOW THE APPELLANT TO SUBMIT SUCH ADDITIONAL EVIDENCE UNDER RULE 46-A, SEC. 251 OF THE INDIAN INCOME TAX ACT, 1961 AS THESE CERTIFICATES FROM INDEPENDENT PR OFESSIONALS WILL PROVE THAT THE DWELLING UNIT CONSTRUCTED BY THE APPELLANT IS A RES IDENTIAL UNIT. THE APPELLANT HAS FAILED TO SATISFACTORILY EXPLAIN WHY THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED, WAS NOT SUBMITTED DURI NG ASSESSMENT PROCEEDINGS. CONSIDERING THE FACTS, THE ADDITIONAL EVIDENCE IS N OT ADMITTED AS NONE OF THE CONDITIONS LAID DOWN IN RULE 46-A ARE SATISFIED. EVEN ON MERITS, THE ABOVE LETTER REFERS TO COMMERC IALLY CONVERTED LAYOUTS LIKE PRAKRUTHI RESORTS. THIS ONLY CONFIRMS THAT P RAKRUTHI RESORTS IN WHICH THE APPELLANT HAS CONSTRUCTED A BUILDING, IS A COMMERCI AL PROPERTY. THE APPELLANT HAS NOT FILED ANY EVIDENCE TO SHOW THAT THIS PROPERTY W AS CONVERTED FROM COMMERCIAL TO RESIDENTIAL USE. THE PROPERTY PURCHASED BY THE APPELLANT IS A PART OF PRAKRUTHI RESORTS. IN VIEW OF THESE FACTS, THE ASSESSING OFF ICER HAS RIGHTLY HELD THAT THE ABOVE PROPERTY IS COMMERCIAL IN NATURE. 3.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 4 I. T. APPEAL NO. 4904 (DEL) OF 2010 4. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF MATERIAL PRODUCED AND RELIED UPON. THE LEARNED COUNSEL OF THE ASSESSEE REFERRED TO THE DEVELOPMENT AGREEMENT WITH THE BUILDER, THE PLAN OF THE PROPERTY, AFFIDAVIT ON OAT H BY THE ASSESSEE, CERTIFICATE BY THE GRAM PANCHAYAT AND THE HOUSE-TAX PAYMENT RECEIPT FROM TH E JALIGE GRAMA PANCHAYAT. HE CONTENDED THAT THE LOWER AUTHORITIES HAVE TOTALLY ERRED IN NO T APPRECIATING THAT THE TRUE NATURE OF THE PROPERTY, WHICH IS RESIDENTIAL IN NATURE. THE LD. SR. DR COULD NOT COGENTLY REBUT THE SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. W E FIND THAT THE ASSESSEE HAS ALSO FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EV IDENCE. THE DOCUMENTS SUBMITTED ARE THE AFFIDAVIT ON OATH BY THE ASSESSEE, CERTIFICATE BY T HE JALIGE GRAMA PANCHAYAT AND HOUSE-TAX RECEIPT. IN OUR CONSIDERED OPINION, THE AUTHORITIE S BELOW HAVE NOT PROPERLY APPRECIATED THE FACTS OF THE CASE. HENCE, IN OUR CONSIDERED OPINIO N, MATTER NEEDS TO BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFR ESH IN THE LIGHT OF THE SUBMISSIONS AND ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE. AC CORDINGLY, THE ISSUE STANDS REMITTED TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO ADD THA T THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STAND S ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 22 ND JUNE, 2011. SD/- SD/- [ A. D. JAIN ] [ SHAMIM YAHYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22 ND JUNE, 2011. *MEHTA * 5 I. T. APPEAL NO. 4904 (DEL) OF 2010 COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.