ARUN KESHAVRAO NARWADE (HUF),,AURANGABAD vs. INCOME-TAX OFFICER,,

आदेश / ORDER

PER R.S.SYAL, VP : This appeal by the assessee is directed against the order passed by the CIT(Appeals)-2, Aurangabad on 16-09-2015 in relation to the assessment year 2005-06. 2. This appeal is time barred by 31 days. The assessee has filed a condonation application with necessary affidavit giving the reasons for the delay. I am satisfied with the same. The delay is condoned and the appeal is admitted for disposal on merits.

2 ITA No. 1727/PUN/2015 Arun K. Narwade (HUF)

of re-assessment proceedings, which is hereby dismissed. Ground

No.3 challenging the granting approval for re-assessment is connected

with Ground No.2. The same is also consequently dismissed.

of capital gain made by the Assessing Officer (AO) as sustained in the

first appeal.

information that the assessee and five other persons jointly selling a

plot of land on 30-06-2004 for a total consideration of

Rs.2,34,53,460/- to M/s. Bhosale Builders & Developers Pvt. Ltd.

The assessee’s share in the aforesaid consideration was Rs.28,35,160/-

This transaction was not disclosed in the return of income. Notice

u/s.148 was issued, pursuant to which the assessee filed return

declaring long term capital gain from the transfer of the above

property to the tune of Rs.3,46,760/-. In such computation, the

assessee claimed, inter alia, exemption u/s.54F of the Act amounting

to Rs.16,03,920/-; deduction towards indexed cost of improvement;

and amount spent on construction of wall compound at the time of

sale. The AO rejected all such claims. The assessee made an

additional claim before the AO towards payment of Rs.25.00 lakh to

3 ITA No. 1727/PUN/2015 Arun K. Narwade (HUF)

other co-owners. The AO rejected that claim as well for the reasons

given in the order and consequently computed long term capital gain

by taking full value of consideration at Rs.28,59,402/-, being, the

amount of stamp value u/s.50C in respect of the actual amount of

consideration received by the assessee at Rs.28,35,160/- and

thereafter, granted deduction towards indexed cost of acquisition at

Rs.2,36,860/-. The ld. CIT(A) dismissed the appeal of the assessee.

Aggrieved thereby, the assessee has come up in appeal before the

Tribunal challenging the non- granting of exemption u/s.54F and not

granting deduction of Rs.25.00 lakh which was paid by the assessee to

other co-owners.

material on record. The first issue taken up by the assessee is about

non-granting of deduction of Rs.25.00 lakh which the assessee

claimed to have paid to other co-owners in connection with the

property transferred. The facts apropos this issue are that the assessee

sold plot of land along with other five co-owners having total area of

24 Acres 4 Gunthas. The six co-owners, in total, are as under :

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below, the assessee claimed that he paid a sum of Rs.25.00 lakh as

compensation to certain other co-owners on behalf of M/s. Bhosale

Builders & Developers Pvt. Ltd., the purchaser, for the reason of delay

in the transaction and increase in the value of land. The said

compensation was claimed to have been paid by account payee

cheques and in pursuance of the Compromise deed before the Civil

Court and the Hon’ble Bombay High Court, Aurangabad Bench. The

assessee stated that he along with Sh. Vilas Keshavrao Autade,

another co-owner transferring the property to M/s Bhosale Builders,

paid a total sum of Rs.50.00 lakh (the assessee’s one half share at

Rs.25.00 lakh) to the remaining four co-owners given at Sl.Nos. 2 to 5

above. The ld. CIT(A), on perusal of the Compromise deed, recorded

that the payment was made in respect of Gut No. 222/13 as against the

property having Gut Nos. 222/1 to 222/6 actually transferred by the

assessee to M/s Bhosale Builders resulting in the receipt of

consideration of Rs.28.35 lakh by the assessee. Since the full value of

5 ITA No. 1727/PUN/2015 Arun K. Narwade (HUF)

consideration, subject matter of the capital gain under consideration,

did not have any relation with Gut No.222/13 in respect of which the

assessee along with Sh. Vilas Keshavrao Autade paid a total sum of

Rs.50.00 lakh to the other four co-owners, this transaction of payment

in my opinion has rightly been disassociated from the computation of

capital gain from transfer to Gut Nos. 222/1 to 222/6. The

compromise deed dated 19-11-2011 also mentions in para 4(a) that the

aforesaid amount of Rs.50.00 lakh was given to Plaintiff Nos. 2, 3, 4

and 5 towards their ownership, possession and right in the land at Gut

No.222/13. Thus, it becomes evident that a sum of Rs.25.00 lakh paid

by the assessee had no connection with the land transferred to M/s.

Bhosale Builders & Developers Pvt. Ltd. with Gut Nos.222/1 to

222/6. It can be gathered from the impugned order qua the Gut

No.222/13 that Sh. Vilas Keshavrao Autade entered into agreement

for jointly developing and selling the land which covered Gut

No.222/13. Other four co-owners had some right and interest in the

said land at Gut No.222/13. To purchase their right, a total sum of

Rs.50.00 lakh was paid by the assessee and Sh. Vilas Keshavrao

Autade. On 17-08-2013, Sh. Vilas Keshavrao Autade entered into

sale deed for transfer of his land admeasuring 80R out of Gut

No.222/13 in favour of two sons of the assessee and no payment was

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made by the assessee or his sons towards acquiring the share in Gut

No.222/13 along with Vilas Keshavrao Autade. This shows that sum

of Rs.25.00 lakh paid by the assessee along with Sh. Vilas Keshavrao

Autade to the other co-owners was a consideration for transfer of Gut

No. 222/13, inter alia, in the name of two sons of the assessee.

Notwithstanding this factual aspect, since the payment of Rs.25.00

lakh made by the assessee to other co-owners has no relation

whatsoever with the property transferred that became subject matter of

computation of long term capital gain under consideration, there can

be no question of allowing any deduction in respect of this sum. The

impugned order is countenanced on this score.

of exemption u/s.54F of the Act. The assessee claimed that he

purchased a residential house on 04-10-2004 for a sum of

Rs.16,03,820/- and thus claimed exemption in the computation of

income filed by him in response to notice u/s.148. This claim was

jettisoned by the AO on the ground that the assessee did not purchase

a new residential flat but only an “office premises” and hence, section

54F could not apply. It is apparent from bare reading of section 54F

that the exemption becomes available towards capital gain arising

from the transfer of any long term capital asset on purchasing or

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constructing one residential house in India. Thus, it is patent that in

order to qualify for exemption u/s.54F, it is necessary that the new

asset must be a ‘residential house’. Turning to the facts of the instant

case, it is seen that the new asset purchased by the assessee is an

‘office premises’ and not a ‘residential premises’. In that view of the

matter, the inescapable conclusion is that the authorities below were

justified in repelling the assessee’s contention on this issue.

Sd/-

(R.S.SYAL) उपा�य�/ VICE PRESIDENT पुणे Pune; �दनांक Dated : 29th March, 2022 Satish

ITA No. 1727/PUN/2015 Arun K. Narwade (HUF)

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order is forwarded to :

आदेशानुसार/ BY ORDER,

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 28-03-2022 Sr.PS 2. Draft placed before author 29-03-2022 Sr.PS 3. Draft proposed & placed -- JM before the second member 4. Draft discussed/approved -- JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement Sr.PS on 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *