SHER SINGH,YAMUNA NAGAR V. THE INCOME TAX OFFICER, WARD 4, YAMUNA NAGAR

ITA 647/CHANDI/2023

AI Insights

The case involves Sher Singh, the appellant, who contested the order of the Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi, which confirmed the addition of Rs. 46,08,371 by the A.O. for capital gains from the sale of agricultural land for the Assessment Year 2008-09. The primary contention was regarding the denial of deduction under section 54F of the Income Tax Act, 1961, which the A.O. partially allowed based on an estimated construction cost significantly lower than claimed. The CIT(A) upheld the A.O.'s decision, leading to the appeal. The Tribunal found that the A.O. and CIT(A) erred in their application of section 54F, as the assessee had indeed constructed a house and resided in it, qualifying for the deduction claimed.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28834 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-11-2024
• Assessment Year: 2008-2009
• Appeal Filed On: 22-10-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJEET KAUR
• Assessee Lawyers: KAMAKSHI MAHAJAN
• Keywords: Capital Gains; Valuation report
• Section: 54F

Judgement Text

" आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘SMC’, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 647/CHD/2023 Ǔनधा[रण वष[ / Assessment Year : 2008-09 Sher Singh, Jaroda Jagadhri, Yamunanagar 135001 बनाम The ITO, Ward-4, Yamunanagar èथायी लेखा सं./PAN NO: AJHPS05405C अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent ( PHYSICAL HEARING ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Ms. Kamakshi Mahajan, CA राजèव कȧ ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR सुनवाई कȧ तारȣख/Date of Hearing : 07.11.2024 उदघोषणा कȧ तारȣख/Date of Pronouncement : 03.12.2024 आदेश/Order The present appeal has been preferred by the assessee against the order dated 29.08.2023 passed by the Ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2008- 09. 2. The Assessee in this appeal is aggrieved by the action of the CIT(A) in confirming the additon made by the Assessing Officer 647 -Chd-2023 Sher Singh, Yamunanagar 2 (A.O.) of Rs. 46,08,371/- on account of capital gains from sale of agricultural land. 3. At the outset, the ld. Counsel for the Assessee has submitted that the A.O. while making the impugned additon has wrongly and illegally denied the claim of deduction u/s 54F of the Income Tax Act, 1961 (in short 'the Act'). She in this respect, has submitted that the Assessee had constructed a residential house and spent Rs. 55,82,750/-. A valuation report from the approved valuer in this respect was also submitted before the Assessing Officer. However, the Assessing Officer deputed the Income Tax Inspector, who estimated the cost of construction at Rs. 25 lacs. The A.O., therefore, allowed deduction u/s 54F of the Act to the extent of Rs. 25 lacs and computed the Long Term Capital Gains at Rs. 21,08,371/-. 4. In appeal, the ld. CIT(A) rejected the claim of the Assessee u/s 54F of the Act, observing that the Assessee had construed the house on the land which was owned by his mother Jabra Devi. He, therefore, enhanced the income of the Assessee at Rs. 46,08,371/-. 5. I have heard the rival contentions and gone thought the record. In the case in hand, there is no dispute about the fact that the Assessee had constructed a house out of sale proceeds of the 647 -Chd-2023 Sher Singh, Yamunanagar 3 agricultural land. The said fact has already bene verified by the Assessing Officer by sending Inspector at the house of the Assessee. There is also no plea that the Assessee is not residing in the said house or that the said house has not been constructed by the Assessee. It is also not the case of the Revenue that the Assessee is not residing with his mother. Merely because the plot of land on which the house has been constructed still stands in the name of the mother of the Assessee that, in my view, cannot be a ground to reject the calm of the Assessee u/s 54F of the Act, when, it has otherwise been proved on the file that the house has been constructed by the Assessee and the Assessee is residing in the said house along with his mother. 6. So far as the quantum of deduction is concerned, the Assessee has furnished the valuation report from the approved valuer regarding the cost of construction. The Income Tax Inspector is not a qualified or technical person to assess the cost of construction. Moreover, the cost of construciton cannot be assessed by just vising the house without comparing the item wise details with the market price. It is a technical work which could have been got done by the Assessing Officer from Government valuer. However, no such exercise has been got done by the A.O. Under the circumstances, the report submitted by the approved valuer, who is a technically 647 -Chd-2023 Sher Singh, Yamunanagar 4 qualified person in the said field, is to be given credence. In view of this, it is held that the A.O. is not justified in estimating the cost of construction at Rs. 25 lacs at the report of the Inspector. Therefore, the cost of construction is directed to be taken as per the approved valuer’s report at Rs. 55,82,750/-. Under the circumstances, after giving deduction u/s 54F of the Act to that extent, there will be no net capital gains. Accordingly, the additon made by the A.O. is ordered to be deleted. 7. In the result, the appeal of the Assessee stands allowed. Order pronounced on 03.12.2024. Sd/- (SANJAY GARG) Judicial Member “आर.क े.” आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआयुÈत/ CIT 4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयआͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[फाईल/ Guard File आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar "