ASHISH MALHOTRA ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE-1(2), BANGALORE

The first issue raised by the assessee is that the CIT(A) erred in confirming the addition made by the AO taking the deemed rent of Rs. 4,32,000/- whereas the property was purchased on 15.03.2019.

The necessary facts are that the assessee in the present case is an NRI and has offered income under the capital gain, income from house property and income from other sources. The AO during the assessment proceedings found that the assessee owns a flat bearing No. H-18, Shivaji Park, New Delhi which was deemed to be let out under section 23 of the Act. Accordingly, the AO calculated deemed rental income based on the gross rent value taken from 99

Being aggrieved by the order of the CIT(A), assessee is in appeal before us.

The learned AR before us filed a Paper Book running from pages 27 to 229 and contended that the property in dispute was purchased on 15.03.2019 and therefore, the deemed rent for the same cannot be calculated for the entire year. The learned AR in support of his contention, drawn our attention to pages 114 to 122 where the copy of sale deed was placed.

We have heard the rival contentions of both the parties and perused the materials available on record. On perusal of the sale deed for the property in dispute, we note that it was purchased on 15.03.2019 and therefore at the most deemed rent can be worked out for 15 days only. Further, we find that the authorities below have erred in calculating the deemed rent for the property in dispute for the entire year. Likewise, the deemed rent declared by the assessee

The next issue raised by the assessee in ground No. 3 is that ld. CIT(A) erred in not allowing the exemption under section 54 of the Act for Rs. 24,10,000/- with respect to property purchased in the year under consideration.

The assessee in the year under consideration has claimed a deduction under section 54 of the Act against purchase of plot of land. According to the AO, the purchase of plot is not eligible for deduction under section 54 of the Act. Thus, the AO disallowed the same and added to the total income of the assessee. On appeal, the ld. CIT(A) confirmed the Order of the AO by observing as under:

Being aggrieved by the Order of CIT(A), assessee is in appeal before us.

The learned AR before us contended that the assessee made the investment in the piece of land with the fair intention to construct the residential house but failed to do so on account of unavoidable circumstances such as covid. Furthermore, assessee was based in USA, therefore he could not travel to India for the construction of the house. According to the learned AR, assessee should

We have heard the rival contentions of both the parties and perused the materials available on record. It is the admitted position of law that the investment in the land is not eligible for deduction under section 54 of the Act unless a residential house is constructed thereon. Even now there is no construction activity on such piece of land which is established from the statement furnished by the learned AR appearing on behalf of the assessee. Accordingly, we do not find any reason to interfere in the finding of the ld. CIT(A). However, we find force in the alternate argument advanced by the learned AR that there is another flat purchased by the assessee for Rs. 24,10,000/- which could be considered for the purpose of deduction under section 54 of the Act. This fact has also been admitted by the ld. CIT(A) that the assessee has purchased a residential flat in New Delhi. Accordingly, we direct the AO to allow the benefit of deduction under section 54 of the Act for the residential flat purchased by the assessee. Hence, gorund of appeal of the assessee is partly allowed.

Regarding the other ground raised in the memorandum of appeal of the assessee, learned AR has not pointed out any grievance to the assessee. As such these grounds are general in nature and therefore do not require any separate adjudication. Thus, we dismiss the same as infructuous.

In the result, the appeal filed by the assessee is partly allowed.