M/s Mangi Lal Gupta & Sons (HUF), Faridabad V. DCIT, Faridabad

ITA 6513/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4194 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 20-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D C GARG
• Keywords: Capital asset; Opportunity of being heard; Competent authority
• Section: 54F; 54

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH E, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 6513/DEL./2016 ASSESSMENT YEAR: 2013-14 MANGI LAL GUPTA & SONS (HUF), 234, SECTOR-15A, FARIDABAD. PAN- AAEHM6333G (APPELLANT) VS. D.C.I.T., CIRCLE - 1, FARIDABAD. (RESPONDENT) ASSESSEE BY SHRI D.C. GARG, C.A. REVENUE BY SHRI SUJIT KUMAR, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), FARIDABAD DATED 22.09.2016 FOR THE ASSESSMENT YEAR 2013-14 ON THE FOLLOWING GROUNDS : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)- FARIDABAD, HAS ERRED IN LAW AS WELL AS ON FACTS AND IN CIRCUMSTANCES OF THE CASE IN UPHOLDING ACTION OF THE ASSESSING OFFICER O F DISALLOWANCE OF CLAIM OF THE APPELLANT UNDER SECTION 54 OF THE INCOME TAX ACT, 1961. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)- FARIDABAD, HAS ERRED IN LAW AS WELL AS ON FACTS AND IN CIRCUMSTANCES OF THE CASE IN CONFIRMING DISALLOWANCE OF CLAIM OF THE APP ELLANT WITHOUT APPRECIATING THE FACT THAT THE COMPLETION CERTIFICA TE OF THE HOUSE HAS ALREADY BEEN PROVIDED BY THE COMPETENT AUTHORITY. DATE OF HEARING 05.07.2018 DATE OF PRONOUNCEMENT 11 .07.2018 ITA NO. 6513/DEL/2016 2 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)- FARIDABAD, HAS ERRED IN LAW AS WELL AS ON FACTS WHI LE TREATING PERMANENT COMPLETION CERTIFICATE AS PROVISIONAL ONE. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)- FARIDABAD, HAS ERRED IN PLACING RELIANCE ON JUDGMEN TS OF HON'BLE HIGH COURTS IN RAJESH SURANA VS CIT [306 ITR 368], ASHOK SYAL VS CIT [209 TAXMAN 376] AND DR. A S ATWAL VS CIT [277 ITR 462] WHI CH ARE NOT RELEVANT TO THE FACTS OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN ON 04.07.2013 DECLARING AN INCOME OF RS.1,35,52,850/- CONTAINING LONG-TERM CAPITAL GAINS OF RS.1,26,03,571/- AND INCOME FROM O THER SOURCES OF RS.9,52,282/-. THE CASE WAS SELECTED FOR SCRUTINY A ND STATUTORY NOTICES WERE ISSUED. THE ASSESSEE HAD SHOWN LONG-TERM CAPITAL GA INS ON SALE OF PLOT/HOUSE NO. 03, SECTOR 21A, FARIDABAD, MEASURING 500 SQ. YA RDS TO M/S. DREEM FACTORY PVT. LTD. THE SALE DEED WAS EXECUTED ON 16.11.2012 AND SALE CONSIDERATION WAS RS.3.25 CRORES. THE LONG TERM CAPITAL GAIN CALC ULATED BY THE ASSESSEE IS AS UNDER : SALE PROCEEDS RS.3,25,00,000/- LESS: TRANSFER EXP. RS. 2,25,000/- NET SALE PROCEEDS RS.3,22,75,000/- LESS: INDEXED COST AS PER COMPUTATION RS. 46,71,4 29/- LONG TERM CAPITAL GAIN RS.2,76,03,571/- LESS: DEDUCTION U/S 54 RS.1,50,00,000/- TAXABLE LTCG RS.1,26,03,571/- ON SCRUTINY, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAD CLAIMED EXEMPTION U/S. 54 OF THE ACT AMOUNTING TO RS.1,50,0 0,000/-. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM. HE SUBMITTED THE DETAIL ED REPLY. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SUBMISSIONS OF T HE ASSESSEE AND FOR VERIFICATION OF THE CLAIM, THE ASSESSING OFFICER DE PUTED THE INSPECTOR FOR PHYSICAL VERIFICATION OF THE PROPERTY SOLD. THE INS PECTOR REPORTED THAT THE ITA NO. 6513/DEL/2016 3 CONSTRUCTED AREA IN THE PLOT IS APPROXIMATELY 25X10 SQ. FEET., WHICH IS ACTUALLY A SINGLE HALL. HE FURTHER SUBMITTED THAT THE CONSTR UCTION WAS IN SUCH A CONDITION THAT HARDLY CAN BE USED FOR RESIDENCE. AG AIN, THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY HOW HE FULFILLS THE C ONDITIONS OF SECTION 54 OF THE ACT AND ISSUED SHOW CAUSE NOTICE ON 01.12.2015. THE ASSESSEE SUBMITTED PART REPLY WHICH READS AS UNDER : 'IN THE OCCUPATION CERTIFICATE GIVEN BY HARYANA URB AN DEVELOPMENT AUTHORITY, FARIDABAD IT IS CLEARLY STATED THAT THE HOUSE IS ONE ROOM, KITCHEN & TOILET BUILT. FURTHER FROM THE SALE DEED D ATED 10.02.2006 IT IS VERY MUCH CLEAR THAT THE ASSESSEE HAS PURCHASED A C ONSTRUCTED RESIDENTIAL HOUSE I.E. ONE ROOM, KITCHEN AND TOILET. FURTHER THE ASSESSES HAS SOLD THE SAID RESIDENTIAL HOUSE IN THE F/Y 2012-13. WHEN THE ASSESSEE HAS SOLD THE HOUSE, IT IS NOT A M ATTER OF QUESTION FOR HIM, WHETHER SOMEONE IS RESIDING THERE OR NOT AFTER SELLING THE HOUSE. FROM THE ABOVE IT IS SUBMITTED THAT THE ASSET TRANS FERRED BEING A RESIDENTIAL HOUSE INCOME FROM WHICH IS CHARGEABLE U NDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. HENCE THE CONDITION T O AVAIL DEDUCTION U/S 54 IS DULY SATISFIED I.E. ASSET TRANSFERRED IS A RESIDENTIAL HOUSE, LONG TERM CAPITAL ASSET AND THE DEDUCTION MAY KI NDLY BE ALLOWED.' 