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Income Tax Appellate Tribunal, SMC “B” BENCH : BANGALORE
Before: SHRI A.K. GARODIA
Date of hearing : 16.02.2017 Date of Pronouncement : 23.02.2017 O R D E R Per A.K. Garodia, Accountant Member
This is an assessee’s appeal directed against the order of ld. CIT (Appeals)-7, Bangalore dated 27/07/2016 for the assessment year 2013- 14.
The grounds raised by the assessee are as under:-
“1. The learned Commissioner of Income-tax (Appeals) has erred in confirming the order in the manner which he did.
2. The learned Commissioner (A) ought to have appreciated that the appellant has fulfilled the conditions u/s. 54F of the Act and therefore his claim of exemption was valid and tenable and liable to be allowed.
3. The learned Commissioner (A) ought to have appreciated that the appellant has invested in the flat Rs. 62,32,000/- and not Rs. 47,56,500/- and also the appellant furnished the copy of agreements to prove the claim was genuine. Accordingly, the addition confirmed by the CIT(A) has to be deleted granting exemption u/s.54F of the Act in full.
4. The learned Commissioner(A) ought to have accepted the explanation of the appellant and the evidence produced and ought to have allowed the exemption u/s.54F of the Act as claimed by the appellant.
Without prejudice, the disallowance/addition as confirmed is excessive, arbitrary and unreasonable and ought to be deleted in toto.
6. The learned Commissioner(A) erred in confirming the interest u/s.234A, 234B and 234C of the Act.
For these and such other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.”
It was submitted by the ld. AR of assessee that in respect of assessee’s claim for deduction u/s. 54 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) to the extent of Rs. 62.32 Lakhs, the AO has allowed deduction of Rs. 47,56,500/- only on this basis that as per the sale deed registered on 31/10/2014, the price paid by the assessee is only Rs. 47,56,500/-. In this regard, she submitted that copy of construction agreement is available at pages 31 to 43 of the PB between the assessee and M/s. Reddy Structures Pvt. Ltd., as per which, the cost of construction was fixed at Rs. 38,06,513/-. Thereafter, it was submitted that copy of sale deed dated 31/10/2014 is available at pages 44 to 64 of the PB and as per internal page 6 of this sale deed, this value of Rs. 47,56,500/- is only towards undivided interest of land in respect of Apartment no. 104, Block A on the first floor having built up area of 1245 sq. ft. along with a car parking area. She submitted that in addition to the cost of land, cost of construction is also required to be considered for the purpose of deduction u/s. 54 of the Act.
The ld. DR of revenue supported the orders of authorities below. He also submitted that if it is accepted that cost of construction is also required to be considered, then the matter may be restored back to the file of CIT(Appeals) for a fresh decision.
5. I have considered the rival submissions. I find that deduction u/s. 54 is allowable for acquisition of new house property and new house property comprises of value of land as well as cost of construction and therefore, the AO’s action is not proper to restrict the amount of deduction u/s. 54 to the value of land only excluding the cost of construction of the flat. When both the amounts are considered, the total exceeds the amount of capital gain. The AO has stated in para 5 of the assessment order that assessee has not furnished any evidence with respect to the construction of the house on the site purchased. Hence as per the assessment order also, the amount of Rs. 47,56,500/- is only the cost of the land. Copy of agreement between the assessee and developer is available on pages 17 to 30 of PB as per which, assessee has paid Rs. 30 Lakhs out of which Rs. 25.37 Lakhs was towards value of land and the balance amount of Rs. 4.63 Lakhs was towards part of construction value. As per the construction agreement available on pages 31 to 43 of the PB, cost of construction was determined at Rs. 38,06,513/- and after adjusting the advance amount of Rs. 4.63 lakhs, the balance amount payable was Rs. 33,43,573/-. Under these facts, in my considered opinion, the deduction claimed by the assessee u/s. 54 of the Act of Rs. 62.32 Lakhs is allowable in full and no part of the same can be disallowed. I, therefore, delete the disallowance.
In the result, appeal by the assessee is allowed.
Pronounced in the open court on this 23rd day of February, 2017.