Income Tax Appellate Tribunal - Chandigarh
Income-Tax Officer vs Shri Pawan Kumar Garg, Prop Shiv ... on 12 August, 2005
Equivalent citations: (2006)100TTJ(CHD)283
ORDER
S.K. Pransukhka, Accountant Member
1. The appeal of the revenue for assessment year 98-99 is directed against the order dated 27.2.2003 of the CIT(A), Panchkula.
2. The only ground raised in the appeal reads as under:-
The ld. CIT(A)-I on the facts and in the circumstances of the case, has erred in allowing the deduction Under Section 54F of the I.T. Act, 1961.
3. The relevant facts briefly stated are that during the course of assessment proceedings, the Assessing Officer found that assessee has shown long-term capital gain of Rs. 4,64,400/- on sale/purchase of 2900 shares and this gain was claimed to be exempt Under Section 54F. On verification of the claim of the assessee for deduction Under Section 54F, the Assessing Officer found that although assessee purchased a plot from PUDA for the purposes of construction of residential house and the entire amount realized on sale of shares was claimed as exempt in respect of purchase of plot only. The AO observed that shares were sold on 22.4.97 and assessee filed return of income claiming exemption on 11.10.98. Till then, there was no house constructed at the plot purchased by the assessee. Even during the course of assessment proceedings, the AO made further enquiry by sending his Inspector at site who reported that there does not exist any residential property at the site of the plot. When this fact was confronted to the assessee, the assessee explained that construction was started but the house was inauspicious and whole of the construction was demolished. When asked whether the foundation exists there, the assessee replied that even the foundation was removed. At this point of time, the assessee informed the Assessing Officer that the builders made two small rooms. The assessee in its reply has claimed that house was constructed during the period March, 1999 to May, 2000 on which he had spent Rs. 5.40 lacs. To check this fact, Inspector was sent to make spot inspection but on visit, he found that there was no house which was ever built on this plot and it was a vacant plot. The report of the Inspector dated 20.2.2001 is reproduced below:-
As directed I visited at the site of Plot No. 1021, Urban Estate, Phase-11, Ludhiana belongs to Shri Pawan Kumar Garg, Prop. M/s Shiv Electric Store, Focal Point, Ludhiana today and find that no construction have so far been made. There is only a Plot. Therefore, the claim of the assessee is wrong. This is for your kind information and necessary action.
It will be pertinent to mention here that after initially a report was given by the Inspector regarding non-existence of any residential house property there, later on the Inspector found that there are two rooms with AC sheets total covered area being 150 sq.ft. and photographs were also taken. The Addl. CIT, Range-I, Ludhiana vide his letter dated 23.3.2001 addressed to Commissioner, Municipal Corporation, Ludhiana asked him to get the enquiries made on the following two points:-
(i) Whether on this plot, an unauthorized building/house was constructed during the period March, 99 to May 2000 which was demolished subsequently.
(ii) Whether two small rooms presently standing on this plot were constructed about two-three weeks ago or upto two years ago as claimed.
4. The report of Shri Kashmira Singh, XEN, Zone-B, M.C. Ludhiana dated 26.3.2001 is as under :-
Plot No. 1021 Urban State, Phase-11, Jamalpur - Site Seen, Main gate was locked, enquiry have been made from neighbour, boundary wall and two temporary rooms with A.C. Sheet roofing for use of storage of Cement etc. has been constructed about one month back.
Relevant extract of Estate Officer, PUDA's letter dated 27.3.2001 are reproduced as under:-
Sh. Pawan Kumar has purchased plot No. 1021 measuring 500 sq.yds. In Urban Estate, Phase-ll, Jamalpur, Ludhiana in open auction on 28.2.1997 at the bid of Rs. 23.80 lacs. He has paid full cost of the plot and no due certificate has also been issued on 1.9.2000. The allottee has not got the building plan approved from this office. A boundary wall has been constructed on front and back side of the plot alongwith a temporary store with sheet roofing of size 15'x17'. The adjoining plot 1020 & 1022 have been constructed by the concerned allottee. It can not be said when this temporary store was constructed by the allottee (assessee) since the building plan was not approved by this office. However, prima facie it appears that the construction in this site has come up during the last 2-3 months approximately.
Relevant extract of estate Officer PUDA's letter dated 28.3.2001 are reproduced as under:-
Plot No. 1021, Jamalpur Awana has again been visited by the Junior Engineer of this office on 28.3.2001 and has reported that no building appears to have been ever constructed at the site and then demolished. There is no such sign of any foundation having been digged up.
5. From these facts, the AO drew the inference that actually the assessee did not construct any house as he was supposed to construct within a period of three years of the transfer of the shares and he accordingly, disallowed the claim of the assessee.
6. In appeal before the CIT(A) assessee submitted that assessee constructed two rooms there. It was residential house and the Id. CIT(A) taking the clue from the letters of the Municipal Commissioner and PUDA authorities drew the inference that the assessee constructed two small rooms there which constituted an independent dwelling unit and relying upon the dictionary meaning of residence from Strouds Judicial Dictionary the CIT(A) allowed deduction Under Section 54F. While allowing the claim of the assessee, the CIT(A) placed reliance on CBDT Circular No. 667 dated 18.10.93, wherein it has been held that cost of land is to be an integral part of the aggregate cost of residential house for allowing deduction Under Section 54F.
7. In appeal before us, the Id. D.R. contended that assessee was supposed to construct residential house on the PUDA plot within a period of three years from the date of sale of shares and accordingly last date by which assessee should have constructed the house was 22.4.2000. The Id. DR pointed out that in the assessment proceedings, assessee himself admitted that construction was half way and demolished and to claim exemption when return was selected for scrutiny, two small rooms were constructed there in a hurried manner. There was no evidence from the assessee that there was any construction of house by 22.4.2000. If at all there was any construction of two small rooms as temporary structure which appears from the photographs taken when the letters received from the Municipal Corporation and the PUDA, the assessee is not entitled for any deduction Under Section 54F. On the other hand, the Id. A.R. contended that construction of two rooms as completed within a period of three years i.e. from March 1999 to May, 2000 and accordingly he tried to justify by showing us the amount of withdrawals on different dates in cash from March, 1999 to 17th May, 2000. The Id. A.R. also pointed out that there is also variation in the information supplied to the Assessing Officer by the Inspector and different authorities like Municipal Corporation and PUDA where the construction of two small rooms has been accepted to have been constructed recently. Therefore, assessee was entitled for deduction Under Section 54F in respect of the construction so made by him on the plot allotted by PUDA.
8. We have given our careful consideration to the rival contentions and perused the orders of the authorities below. We find that assessee has shown capital gain of Rs. 4,64,400/- and claimed it as exempt Under Section 54F by purchasing a plot from PUDA. Now, the issue before us is to examine whether the assessee has actually constructed any residential house within the meaning, object and time allowed Under Section 54F. As per Section 54F assessee is entitled for deduction in respect of construction of house property if it constructed within three years of transfer of shares which in this case was on 22.4.97 meaning thereby that he was obliged to construct the house by 22.4.2000. Now the dispute remains to be resolved is whether by this date there was any residential house on said plot or not. It is evident from the report of the Inspector and the report of the Municipal Commissioner as also PUDA that there was construction of two rooms with AC sheets and constructed in a covered area of less than 150 sq.ft. Initially, as per the report of the Inspector dated 22.2.2001, there was no construction at the site. Later on he found that there is a construction of two small rooms and photographs were taken. Before the Assessing Officer, assessee himself has admitted that original construction which he had proposed to do of 1800 sq.ft. was demolished and in half way and even the foundation of that construction was removed and no evidence was adduced by assessee to justify his claim for construction of house. In view of these facts, it becomes crystal clear that assessee had not constructed any house before 22.4.2000 and when the case came up for scrutiny in F.Y. 2000-01, some sort of construction of two rooms were there with a view to claim exemption Under Section 54F. In income tax proceedings, if the assessee claims any deduction and case is selected for scrutiny, onus lies on the assessee to prove by way of evidence to justify his claim for deduction. In this case, onus was not discharged by the assessee in view of the fact that assessee could not furnish any evidence to prove the fact that there was any construction before 22.4.2000. Assessee's contention that amount has been withdrawn on the dates mentioned above does not provide any cogent evidence so that it can be inferred that actually there was any house constructed by the assessee as these withdrawals are in cash and some vouchers for purchase of cement and bricks have been shown in the paper book and all these vouchers are in cash. Merely producing of the vouchers all in cash for purchase of cement and bricks does not justify the claim of the assessee that a residential house was ever constructed before the said date i.e. 22.4.2000. The Id. CIT(A) deleted the addition without verifying the facts and simply interpreting the 'word 'residence' as per the dictionary meaning. The task of interpretation of statutory enactment, as held by their Lordship of Hon'ble Supreme Court in the case of K.P. Varghese v. ITO, 131 ITR 597, is not a mechanical task. Their Lordships further observed: We can do no better than repeat the famous words of Judge Learned Hand when he said:-
...It is true that the words used, even in their literal sense, are the primary and ordinarily the most reliable source of interpreting the meaning of any writing: be it a statute, a contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.
We are, therefore, of the considered view that that legislative intent was not achieved as existence of the facts shows that assessee could not produce any evidence in support of the fact that there was any construction before 22.4.2000. In the light of our discussion above, we are of the view that the Id. CIT(A) was not justified in allowing claim of exemption Under Section 54F. We accordingly set aside the order of the CIT(A) and restore that of the AO.
9. In the result, the appeal of the revenue is allowed.