3. THE ASSESSEE ALSO SUBMITTED APPROVED MAP FROM HU DA, HOUSE TAX RECEIPT, WATER CHARGE RECEIPT AND SEVER CHARGES REC EIPT, COPY OF OCCUPATION CERTIFICATE AND PHOTOGRAPH OF THE HOUSE PROPERTY IN SUPPORT OF HIS CLAIM U/S. 54 OF THE ACT. THE ASSESSING OFFICER EXAMINED THE I SSUE IN DETAIL AND CONCLUDED THAT THE SAID PROPERTY WAS NOT HABITABLE AND ALSO OBSERVED THAT THE ASSESSEE HAD NOWHERE CLAIMED THAT HE HAS USED THE H OUSE HIMSELF AS RESIDENTIAL HOUSE. HE ALSO OBSERVED FROM THE INSPEC TORS REPORT THAT FROM LAST 3-4 YEARS, NEITHER THE ASSESSEE HIMSELF OR SOMEONE ELSE WAS RESIDING IN THE SAID PROPERTY. HE, THEREFORE, DISALLOWED THE CLAIM U/S. 54 TO THE EXTENT OF 1.50 CRORES AND ADDED THE SAME TO THE INCOME OF THE ASSE SSEE AS LONG-TERM CAPITAL ITA NO. 6513/DEL/2016 4 GAIN. THE ASSESSEE WAS NOT SATISFIED FROM THE ORDER OF ASSESSING OFFICER ON THIS ISSUE AND HE APPEALED BEFORE THE LD. CIT(A).THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DISMISSED THE APPE AL HOLDING AS UNDER : 6.2 I HAVE PERUSED THE SUBMISSIONS OF THE APPE LLANT AND THE ORDER OF THE AO. THE AO HAS DENIED THE EXEMPTION U/S 54 CLAIMED BY THE A PPELLANT. THE FACTS OF THE CASE ARE THAT THE APPELLANT SOLD HOUSE NO, 3, SECTOR 21- A, FARIDABAD (PLOT SIZE 500 SQ. YDS.) TO ONE M/S DREAM FACTORY ON 16.11. 2012 FOR A TOTAL SALE CONSIDERATION OF RS.3.25 CRORES. THE TOTAL LONG TERM CAPITAL GA IN ON THIS SALE AMOUNTED TO RS.2,76,03,571/-. OUT OF THIS, THE APPELLANT CLAI MED DEDUCTION U/S 54 FOR AN AMOUNT OF RS. 1,50,00,000/- AND ON THE BALANCE AMOUNT OF RS.1,26,03,571/-, THE APPELLANT PAID LONG TERM CAPI TAL GAIN. THE AO ISSUED A SHOW CAUSE NOTICE TO THE APPELLANT ON 01.12.2015 AND SUB SEQUENTLY AFTER CONSIDERING THE APPELLANT'S REPLY, THE AO HAS DENIED EXEMPTION U/S 54 TO THE APPELLANT. THE SAME HAS BEEN ELABORATED BY THE AO IN PARA 7 OF THE ASSE SSMENT ORDER. THE MAIN REASON FOR THE AO TO DENY THE EXEMPTION U/S 54 HAS BEEN TH AT THE STRUCTURE CONSTRUCTED BY THE APPELLANT ON THIS PLOT DOES NOT QUALIFY TO BE A RESIDENTIAL HOUSE AND THUS THE EXEMPTION U/S 54 CANNOT BE GRANTED TO THE APPELLANT . THE MAIN REASONS ELABORATED BY THE AO IN THE ASSESSMENT ORDER ARE AS BELOW: (I) AN INSPECTION WAS MADE BY THE INSPECTOR O F THE AO AND AS PER THE INSPECTOR'S REPORT, THE STRUCTURE WAS NOT USED FOR RESIDENCE EI THER BY THE APPELLANT OR SOMEONE ELSE. IT IS POSSIBLE THAT SOME CHOWKIDAR/LABOURER W AS LIVING IN THIS STRUCTURE. (II) IN THE ABSENCE OF ANY STATUTORY DEFINITIO N IN THE ACT TO DESCRIBE THE ASSET AS A RESIDENTIAL HOUSE ANY SUCH STRUCTURE SHOULD FULFILL THE BASIC CHARACTERISTIC OF A RESIDENTIAL HOUSE. AS PER THE AO, THE STRUCTURE IN QUESTION IS AN INSIGNIFICANT STRUCTURE, AS THE TOTAL COVERED AREA OF THE STRUCTU RE IS 25 SQ. YDS. ON A 500 SQ. YDS. PLOT. EVEN THOUGH THE 25 SQ. YDS. STRUCTURE INCLUDE S A TOILET AND A KITCHEN, STILL IT CANNOT BE CONSIDERED TO BE A RESIDENTIAL HOUSE FIT OF THE DWELLING BY THE APPELLANT. (III) THE APPELLANT HAS NOWHERE CLAIMED THAT THE STRUCTURE HAS BEEN USED BY THE APPELLANT AS A RESIDENTIAL HOUSE. (IV) THE RATIONALE AND THE LEGISLATIVE INTENT F OR BRINGING THE PROVISION OF SECTION 54 WERE TO PROVIDE RELIEF FROM CAPITAL GAINS TO AN ASSESSEE WHO SELLS ONE RESIDENTIAL HOUSE AND IN EXCHANGE OF THAT HE BUYS ANOTHER RESID ENTIAL HOUSE. THIS PROVISIONS HAVE BEEN MISUSED BY THE APPELLANT. 6.3 ON THE OTHER HAND, THE APPELLANT THROUGH HI S LEARNED COUNSEL IN HIS WRITTEN SUBMISSIONS REPRODUCED ABOVE HAS MADE THE FOLLOWING ARGUMENTS IN HIS DEFENSE: (I) THE FACT THAT THE STRUCTURE IS BUILD ON 25 SQ. YDS. ON 500 SQ. YDS. PLOT IS NOT IN DISPUTE BETWEEN THE APPELLANT AND THE AO. (II) THE FACT THAT THE APPELLANT WAS HIMSELF NOT RESIDING AT THE PREMISES IS ALSO NOT IN DISPUTE BETWEEN THE APPELLANT AND THE AO. ITA NO. 6513/DEL/2016 5 (III) THE STRUCTURE IN QUESTION QUALIFIES TO BE A RESIDENTIAL HOUSE BECAUSE OF THE FOLLOWING REASONS: (A) THE COMPLETION CERTIFICATE ISSUED BY HUDA SHOWS T HAT THE BUILDING CONCERNED OF ONE ROOM, KITCHEN AND TOILET. THE HOUS E TAX RECEIPTS AND THE RECEIPT OF WATER AND SEWERAGE CHARGES HAVE ALSO BEEN FURNISHED BEFORE ME AS WELL AS BEFORE THE AO TO ESTABLISH TH AT THE STRUCTURE IN QUESTION IS A RESIDENTIAL BUILDING. (B) THE BUILDING HAS BEEN CONSTRUCTED AS PER THE APPROV ED AND SANCTIONED PLAN OF HUDA AND THE SANCTIONED PLAN OF THE HUDA HA S ALSO BEEN FURNISHED. 6.4 HAVING REPRODUCED THE ARGUMENTS OF THE AO AS WE LL AS OF THE APPELLANT, THE ONLY QUESTION THAT NEEDS TO BE ANSWERED IS WHAT DEF INES A RESIDENTIAL HOUSE. THE INCOME TAX ACT DOES NOT DEFINE A RESIDENTIAL HOUSE. THUS THE DEFINITION OF THE RESIDENTIAL HOUSE HAS TO BE TAKEN FROM THE COMMON P ARLANCE. THE SINE-QUA-NON OF A RESIDENTIAL HOUSE IS THAT IT SHOULD BE A STRUCTURE FIT FOR DWELLING. IN OTHER WORDS, A STRUCTURE WHICH IS FOUND FIT FOR DWELLING CAN BE TE RMED AS A RESIDENTIAL STRUCTURE. THERE ARE CERTAIN FACILITIES/AMENITIES WITHOUT WHIC H A STRUCTURE MAY NOT BE FOUND FIT FOR DWELLING. THE ABSENCE OF ONE OF THESE FACILITIE S IN ITSELF, WOULD RENDER THE STRUCTURE UNFIT. TWO MOST IMPORTANT INGREDIENTS TO MAKE A STRUCTURE FIT FOR DWELLING ARE THE FACILITIES OF WATER AND ELECTRICITY. IN THE CASE OF THE APPELLANT, IT IS SEEN THAT THIS RESIDENTIAL STRUCTURE DOES NOT HAVE ANY ELECTR ICITY CONNECTION. 6.5 WHILE EXAMINING THE CONCEPT OF RESIDENTIAL STRU CTURE, IT SHALL BE PERTINENT TO EXAMINE THIS CONCEPT IN A CULTURAL AS WELL AS GEOGR APHICAL CONTEXT. FOR EXAMPLE, THERE COULD BE A RESIDENTIAL STRUCTURE IN A REMOTE PART OF HIMACHAL PRADESH. AS IS COMMON IN SUCH REMOTE PARTS IN THE MOUNTAINS, THERE IS NO SEWER CONNECTION AND MOST OF THE TIME THE WATER IS AVAILED FROM THE NEAR BY STREAMS. THUS WOULD SUCH A STRUCTURE BE TERMED AS 'NOT A RESIDENTIAL HOUSE' JU ST BECAUSE IT DOES NOT HAVE A SEWER OR A REGULAR MUNICIPAL WATER CONNECTION. THE ANSWER IS 'NO'. THE FACILITIES AVAILABLE FOR DWELLING UNIT ALSO NEED TO BE EXAMINE D IN THE LIGHT OF THE GEOGRAPHICAL AND CULTURAL CONTEXT. IT NEEDS TO BE APPRECIATED T HAT NONE OF THE OTHER DWELLING UNITS IN REMOTE PART OF HIMACHAL PRADESH WOULD HAVE THE SEWERAGE AND WATER FACILITIES AVAILABLE. THUS THE ABSENCE OF THESE FAC ILITIES IN SUCH A HOUSE WOULD NOT BE AN ISOLATED INCIDENT. COMING TO THE FACTS OF THE IN STANT CASE, THE APPELLANT HAS FURNISHED EVIDENCE WITH REGARD TO THE FACT THAT THE PLAN OF THE HOUSE HAS BEEN SANCTIONED BY HUDA. HE HAS ALSO FURNISHED A COMPL ETION CERTIFICATE. IN MY OPINION THESE EVIDENCES ARE IMPORTANT BUT THEY DO NOT ESTAB LISH THAT THE STRUCTURE IN QUESTION WAS FIT FOR DWELLING. I WOULD HAVE FOUN D THE STRUCTURE FIT FOR DWELLING, AND ACCEPTED IT AS A RESIDENTIAL HOUSE IF ALL THE THREE FACILITIES WERE PRESENT IN THE STRUCTURE VIZ. SEWERAGE CONNECTION, WATER CO NNECTION AND ELECTRICITY CONNECTION. THE FIRST TWO ARE EXISTING IN THE STRUCTURE, HOWEVE R, THE THIRD ONE I.E. ELECTRICITY CONNECTION IS MISSING. THESE FACTS HAVE TO BE EXAM INED IN THE CORRECT GEOGRAPHICAL AND CULTURAL CONTEXT. THE PROPERTY IN QUESTION HA S BEEN SOLD FOR A VALUE OF RS.3.25 CRORES AND IS LOCATED IN THE NCR REGION, HOWEVER, E VEN THE BASIC FACILITY OF ELECTRICITY ITA NO. 6513/DEL/2016 6 IS MISSING FROM SUCH A HOUSE. IS IT POSSIBLE IN TOD AY'S WORLD THAT A STRUCTURE WITH A MARKET PRICE OF RS.3.25 CRORES IS 'FIT FOR DWELLIN G' EVEN WHEN THERE IS NO ELECTRICITY CONNECTION? IT IS PRECISELY FOR THIS REASON THAT TH E PREMISES HAVE NOT BEEN OCCUPIED BY THE APPELLANT EVER, AND MOREOVER IT HAS NOT BEEN LET OUT BY THE APPELLANT EVER. THE FACT THAT THE PREMISES HAS BEEN NOT BEEN LET OU T IS EVIDENT FROM THE FACT THAT NO INCOME FROM HOUSE PROPERTY HAS BEEN DISCLOSED BY TH E APPELLANT IN ITS RETURN OF INCOME. WHEN THE STATUS FACT OF THE OCCUPATION OF T HE PROPERTY IN QUESTION IS EXAMINED IN LIGHT OF THE FACT THAT THERE IS NO ELEC TRICITY CONNECTION IN THE STRUCTURE, IT IS EVIDENT BEYOND DOUBT THAT THE STRUCTURE IN QUEST ION IS NOT FIT FOR DWELLING. ONCE THE STRUCTURE IN QUESTION IS NOT FOUND FIT FOR DWEL LING IT CANNOT BE CONSIDERED AS A RESIDENTIAL HOUSE AND THUS NO EXEMPTION U/S 54 CAN BE GRANTED TO THE APPELLANT. 