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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
आदेश / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)–III, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-III/0176/11-12 dated 22/08/2013 arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961(here-in-after referred to as "the Act") dated 29/12/2011 relevant to Assessment Year (AY) 2009-10.
The assessee has raised following grounds of appeal:-
The order u/s.143(3) is bad in law.
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 2 - 2. The Ld.Assessing Officer has erred in law as well as on facts in making addition of Rs.1,40,000/- as Income from House Property. The Ld. CIT(A) has erred in confirming the said addition. 3. The Ld. Assessing Officer has erred in law as well as on facts in making addition of Rs.10,28,919/- by denying the benefits of exemption u/s.54F. The Ld. CIT(A) has erred in confirming the said addition.
The first issue raised by the assessee is that the Ld.CIT(A) erred in confirming the order of the Assessing Officer by treating the sum of Rs.1,40,000/- as income under the head ‘property’.
Briefly stated facts are that the assessee in an individual and deriving her (assessee) income under the head ‘salary’, capital gain, and other sources. The Assessing Officer during the assessment proceedings found that the assessee has received rental income from DHL Express (India) Pvt.Ltd. amounting to Rs.2,00,000/- which was not disclosed in the income-tax return. The AO also got confirmation from DHL Express (India) Pvt.Ltd. for the payment of rent to the assessee of Rs.2,00,000/- u/s 133(6) of the Act. Accordingly, the Assessing Officer added the sum of Rs.1,40,000/- after allowing the statutory deduction of Rs.60,000/- (30% of Rs.2,00,000/-) to the total income of the assessee.
The aggrieved assessee preferred an appeal to the Ld. CIT(A). The assessee before the Ld.CIT(A) submitted that she sold the property on 15/05/2008. The assessee also claimed that the rent received for
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 3 - Rs. 2 lakhs was also returned to DHL Express (India) Ltd. Therefore there cannot be any addition on account of such rental income.
5.1. However, the Ld. CIT(A) disregarded the contention of the assessee by observing that the assessee failed to furnish any evidence suggesting that the rent was returned to M/s DHL Express (India) Pvt.Ltd. Accordingly, the Ld. CIT(A) confirmed the order of the Assessing Officer.
Being aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us.
The Ld. AR before us filed a paper-book running from page Nos.1 to 17 and reiterated the submissions as were made before the authorities below.
7.1. The Ld.AR also submitted that the assessee had not taken the credit of the TDS deducted by DHL Express (India) Pvt. Ltd regarding the rent paid to her.
The Ld. DR vehemently supported the orders of the authorities below.
We have heard the rival contentions and perused the materials available on record. As per Form 26AS, the assessee has received the rent of ₹2 lakhs from DHL express (India) Private Ltd in the year under
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 4 - consideration. However, the assessee has not declared any rental income in her return of income. The DHL express India private Ltd also confirmed this fact during the assessment proceedings. Therefore, the AO added a sum of ₹ 1.40 lakhs after giving the benefit of standard deduction under section 24(a) of the Act.
9.1. The ld. CIT (A) also confirmed the order of the AO by observing that the assessee has not produced any documentary evidence suggesting that the rent received from DHL express India Private Ltd has been returned.
9.2. It is an undisputed fact that the property from where the assessee was getting rent from DHL express India private Ltd was sold out on 15th May 2008 as evident from the sale deed. The sale deed is placed on page No. 75-95 of the paper book. But on perusal of the income tax return, we note that the assessee has not shown any rental income up to the date of sale of the property. On a question from the bench about the same, the ld. AR failed to make any reply to this effect. However, the ld. AR requested the bench to restore this issue to the file of AO for fresh adjudication/verification as per the provisions of law.
9.3. We also note that the assessee has not furnished any reply to the ld. CIT (A) to demonstrate that the money received from the DHL express India Private Ltd has been returned. The ld. counsel for the assessee has also not produced any documentary evidence to prove that the money has been returned to DHL express India Private Ltd. Similarly, there was also
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 5 - no evidence furnished by the assessee to justify that the impugned rental income has been assessed in the hands of some other party/assessee.
9.4. The ld. DR did not raise any objection if the matter is restored to the file of AO for fresh adjudication as per the provisions of law. Therefore, in the interest of justice and fair play we are inclined to restore this issue to the file of AO for fresh/ de novo adjudication as per the provisions of law.
9.5. The assessee is also directed to co-operate during the assessment proceedings before the AO and furnish all the necessary details in support of her claim. If the assessee doesn’t co-operate or failed to furnish the requisite details, then the matter will be decided against the assessee after giving the benefit of TDS deducted by the DHL express India Private Ltd.
9.6. Hence, the ground of appeal of the assessee is allowed for statistical purposes.
The next issue raised by the assessee is that the Ld. CIT(A) erred in denying the benefit of exemptions u/s 54 of the Act for Rs.10,28,919/- only.
The assessee during the year has shown Long Term Capital Gain (LTCG) of Rs.10,28,919/- only which was claimed as deduction u/s 54F of the Act on account of the investment in the residential building.
