VASUMATHI ASHOK,CHENNAI vs. ITO, NON CORPORATE WARD-3(5), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -4, Chennai, dated 27.06.2017 and pertains to assessment year 2013-14.

Sh. Philip George, the Ld.counsel for the assessee, submitted that deduction under Section 54F of the Income-tax Act, the ground that the assessee was owning more than one house on the date of transfer. In fact, according to the Ld. counsel, the assessee sold the vacant land at Sithalapakkam Village on 18.10.2012 and claimed exemption under Section 54F of the Act in respect of the investment made by the assessee. According to the Ld. counsel, the assessee was having one residential house at Kothari Road which is self-occupied and also another commercial building at Bharathi Salai, Royapettah. According to the Ld. counsel, the building at Bharathi Salai, Royapettah was let out for commercial purpose, therefore, it cannot be considered as residential premises. According to the Ld. counsel, when one of the properties was let out for commercial purpose, it cannot be said that the assessee was owning more than one residential house, hence, the Assessing Officer is not justified in disallowing the claim of the assessee.

The Ld.counsel for the assessee further submitted that while computing fair market value, the Assessing Officer has taken the value on the date on which the property was inherited by the assessee from her husband. Placing reliance on the judgment of Bombay High Court in CIT v. Manjula J. Shah (355 ITR 474), the of the property in the hands of the original owner has to be taken into consideration. Therefore, according to the Ld. counsel, the Assessing Officer is not justified in taking the cost of the asset as on the date of inheritance.

We heard Shri AR.V. Sreenivasan, the Ld. Departmental Representative also. The assessee sold a vacant land at Sithalapakkam Village on 18.10.2012 and claimed exemption under Section 54 of the Act. It is not in dispute that the assessee was having a residential house at Kothari Road and claiming the same as self-occupied. The assessee claims that she is having another building at Bharathi Salai, Roayapetta and it was let out for commercial purpose. The fact remains that the Planning permission/building approval was granted for construction of residential house and the electricity connection was also apparently obtained only for residential purposes. Moreover, there is no evidence for carrying out any commercial activity in the building. No material was produced either before the lower authorities or before this Tribunal. In the absence of any material to indicate that the property was in fact used for commercial activity, it cannot be said that the building at Bharathi Salai, Royapettah is a commercial with the order of the lower authority. In other words, the assessee was having more than one house, therefore, not eligible for exemption under Section 54 of the Act.

Now coming to determination of fair market value, it is not in dispute that the assessee inherited the property from her husband.

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