6.6 EVEN THE COMPLETION CERTIFICATE FURNISHED BY THE APPELLANT HAS BEEN EXAMINED BY ME AND IT IS SEEN THAT THE COMP LETION CERTIFICATE IS A 'PART COMPLETION CERTIFICATE'. THE PROPERTY IN QUESTION I S SITUATED IN THE HUDA ESTATE AREA AND AS PER THE HUDA BY-LAW 25% OF THE CONSTRUCTION HAS TO BE COMPLETED WITHIN THE STIPULATED TIME FRAME AND IN THE ABSENCE OF THIS BA SIC MINIMUM CONSTRUCTION THE PLOT IS RESUMED BY HUDA. THE CONSTRUCTION CARRIED O UT BY THE APPELLANT ON THIS PLOT IS IN PURSUANCE OF THIS BY-LAW, AND THE OCCUPATION CERTIFICATE ISSUED BY HUDA (DATED 13.01.1994 AND ANNEXED BY THE APPELLANT IN THE PAPE R BOOK) CLEARLY SHOWS THAT THE OCCUPATION CERTIFICATE IS PROVISIONAL AND IS VALID ONLY FOR A PERIOD OF SIX MONTHS. THE RELEVANT PROVISIONS OF HUDA BY-LAW IN THIS CONTEXT ARE REPRODUCED BELOW: 'SOME PLOT HOLDERS APPLY FOR AND OBTAIN PART COMPLET ION CERTIFICATE AFTER HAVING CONSTRUCTED 25% OF THE PERMISSIBLE COVERED AREA/ONE LIVING UNIT. THE VALIDITY OF THE PART CERTIFICATE IS ONLY FOR SIX MONTHS. AFTER EXPI RY OF SIX MONTHS IT SHOULD BE GOT REVALIDATED OTHERWISE PART COMPLETION CERTIFICATE W ILL DEEMED TO HAVE EXPIRED. PLOT HOLDERS WHO HAVE NOT OBTAINED REVALIDATED PART CERTI FICATE, ARE REQUIRED TO DO SO WITHOUT DELAY) IT MAY PLEASE BE NOTED THAT W.E.F. 1. 1.98, THE MINIMUM CONSTRUCTION OF A RESIDENTIAL PLOT HAS BEEN FIXED 25% OF THE COVERED A REA PERMISSIBLE ON GROUND FLOOR WHICH INCLUDES ONE HABITABLE ROOM, A KITCHEN AND A TO ILET' 6.7 THE 25% MINIMUM CONSTRUCTION QUALIFICATION HAS BEEN IMPLEMENTED BY HUDA W.E.F. 01.01.1998 AND BEFORE THIS (DURING THE PERIO D WHEN THE STRUCTURE WAS CONSTRUCTED IN 1994) THE MINIMUM LIMIT WAS EVEN LOW ER THAN 25%. THUS FROM THE ABOVE IT IS EVIDENT THAT EVEN THE COMPLETION CERTIF ICATE FURNISHED BY THE APPELLANT WAS PROVISIONAL, WITH A VALIDITY OF SIX MONTHS ONLY . SUBSEQUENTLY THE SAME HAS NOT BEEN RENEWED AS NO FURTHER CONSTRUCTION WAS CARRIED OUT. THUS NO COGNIZANCE CAN BE TAKEN OF THIS CERTIFICATE. THIS FURTHER GOES ON TO PROVE THAT THE STRUCTURE IN QUESTION WAS NOT FIT FOR HABITATION. 