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 6 - However, the assessee failed to furnish any documentary evidence for the investment in the residential building, therefore, the AO denied the benefit of deduction u/s 54 F of the Act claimed by the assessee. Accordingly, the Assessing Officer made the addition of Rs.10,28,919/- to the total income of the assessee.
Aggrieved assessee, preferred an appeal before the Ld. CIT(A). The assessee before the Ld.CIT(A) submitted that she had purchased four plots for a consideration of Rs.16 lakhs. The assessee further submitted that she had incurred a cost of Rs. 98,800/- on the construction of one room on such plots. The assessee in support of her claim filed the copy of the bill issued by S.K. Builders.
12.1. However, the Ld.CIT(A) disregarded the contention of the assessee by observing that construction of one room cannot be equivalent to the new residential house. Therefore, the Ld. CIT(A) confirmed the order of the Assessing Officer.
Being aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us.
The Ld.AR drew our attention towards page No.15 of the paper- book, where evidence of construction of one room was placed in the form of the construction bill issued by S.K. Builders. The Ld.AR also filed a certificate dated 05/07/2013 issued by Vibhapur Gram Panchayat
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 7 - evidencing the construction of residential house property which is placed on page No.16 of the paper-book.
On the other hand, the Ld.DR submitted that the construction of one room could not be regarded as the construction of the house. Accordingly, the Ld.DR vehemently supported the orders of the authorities below.
We have heard the rival contentions and perused the materials available on record. The assessee has sold a plot of land dated 02/02/2009 for consideration of ₹16 lakhs and earned a long-term capital gain income of ₹ 12,18,418.00.
16.1. The assessee further purchased 4 pieces of land at green woods bearing plot numbers 4, 5, 8 and 9 vide purchase agreement dated 31st January 2009 and 31st March 2009 for Rs. 16,21,500.00. The assessee subsequently constructed one small room in the corner of these plots during the year 2009-10 as evident from the copy of the bill placed on page 15 of the Paper book-I. The assessee in support of her contention for the construction of the small room filed the copy of the invoice issued by SK builders of ₹98,800/- only issued during the FY 2009-10.
16.2. Now the controversy before us arises whether the construction of the small room in one corner of these plots amounts to the construction of the new residential house as contemplated under the provisions of section 54F of the Act. In this regard, we find that the object of section 54F of
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 8 - the Act is to extend the benefit for the construction of the house. Thus mere construction of a room on 4 pieces of plots does not entitle the benefit to the assessee under section 54F of the Act. In this connection we find support & guidance from the order of the Lucknow tribunal in case of Rita gaur (90 ITD 24) wherein it was held as under:
“The very intention of the Legislature is that benefit can be extended only when assessee is able to prove on record that he has constructed a residential house. Here in the case in hand, the assessee has not been able to prove that mere construction of boundary wall, installation of tube-well and even construction of one room will not be taken as construction of residential building and benefit under section 54F of the Act cannot be given to the assessee.”
16.3. We also note that the assessee made the investment in four different plots. But one small room was constructed in one corner which transpires that it has been constructed only on one piece of plot. Thus the question arises whether the investment in one plot should be considered for deduction under section 54F of the Act in respect of investment all the plots.
16.4. It also appears that the assessee has made investments substantially in the plots of land. There is no ambiguity that the benefit to the assessee under section 54F of the Act is available only for the purpose of the construction of the house. There is no intention of the law to extend the benefit to the assessee under section 54F of the Act if she invests in the plots.
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 9 - 16.5. We also note that the assessee has purchased four plots bearing different numbers. But from the plot numbers, it appears that two plots are adjacent to each other such as 4 and 5 No. of plots. Similarly, the same logic applies to the plot numbers 8 and 9 also. However, the question arises whether the plot Nos. 4, 5 and 8, 9 are adjacent to each other. If these are adjacent to each other than to our mind, all the plots can be treated as one unit for the purpose of claiming the deduction under section 54F of the Act. But in the present case if these plots are not adjacent to each other then the question arises whether these plots can be combined together to give benefit under section 54F of the Act. However, this issue was not raised before the lower authorities, therefore, we restrain ourselves from adjudicating the same and keep the issue open. 16.6. In view of the above, we are not inclined to disturb the finding of the lower authorities. Hence, the ground of appeal of the assessee is dismissed.
In the result, the appeal raised by the assessee is partly allowed for statistical purposes. This Order pronounced in Open Court on 01/02/2019
Sd/- Sd/- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 01/02/2019 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
ITA No.403/Rjt/2013 Shilpa Rohit Thakkar vs. ITO Asst.Year - 2009-10 - 10 -
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-III, Rajkot 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण,राजोकट/DR,ITAT, Rajkot 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, राजोकट / ITAT, Rajkot 1. Date of dictation .. 16.1.2019(dictation-pad 11- pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …16/18.1.2019 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….01.02.2019 7. Date on which the file goes to the Bench Clerk…………………01.02.2019 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………