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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI
Before: SHRI J. S. REDDY & SMT. BEENA A. PILLAI
ORDER
PER BEENA A. PILLAI, JM:
The present appeal has been filed by revenue against 1. order dated 30.03.2013 passed by Ld. CIT (A) 28, New Delhi for assessment year 2009-10 on the following grounds of appeal:
GROUNDS OF APPEAL
1. In the facts and circumstances of the case, Ld. CIT(A) grossly erred in allowing deduction claimed by the assessee u/s54F of IT Act, 1961 of Rs.70,24,934/- not appreciating the fact the assessee had not constructed a residential house within three years from the date of transfer of the original asset which is a necessary condition for claiming deduction u/s54F of IT Act., 1961.
2. In the facts and circumstances of the case, the Ld. CIT(A) grossly erred in allowing deduction claimed by the assessee u/s 54F of IT Act., 1961 of Rs.70,24,934/- not appreciating the fact the AO had conducted physical inspection by the Inspector and had noticed that the assessee had not constructed a residential house within three years from the date of transfer of the original asset which is a necessary condition for claiming deduction u/s 54F of IT Act., 1961.
3. In the facts and circumstances of the case, the Ld. CIT (A) grossly erred in allowing deduction claimed by the assessee u/s54F of IT Act., 1961 of Rs.70,24,934/- not appreciating the fact the assessee had not disclosed income earned from 'Long Term Capital Gains' in the return of income and it was only during the course of scrutiny proceedings, the assessee had made a claim for deduction u/s 54F of IT. Act., 1961 and also did not fulfill the necessary conditions laid down in the provisions of 54F of IT.Act.,1961.
4. In the facts and circumstances of the case, the Ld. CIT(A) grossly erred in allowing deduction claimed by the assessee u/s54F of IT Act., 1961 of Rs.70,24,934/- not appreciating the fact the assessee had not disclosed income earned from "long Term Capital Gains" in the return of income and it was only through AIR information that the said transaction came to the notice of the Department.
5. The appellant craves leave to add, amend or modify the ground of appeal before or during the course of the appeal.
Assessee is a cardiologist earning income from house property, profit and gains of profession and other sources. For the year under consideration the assessee filed its return of income on 04.10.2009, declaring a total income of Rs. 93,28,625/-. The case was picked up for scrutiny and notices under section 143(2) and questionnaire alongwith notice under section 142(1) was issued and served upon assessee. In view of the notices representatives of assessee appeared before assessing officer and filed all relevant details as called for.
During the year under consideration assessing officer observed that assessee has sold plot No. 5/1214, Ghaziabad on 27.10.2008 for a consideration of Rs. 78, 00, 000/-. It was submitted that assessee invested a sum of Rs. 81, 52, 000/- in purchase of a residential plot at D75, sector 47, Noida, vide purchase agreement dated 25.11.2009. As purchase price of the residential plot was more than the sale price, the capital gains in sale of residential plot was not declared in the return for the year under consideration. It has been submitted that assessee has however declared the particulars of purchase and sale of the plot in AIR section of the return which is annexed to the paper book at page 1. Assessee had submitted that construction of residential house on the said residential plot was completed on 3.11.2010 thereby assessee had complied with requirements for claiming exemption under section 54F of the Act. Assessee in order to establish his claim submitted various sanctions/approvals before Assessing Officer. Ld. AO rejected these documents as those were merely letters for obtaining the sanction/approval, but it was not clear that the building has been constructed and was fit for habitation. Assessing officer accordingly disallowed the claim of assessee.
Aggrieved by the order passed by Ld. AO, assessee preferred an appeal before the Ld. CIT (A) who allowed the claim of assessee under section 54 F. Aggrieved by order of Ld. CIT (A), revenue is in appeal before us now.
Ld. DR submitted that assessee has constructed structure without any electricity and water connection, which cannot be considered to be fit for occupation. He referred to report submitted by Inspector, wherein it has been menitioned that structure constructed by assessee does not fulfill any requirement of a residential house due to non evailability of electricity and water supply. Ld. AR placed reliance upon the completion certificate which has been issued by the authority as on 23.12.2011 which is beyond the period of 3 years. He further referred to and relied upon the findings of the assessing officer which has been referred to in para 10 of the Ld. CIT (A) order.
On contrary Ld. AR submitted that assessee purchased plot on 25.02.2009 on which he started constructing residential house. He applied for completion certificate on 03.11.2010. He submitted that mandate for claiming exemption under section 54F is that a residential house has to be constructed within 3 years from the date of transfer of capital asset. According to assessee 3 years expired on 27.10.2011, before which the assessee had already completed the construction of residential house which is the requirement u/s 54F. He submitted that Noida authorities being regulating and controlling authority for all properties in Noida, and issued completion certificate on 23.12.2011. He submitted that Assessing Officer proceeded on wrong presumption that in the absence of electricity and water connection the residential house was incomplete and inhabitable, which is not required for claiming exemption under section 54F. Ld. AR submitted that exemption under section 54F cannot be denied to assessee, as he has not violated any of the conditions u/s 54F.
We have perused records in the light of the submissions advanced by both the parties before us.
It is observed from the records that the assessee had sold the plot for Rs. 78 lakhs on 27.10.2008 and a subsequent investment in the residential plot in sector 47, Noida, was made on 25.11.2009, amounting to Rs.81,52,000/-. Assessee constructed residential house on the said plot. Assessing Officer disallowed exemption claimed by assessee under section 54F on the ground that assessee had not complete of construction within 3 years as required under section 54F. It is an admitted fact by Ld. AR that during the relevant financial year there was no electricity connection in the constructed residential house. From the order passed by Ld. CIT (A), it is observed that an inspector of the Circle was deputed to visit site for physical inspection on 11.11.2011 whose report was placed on record. In the report, Inspector stated that, “a structure is there on the plot which looks inhabitable and looks old”.
In the paper book assessee has relied upon letter dated 17.10.2011 which is accompanied by a duly attested drawing of the completed house, consisting of 3 bedrooms, kitchen and toilets along with a drawing/dining room covering and needy of 1200 ft. As regards the repeated allegation of Assessing Officer that no water/electricity connections were available at site, there is a mention regarding a structure existing on the plot by the Inspector in his report. To our mind no structure could be constructed without water.
It has been submitted by Ld. AR that assessee had installed underground hand water pump, which was readily available.
Further certificate issued by NOIDA authority ensure that construction has been made as per the approved drawing. Regarding electricity connection, Section 54F mandates that a residential house has to be constructed with the intention of occupation by the assessee. It does not require the assessee to actually occupy the house within the period of 3 years from the date of the transfer of capital asset. Hence, in such circumstances the consumption of electricity is subject to actual occupation. Assessing Officer has denied the exemption under Section 54F only on the ground that the house is not complete without water and electricity connection.
It is further been observed by Ld. CIT (A) that a servant quarter was also constructed and a Chaukidar was staying there. We have perused the decision relied upon by the assessing officer in the case of Rajesh Surana vs. CIT reported in 306 ITR 368. The facts therein are distinguishable because assessee therein had made admission regarding a garage come room without any kitchen and toilet being constructed. Ld. CIT (A) has decided the issue as under:
3. I have considered the grounds raised in appeal and the submissions of the AR of the appellant. The AR of the appellant has stated complete facts on the basis of which it can be proved that the constructions of the said house was completed within the statutory time limit and the appellant is eligible for claiming exemption u/s 54F. The case laws relied upon by the assessing officer has been distinguished on facts by the appellant. It is seen that the appellant submitted documents relating to completion of residential house before the assessing officer. These documents were filed on 3.11.2010 with Noida Authority, the statutory body of the UP Government which decides whether a residential house is fit and complete for occupation in the Noida Area. This means that the construction of the residential house was completed by that date. The final completion/occupation certificate issued by the Noida Authority is on the basis of the completion documents submitted to the authority by the appellant on 03.11.2010. It is apparent that the final completion plan approved by the Noida Authority is same as submitted by the appellant for completion of the house on 03.11.2010. And these documents were filed by the appellant with the assessing officer on 07.10.2011. Hence it is an established facts that the said house upon which exemption u/s 54F has been claimed, was constructed within the statutory time limit for being eligible to claim the said exemption. According to me the appellant has case for getting the claim allowed. In the circumstances the disallowance of the claim of Rs.70,24,934/-is deleted. The grounds raised in appeal are allowed.
We do not find any infirmity in the above findings of Ld. CIT (A) and uphold the same. Accordingly grounds raised by the revenue stands dismissed.
In the result appeal filed by the revenue stands dismissed.
Order pronounced in the open court on 24th January, 2017.