6.8 IN THIS REGARD, I ALSO FIND SUPPORT FROM THE FOLLOWING CASE LAWS: (I). DECISION OF HON'BLE RAJASTHAN HIGH COURT IN TH E CASE OF RAJESH SURANA VS. CIT, 306 ITR 368, IN WHICH IT WAS HELD THAT 'A PLOT WITH BOUNDARY WALLS AND A GARAGE- CUM-ROOM CONSTRUCTED OVER IT IS NOT A RESIDENTIAL H OUSE, HENCE CAPITAL GAIN ARISING FROM SALE THEREOF IS NOT EXEMPT UNDER SECTION 53'. ITA NO. 6513/DEL/2016 7 (II). DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ASHOK SYAL VS. CIT, 209 TAXMAN 376, IN WHICH IT WAS HELD THAT 'EXEMPTION U/S 54 IS NOT AVAILABLE WHEN PROPERTY IN QUESTION IS NOT A 'HOUSE ' OR 'DWELLING UNIT'. 10 (III). DECISION OF THE HON'BLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF DR. A.S. ATWAI VS. CIT, 277 ITR 462, IN WHICH IT WAS HELD TH AT 'PROPERTY SOLD BY ASSESSEE I.E., PLOT WITH A TIN SHED, WAS NOT A HOUSE AS THE TIN SH ED HAD NOT BATHROOM OR KITCHEN OR ELECTRICITY CONNECTION, AND EVEN IF THE SAME IS CON SIDERED AS A HOUSE, ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER S.54 ON THE SALE OF SAI D PROPERTY AS IT WAS NOT OCCUPIED BY THE ASSESSEE OR A PARENT OF HIS FOR THEIR RESIDENCE IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER'. 6.9 THUS KEEPING IN VIEW THESE FACTS, I AM OF THE O PINION THAT THE A.O. HAS RIGHTLY DENIED THE EXEMPTION U/S. 54 TO THE APPELLANT. THIS GROUND OF APPEAL IS DISMISSED. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL. 4. THE LD. AR REITERATED THE SUBMISSIONS MADE BEFOR E THE LOWER AUTHORITIES AND SUBMITTED THAT THERE WAS A RESIDENTIAL BUILDING CONSTRUCTED AS PER APPROVED PLAN AND MUNICIPAL TAXES , SEWAGE TAXES HA VE BEEN PAID BY THE ASSESSEE. HE DREW OUR ATTENTION ON THE APPROVED MAP AND PHOTOGRAPHS OF THE SOLD PROPERTY. HE ALSO REFERRED TO THE PAPER BOOK C ONTAINING 43 PAGES. HE SUBMITTED THAT THE CASES REFERRED BY THE AUTHORITIE S BELOW ARE NOT APPLICABLE IN THE PRESENT CASE. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AUTHORITIES BELOW HAVE RIGHTLY DEALT WITH THIS ISSUE IN DETAIL. THE SAID BUILDING WAS NOT HABITABL E BECAUSE THERE WAS NO ELECTRICITY CONNECTION AND NONE WAS LIVING THERE FO R LAST 3-4 YEARS. THE TOTAL SIZE OF THE SOLD PROPERTY WAS 500 SQ. YARDS WHEREAS THE STRUCTURE HAS BEEN CONSTRUCTED ON ONLY 25 SQ. YARDS, WHICH IS ONLY 5% OF THE TOTAL PLOT AREA. ITA NO. 6513/DEL/2016 8 6. AFTER HEARING BOTH THE SIDES AND PERUSING THE EN TIRE MATERIALS AVAILABLE ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE NECESSARY INGREDIENTS FOR CLAIMING THE BENEFIT OF SECTION 54 IS THAT THE ASSET SOLD SHOULD BE A RESIDENTIAL HOUSE. IF THE CLAIM OF THE ASSESSE E IS DECIDED ON THE ANVIL OF THIS TEST LAID DOWN IN THE SECTION ITSELF, WE FIND THAT THE ASSESSEE HAS UTTERLY FAILED TO FURNISH EVEN AN IOTA OF EVIDENCE REGARDIN G ELECTRICITY CONNECTION IN THE SAID PROPERTY, WHICH IS THE BASIC NEED FOR A PR OPERTY TO BE TREATED AS A RESIDENTIAL HOUSE. A PERUSAL OF THE SALE DEED SUBMI TTED BY THE ASSESSEE, AS ALSO CORROBORATED BY INSPECTORS REPORT, REVEALS THAT TH E PROPERTY SOLD WAS A PLOT MEASURING 500 SQ. YARDS WHERE AS THE CONSTRUCTED AR EA IS 225 SQ. FEET OR 25 SQ. YARDS (5% OF THE TOTAL AREA OF PLOT), CONTAININ G A ROOM, A KITCHEN AND TOILET, BATHROOM. THE ASSESSEE HAS ALSO FAILED TO REBUT THE INSPECTORS REPORT THAT FOR LAST 3-4 YEARS, NOBODY WAS RESIDING THEREIN. THE AS SESSEE HAS ALSO NOT BEEN ABLE TO ESTABLISH THAT THE SAID LAND/PROPERTY HAS E VER BEEN USED AS RESIDENTIAL HOUSE EITHER BY THE ASSESSEE HIMSELF OR BY HIS LABO URERS OR EMPLOYEES ETC. THE ASSESSEE HAS ALSO NOT SHOWN ANY INCOME FROM THAT HO USE PROPERTY. IN PRESENCE OF THESE FACTS, IN OUR OPINION, THE LD. CI T(A) WAS QUITE JUSTIFIED TO OBSERVE THAT THE ASSET SOLD BY THE ASSESSEE WAS NOT A RESIDENTIAL HOUSE SO AS TO QUALIFY FOR EXEMPTION U/S. 54 OF THE ACT. WE, THERE FORE, DO NOT FIND ANY JUSTIFICATION TO DISTURB THE ELABORATE FINDINGS REA CHED BY THE LD. CIT(A) ON THIS SCORE AFTER MEETING OUT ALL THE CONTENTIONS MADE BY THE ASSESSEE. 7. WE, HOWEVER, FIND THAT IT IS NOT IN DISPUTE THAT THE ASSET SOLD BY THE ASSESSEE IS A CAPITAL ASSET. THE PURCHASE OF RESIDE NTIAL PROPERTY IS ALSO NOT DISPUTED BY THE AUTHORITIES BELOW. THE ASSESSEE HAS ALSO PRODUCED BEFORE US COPY OF PURCHASE DEED OF RESIDENTIAL HOUSE, WHICH I S EXECUTED IN THE NAME OF VISHAL GUPTA S/O SHRI M.L. GUPTA. IN SUCH STATE OF AFFAIRS, THE PROVISIONS OF ITA NO. 6513/DEL/2016 9 SECTION 54F COULD BE TAKEN INTO CONSIDERATION BY TH E AUTHORITIES BELOW, WHICH THE AUTHORITIES BELOW HAVE NOT CONSIDERED AT ALL IN THE IMPUGNED ORDERS. IT IS WORTHWHILE TO NOTE, A TAX PAYER HAS TO BE GIVEN ALL SUCH BENEFITS ARISING FROM THE PURCHASE AND SALE OF PROPERTIES. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO RECALCULATE THE CAPITAL GAINS AND TO CONSIDER WH ETHER THE ASSESSEE IS ENTITLED TO BENEFIT OF SECTION 54F OF THE ACT OR NO T IN THE ATTENDING FACTS AND CIRCUMSTANCES OF THE CASE. IF THE ASSESSEE IS FOUND ELIGIBLE FOR EXEMPTION U/S 54F IN ALL RESPECT, HE SHALL BE GIVEN BENEFIT THERE OF. ACCORDINGLY, THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF ABOVE DIRECTIONS. NEEDLESS TO SAY, THE ASSESSEE SHA LL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2018 SD/- SD/- (AMIT SHUKLA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH JULY, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI