SUBHASH CHAND KASERA,NEW DELHI vs. ITO WARD - 47(1), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI) BEFORE SH. M. BALAGANESH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.4092/Del/2019 A.Y. 2015-16 Subhash Chand Kasera Vs. ITO 2114, Khari Baoli, New Ward-47(1) Delhi- 110006 New Delhi PAN No.AAPSK0044J Appellant Respondent Assessee by None Revenue by Sh. Vivek Kumar Upadhyay, Sr.DR Date of Hearing 22/04/2024 Date of 30/04/2024 Pronouncement ORDER PER MADHUMITA ROY, JM:

The instant appeal filed at the behest of the assessee is directed against the order dated 29.03.2019 passed by the CIT(A)- 16, New Delhi arising out of the order dated 30.12.2017 passed by the ITO, Ward – 47 (1), New Delhi u/s.143(3) of the IT Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2015-16

whereby and whereunder the addition to the tune of Rs.1,29,04,523/- on account of LTCG made by the Ld. AO has been upheld.

computed. The assessee further claimed deduction u/s. 54F of the Act by making investment of Rs.1,67,00,000/- for purchasing a new residential plot and construction thereon. In fact, the assessee purchased semi built up residential house at Khasara No.106/368, Extended Lai Dora, Village Khera Kalan, Delhi for a total consideration of Rs.92,00,000/-. He further made payments of Rs.25,00,000/- to Mr. Karam Veer on 05.04.2015 for construction of residential house, as claimed on the said plot and Rs. 36,00,000/- and Rs. 14,00,000/- to M/s. Unnat Developers on 15.09.2015 and 20.10.2015 respectively. All such payments were made through account payee cheques and thus claimed fulfillment of conditions envisaged under Section 54F of the Act. The Income chargeable to tax from Long Term Capital Gain was reduced to nil. Notice under Section 142 (1) of the Act alongwith show cause and relevant details was issued on 10.11.2017 by the Ld. AO whereupon alognwith evidences in support of the above transactions, the assessee submitted that to claim deduction under Section 54/54F, it is not necessary construction should be completed within the stipulated period as prescribed. In this respect the assessee relied upon very many judgments as follows :-

(i) CIT Vs. Sardarimal Kothari and another [2008] reported in 302 ITR 286 (ii) Smt. Ranjeet Sandhu Vs. DCIT [2011] reported in 16 taxmann.com 210 (iii) Smt. Shashi Verma Vs. CIT reported in [224 ITR 106 (MP)] (iv) B.B. Sarkar Vs. CIT reported in [ 1981] 132 ITR 150 (Cal.) (v) CIT Vs. Smt. Brinda Kumari [2001] reported in 114 Taxman 266 (Delhi) (vi) CIT Vs. R.L. Sood [2000] reported in 108 Taxmnan 227 (Delhi) (vii) Smt. V. A. Tharbai Vs. DCIT reported in 19 taxmann.com 276 (Chennai) (viii) K. Datta Vs. Income Tax Officer [2006] reported in 100 TTJ (Pune) 133 (ix) Angela J. Kazi Vs. Income Tax Officer, Ward- 27 (3), Mumbai [2006 reported in 10 SOT 139 (Mum) (x) Balraj Vs. Commissioner of Income Tax [2002] 123 Taxmann. 290 (Delhi)

residential house property or construction of residential house, therefore, the ingredients of Section 54F and deduction claimed u/s. 54F was, was not found to be fulfilled and addition was made thereon.

“From a perusal of the above conditions for claim of deduction u/s 54F, it is clear that registration of property is not a requirement as per the statute. However, investment in residential property is mandatory. The AO has given a finding in the assessment order that the property invested in by the appellant is commercial in nature and hence claim u/s 54F is not allowable. The AO based his finding on the report of the Inspector who visited the site of the purported residential property and after

making local inquiries inquires reported that the property was being used for commercial purposes. A copy of the report is extracted as under:

As directed by ITO Ward-47(1), New Delhi to enquire about the property located at Khera Kalan village in the case of Subhas Chand Kasera (PAN: AASPK00441). 1, Om Prakash, Inspector visited the premise of Subhas Chand Kasera, khasra No. 106/368, Village. Khera Kalan, Delhi-110082. It is found that the assessee is not residing on the said premise. At present godown/sheds are constructed and few labours are residing.

I also met Mr. Santosh (Ph. 9910476937) who is watchman of that property. He said that from last 4 year this godown is not in use. He gave the number of sh. Sumit Aggarwal( ph. 9811162830) who is the owner of major portion of the property. He did not know Subhas Chand Kasera's whereabouts. However once the owner i.e. Sh. Sumit Aggarwal was contacted telephonically he informed that about % of the property i.e. about 500 Sq. yard is owned by Mr. Subhas Kasera but the

property was always used as godown and never used as residential house. Photograph of the layout plan in this regard is also enclosed. The following clear facts emerge from a perusal of the report: Godown/sheds are constructed on the property and some labour is residing on the property. The watchman of the property informed that the property was being used as a godown for the past 4 years.

Sh Sumit Aggarwal (3/4th owner of the said property), also informed that the property was always used as a godown and was never used as a residential property.

Photographs adduced to the report show a commercial front with shop/commercial establishment photograph is reproduced as under: shutters. A copy of the

Cartons were found stored that pertained to the appellant's proprietary concern namely M/s Baboo Ram Hari Chand. A

photograph of the carton was adduced along with the report and is reproduced as under:

From the above detailed report of the Inspector after visiting the site of the property and after making detailed local inquiries, it is crystal clear that the property in question is a commercial property and not a residential property. The photographs adduced with the report are the final concluding evidence in this regard.

During the course of appellate proceedings, the appellant through his AR claimed that the AO had wrongly rejected the claim of 54F by basing his finding on the report of a wrong property made by the Inspector. In order to ascertain the veracity of the claim of the appellant, the submissions of the AR were forwarded to the AO with directions to make requisite inquiries u/s 250(4) of the Income Tax Act. The remand report was received from the AO on 29.01.2019 vide letter No 1018, forwarded by the JCIT, Range 47, New Delhi. A copy of the report is extracted as under:

Brief Facts of the case: The assessment was completed u/s 143(3) of the I.T. Act, 1961 on 30.12.2017 at Income of Rs. 1,46,09,520/- against the return income of Rs. 17,05,000/-. In the assessment order, the assessee's claim of deduction u/s 54F ie. Rs 1,29,04,523/-was denied as the plot purchased is not a residential plot and is used for commercial purpose by way of godown to store the goods and merchandise of the assessee which was evident from the report of the inspector. Appellant submission: The appellant in the submission dated 23.07.2018 during the appellate proceedings has contested that the addition made by the Assessing officer (A.Ο.) was based on the enquiry of another property. Comments of the AO: In compliance to the direction issued u/s 250(4) dated 25.09.2018, the undersigned authorized an enquiry of the above said property located at Khasra No. 106/368, Extended Lai Dora, Village Khera Kalan, Delhi. Accordingly, Inspectors were deputed for enquiry 01 24.01.2019.

In the enquiry report dated 24.01.2019 (copy enclosed) it is confirmed that the property was accurately located and the inspection of the said property confirms that the building is constructed in the form of godown/warehouse for commercial use though it may be located on free hold residential plot. Further, it is pertinent to mention that during the assessment proceedings, the AO conducted an enquiry about the property through the inspector of the ward, from the enquiry report, which is placed on the record and the photographs attached in the assessment order, the then AO reached to conclusion beyond doubt that the said plot is not a residential plot and is used for commercial purpose by way of godown to store goods and merchandise and accordingly rightly denied the exemption claimed u/s 54F of the I.T. Act, 1961. Therefore, it is clear that claim made by the appellant lacks merit. Hence, in the light of the above mentioned facts as well as the stand of the revenue taken in the assessment order, it is requested that additions made by cons may be sustained by

your good self in this case, Submitted for Wind consideration please. Yours faithfully The AO, in his report extracted above, has very clearly and unequivocally given a finding that the property was above the served and the inspection of the said property confirms that the building located on free hold residential plot. A copy of the remand report was provided to the AR who in a rejoinder submitted as under: However without prejudice to above, we would also like to submit that term residential/house has not been given any meaning as understood in common parlance. As per dictionary, it means abode definition and thus has to be assigned dwelling place or building for human habitation. A building in order to be habitable by a human being is ordinarily required to have minimum facilities of wash room, kitchen electricity, sewerage etc. The residential property consisting of two floors purchased/constructed by appellant assessee has all these amenities as evident from the 13 photographs (apart from photographs earlier vide our letter dated 23/07/2018) of the inside of the

house etc as enclosed herewith for your honour's ready reference. Apart from above submission, on the remand report dated 28/01/2019 submitted by the assessing officer without photographs, we would also like to submit as under:- 1. In para 1 under the head brief facts of the case, Ld assessing officer has summarized the reason for disallowing the deduction under section 54f of the Income Tax Act, 1961 in the assessment order so passed which has been rebutted by the appellant assessee alongwith inside photographs of the house vide our submission dated 23/07/2018 and does not require any further comments. 2. In para 2 under the head appellant submission, Ld assessing officer has referred the submissions made by appellant assessee and does not require any comments. 3. In para 3 under the head comments by the AO, Ld assessing officer in sub-para 2 has stated that property is constructed in the form of godown/ware house for the commercial use though it may be located on free hold

residential house. Again Ld assessing officer has given the wrong description of property as evident from the photographs submitted by the appellant assessee. In sub para 3 Ld assessing officer has reiterated the finding given in the assessment order passed by Ld assessing officer which has also been proved by the appellant beyond doubt by furnishing the photographs that then inspector has send his enquiry report on the basis of enquiry conducted in respect of adjoining property for which detail submission has been made vide our letter dated 23/07/2018. Further as already been explained that lal dora land can only be used for the residential purpose. 4. Inspector in his report has submitted that he has visited the property located at Khasra No. 106/368, Extended Lal Dora, Village Khera Kalan, Delhi- 110082 on 24.01.2019 and has admitted that there exists a building painted in yellow with huge iron gate and admits that Shri Kundan was residing there and name plate of assessee was affixed on the wall near the entrance. Further in last para of the remand report it is mentioned by Ld Inspector that

one floor, which is totally property as apparent is in the form of godown with just incorrect. The property of two floors, i.e ground floor and Fest floor consisting of 6 rooms (3 rooms on each floor) and other amenities required for residential purpose and toilets and bathrooms and kitchen on both Admittedly huge property for entered easily, iron gates common for assessee's portion and another adjoining property for safety reasons exists wherein vehicle of any type can be easily. From the iron gates whether motor vehicle cannot be entered and or a residential house cannot have is admitted by Inspector also that Sh. cannot be entered a huge iron gates? In the enquiry report it thereby that property was being used only for residential purpose Kundan was residing there meaning thereby that property was being used only for residential purpose. An examination of the remand report shows that the AR, through his appellant, is harping on the fact that photographs appended with the remand report were not provided. I am constrained to observe that this is factually

incorrect as the photographs were provided to the AR by this office so that a detailed rejoinder may be filed and were duly received by the AR on 28.03.2019 as is clear from the 'recd' remark appended to the bottom right hand corner of the photograph. A scanned copy of the receipt of photographs is reproduced as under to authenticate my observation in this regard: This does not reflect well on the appellant or the AR and suggests an attempt to procrastinate and divert the attention of the appellate authority from the merits of the case. Be that as it may, I will now restrict myself to the submissions made by the AR in his rejoinder. These observations are a reiteration of his earlier claim that the property is residential in nature. He has claimed that as the property was not being used by the owner, shutters had been placed for safety. He further claimed that the property was being used for residential purposes and furnished some photographs showing a clothesline and a kitchenette to prove his claim. Considering the detailed inquiry conducted by the AO at the behest of this office

which reveals very clearly that the property is being used for commercial purposes, I hold that the rejoinder and the photographs of the property filed by the AR are in the nature of self-serving statements that have no credibility in legal proceedings or quasi-judicial proceedings. Moreover, the report of the Inspector shows that labour was residing on the premises, so a clothesline or a kitchenette does not in any way disprove the conclusion of the AO that the property was being used for commercial purposes and hence cannot be allowed the claim of deduction u/s. 54F. The appellant also claimed that material used against him was not confronted to addressing the assessment proceedings. Here I would like to observe that to address this grievance of the appellant fresh inquiry was instituted by this office and results of the inquiry were provided to the appellant who was given opportunity to file rejoinder and make submissions in this regard. So, this grievance of the appellant stands addressed.

The provisions of the Act being clear and unambiguous, I see no reason to allow relief on the grounds raised by the appellant before me. Here, I would pause for a minute and mull over the interpretation of the statute. If the language of thin statute is clear and unambiguous, words must be understood in their plain meaning. The wordings of the Act must be construed according to its literal and grammatical meaning, whatever the result may be.

While interpreting tax statute, the function of the court of law is not to give words in the statute a strained and unnatural meaning to cover and extent its applicability to the areas not intended to be covered under the said statute. Vidarbha Irrigation Dev. Corpn. v/s ACIT [(2005) 278 ITR 521 (Bom)]. It is not permissible to construe any provision of a statute, much less a taxing provision, by reading into it more words than its contains. CIT v/s. Vadilal Lallubhai [(1972) 86 ITR 2 (SC)]

Literal construction means that there is no room for any intendment. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. (ICAI vs. Price Waterhouse, (1997) 90 Comp. Case 113, 140, 141 (SC). A tax is imposed for public purpose for raising general revenue of the state. A taxing statute is to be strictly construed. Lord Hasbury and Lord Simonds stated: "The subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to the natural construction of its words." It is settled law that a taxation statute in particular has to be strictly construed and there is no equity in a taxing provision. H.H. Lakshmi Bai v/s. CIT [(1994) 206 ITR 688, 691 (SC)].

In A.V. Fernandez v/s. State if Kerala, [AIR 1957 SC 657] His Lordshi Bhagwati J. has stated the principle of taxing laws as follows:

In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter."

From a perusal of the principles enunciated by the Apex court as discussed above, it is clear that the provisions of the statute have to be given a literal construction and it has 'no room for intendment'. This being the case and the fact that the provisions are unambiguous, the facts of the case do not fall within the four corners of the exemption provisions of section 54F. The inquiries made by the AO add to the clearly demarcated provisions of the Act.

In the light of the above detailed discussion I hold that the provisions of Section 54F clearly mandate that the deduction under this head can only be allowed if the investment is made in a residential property. As the property invested in by the appellant (Khasara no. 106/368, Extended Lai Dora, Village Khera Kalan, Delhi) is clearly a commercial property, the claim of deduction u/s 54F cannot be allowed as per the unambiguous provisions of the legislation in this regard. I, therefore, have no hesitation whatsoever in upholding the rejection of the claim of deduction u/s 54F made by the AO. The grounds raised by the appellant on this issue fails. Result Ground of Appeal 2 and 3 are dismissed. Ground of Appeal 4 is general in nature and requires no separate adjudication. Overall Result The appeal of the issue on all grounds raised is dismissed. 8. As it is evident from the records particularly the enquiry report appearing in Assessment Order and further considered by the Ld.

CIT(A), contents whereof since not controverted by the assessee by adducing any further evidence, we are constrained to hold particularly in the absence of any assistance rendered by the assessee, that the property on which the assessee has invested is not a residential property but a commercial one which is mandatory requirement in order to claim benefit under Section 54 F of the Act failing which the order passed by the Ld. AO rejecting the claim of the asssessee under Section 54F of the Act and confirmation thereon by the Ld. CIT(A) is found to be just and proper so as to warrant interference. The appeal preferred by the assessee is thus found to be devoid of any merit and thus dismissed. Order pronounced in the open court on 30th April, 2024.

Sd/- Sd/- (M. BALAGANESH) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:-30.04.2024 *Neha, Sr.P.S