ANURADHA KANSAL,GHAZIABAD vs. ITO, GHAZIABAD

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ITA 6590/DEL/2014Status: DisposedITAT Delhi04 November 2015AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, following the Karnataka High Court's decision in CIT vs. B.S. Shantha Kumari, held that Section 54F requires investment in a new house property within the time limit, not necessarily completion and habitability. The assessee had furnished sufficient evidence of investment within the stipulated time.

What were the facts?

The assessee claimed exemption under Section 54F for constructing a house on a plot of land purchased in 2007. The claim was made during assessment proceedings, and the AO denied it for lack of evidence of construction and timely deposit of capital gains. The CIT(A) initially upheld the denial, citing lack of cogent evidence.

What were the issues?

Whether the assessee fulfilled the conditions for exemption under Section 54F by investing in a new house property within the stipulated time, even if construction was not fully completed and habitable.

Which sections of the Income-tax Act were involved?

Section 54F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : SMC-II : NEW DELHI

Before: SHRI J. SUDHAKAR REDDY

For Appellant: Shri Akhilesh Kumar, Advocate
Pronounced: 04.11.2015

ORDER This is an appeal by the assessee directed against the order of the CIT(A), Ghaziabad, dated 26.08.2014 for the assessment year 2009-10.

2.

The sole issue that is argued before us is denial of an exemption claimed u/s 54F of the Act by the AO. The facts leading to the disallowance are that the assessee had purchased a plot of land on 28.7.2007 and had claimed to have constructed a house on the same. No claim for exemption u/s 54F was made while filing the return of income.

The claim was made during the assessment proceedings. The AO records that no details of construction, i.e., map approval, completion certificate of competent authority, have been submitted. He also records that the assessee in the statement of affairs n 31.3.2009 and 31.03.2010 has recorded investment in the house. The exemption was denied on the ground that the assessee has not deposited the amount in the capital gains account on or before the due date of the return, i.e., 31.7.2009, nor has produced any evidence of utilization of the account of capital gain in construction. The assessee went in appeal before the first appellate authority. The assessee filed additional evidence. The ld.CIT(A) called for the remand report. The AO gave his remand report on 22.7.2014 for which the assessee filed the rejoinder on 5.8.2014.

3.

The ld.CIT(A), after considering these reports and rejoinders at para 7.5 held as follows:-

“ The fact whether the new house was constructed within time allowed for claiming deduction is to be decided on circumstantial evidence. No direct evidence has been lead by the appellant. How and when was the construction done. when and from whom the construction material was purchased. who were the contractors/workers who constructed or supervised the construction. All such evidence are almost always likely to be in possession of anyone who gets a house constructed. The house was claimed to have been constructed in 2009 and assessment was completed in December, 2011. The gap was not so big and records were not so old that they could not be in possession of assessee. Thus, the statement that she had received part consideration in advance and started construction in January, 2009 and completed it during the year, is nothing but only a self serving statement not supported by any cogent evidence. The appellant has failed to prove her claim. Not a single piece of evidence has been given in respect of purchases of construction material or payments to labour or contractor. The valuation report cannot be accepted as it is additional evidence not produced before the Assessing Officer and the claim that it was not entertained has no basis. The Assessing Officer has given ample opportunities to assessee to justify the genuineness of claim of having constructed a new house. In the facts and circumstances of the case. the claim of the appellant of deduction u/s 54F falls on facts as the condition of investment in new house within stipulated time has not been fulfilled.

4.

Recently, the Hon’ble Karnataka High Court in the case of CIT vs. B.S. Shantha Kumari, judgment dated 13th July, 2015, held as follows:-

“Section 54F is the beneficial provision and must be interpreted literally. It does not require that the construction of new residential house has to be completed and the house be habitable within three years of transfer o the old asset. It is sufficient if the funds are invested in the new house property within the time limit.”

5.

Respectfully following this decision of the Hon’ble Karnataka High Court, I direct that the claim of the assessee for deduction u/s 54F be allowed. The assessee has furnished sufficient evidence to demonstrate that the amount has been invested in a new house property within the time limit specified 54F of the Act. The valuation report of a registered valuer cannot be rejected in the manner it was by the ld.CIT(A).

6.

In the result, the appeal of the assessee is allowed.

The order pronounced in the open court on 04.11.2015.

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