Income Tax Appellate Tribunal - Jaipur
Sarita Devi Garg, Jaipur vs Assessee on 30 October, 2015
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM
vk;dj vihy la-@ITA No. 199/JP/2014
fu/kZkj.k o"kZ@Assessment Year : 2010-11
Sarita Devi Garg, cuke I.T.O.
2/152, Vidhyadhar Nagar, Jaipur. Vs. Ward 4(2), Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABXPG 5442 N
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri K.L. Moolchandani (Adv)
jktLo dh vksj ls@ Revenue by : Shri Rajendra Singh (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 15/10/2015
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30/10/2015
vkns'k@ ORDER
PER: T.R. MEENA, AM This is an appeal filed by the appellant against the order dated 02/01/2014 passed by the learned CIT (A)-II, Jaipur for A.Y. 2010-11. The effective grounds of appeal raised by the appellant are as under:-
"1 On the facts and in the circumstances of the case the ld.
CIT(A) has factually and legally erred in dismissing ground NO. 3 regarding interpretation of the provisions of Section 50C of the Act for working out deduction U/s 54F of the Act on the wrong plea that no objection was 2 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO raised against increasing the sale consideration by A.O. U/s 50C. Such findings are factually incorrect in view of ground of appeal written submission made before the Hon'ble CIT(A).
2. (a) On the facts and in the circumstances of the case the ld CIT(A) has factually and legally erred in confirming the addition of Rs. 54,22,542/- on account of the claim made U/s 54F without appreciating the facts of the case in right perspective.
(b) On the facts and in the circumstances of the case the ld CIT(A) has factually and legally erred in rejecting the claim of the appellant U/s 54F of the Act by taking a very narrow meaning of the words "for the purpose of residential house" ignoring the real spirit of the legislature in this regard."
2. All the grounds of appeal are interlinked and are against not allowing deduction U/s 54 of the Income Tax Act, 1961 (in short the Act) at Rs. 54,22,542/-. The assessee had shown income from capital gain and interest income. She filed income tax return for A.Y. 2010-11 on 30/3/2011 declaring total income of Rs. 3,61,039/-. The case was scrutinized U/s 143(3) of the Act. During the year, the assessee sold an immovable property on 18/8/2009 for a consideration of Rs.1,91,69,644/-, which was registered with Sub-Registrar-III, Jaipur. It was found by the Assessing Officer that the assessee alongwith her husband Sh. Rajendra Garg and her two sons Saurabh and Kartik were jointly owned an agricultural land measuring 1.26 hectare at village Mothu Ka Bas, tehsil 3 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO Amer, Jaipur. This land is situated near Harmada area, Sikar Road, Jaipur the property had been jointly sold by the assessee family for a consideration of Rs. 1,52,00,000/-, which was valued by the Sub-Registrar for stamp duty purposes at Rs. 1,91,13,86/-. The share of the assessee with her minor son Kartik was 40%, therefore the assessee had shown sale consideration at Rs. 60,80,000/- i.e. 40% of Rs. 1,52,00,000/- in her return of income. The assessee had submitted copy of purchase deed in respect of this land during the course of assessment proceedings, according to which 40% share of this land was purchased by her alongwith her minor son Kartik on 23/01/2002 for a consideration of Rs. 3,10,000/- and Rs. 34,000/- were paid as stamp duty expenses. The cost of land to assessee came at Rs. 3,44,000/- whereas the assessee had taken cost of land at Rs.4,43,160/- and after indexation, it was claimed at Rs. 6,57,458/-. For claim of deduction U/s 54F, the assessee had also submitted some documents/receipts, according to which she had purchased a plot of land at Narayan Vihar (R), Jaipur for a consideration of Rs. 61,08,175/- through auction by JDA. The ld Assessing Officer gave reasonable opportunity of being heard to apply provisions of Section 50C of the Act for computing the capital gain. There was no response on this query from the assessee. The ld Assessing Officer had taken 40% share of 4 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO the assessee on the basis of valuation of sale of immovable property U/s 50C at Rs. 76,45,550/-. The assessee had also not submitted any evidence to clarify the difference of acquisition of cost computed by the Assessing Officer and claimed by the assessee. The assessee claimed some cost of improvement on the immovable property, however, no evidence was furnished before the Assessing Officer, therefore, he had taken cost of acquisition at Rs. 3,44,000/-, which was after indexation comes at Rs. 5,10,374/-. The assessee was also given reasonable opportunity of being heard on deduction U/s 54F, which was submitted before him i.e. plot of land at Narayan Vihar (R), Jaipur was purchased at Rs. 61,08,175/- but on verification of the evidence submitted by the assessee, it was found by the Assessing Officer that this property was commercial plot measuring 464.50 sq.mtr having plot NO. RC-95, Narayan Vihar (R), Jaipur. The lease deed was issued for the use of commercial activity only. There was no evidence with the assessee that any construction has been done on it. The ld Assessing Officer further held that even construction was done by the assessee, the nature of investment was commercial, which cannot be considered for deduction U/s 54F of the Act. Therefore, he had not allowed any deduction U/s 54F when assessee's long term capital gain at Rs. 71,35,176.
5 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had dismissed the assessee's appeal by observing as under:-
"4.3 I have considered the facts of the case; assessment order and appellant's written submissions. Appellant claimed deduction under Section 54F in respect of capital gain on sale of capital asset of the ground that it was invested in residential house property. Assessing Officer examined the documents submitted by the appellant and as per that appellant claimed the said deduction on commercial property purchased from JDA. It is not in dispute that the commercial plot purchased by the appellant was only to be used for commercial purposes. Even the map for construction approved by JDA on 26/4/2011 clearly mentioned the plot as commercial. As against this, appellant only submitted agreement for construction with Messer Kalyani Engineering. Even as per this agreement, there is no reference of construction of residential house. Appellant submitted a photograph showing boundary wall and one small structure inside with appellant's name appearing on the gate. Even with this photograph, one cannot say that this is a residential house. When the JDA, the developing and approving authority had clearly earmarked the plot as commercial, there is no question of treating the same as residential house. None of the 6 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO evidence submitted by the appellant established the appellant's claim that the newly constructed house was residential house. In view of the following facts, there is no doubt that newly constructed property is commercial and not residential.
1. JDA is the developing authority which has developed the scheme and on the basis of such scheme, the plot was allotted to the appellant for commercial use only.
2. In the allotment letter of JDA, it is clearly mentioned that the plot allotted could be used only for commercial purposes and therefore using the same for residential house is not permissible.
3. The agreement for construction on the commercial plot nowhere mentions construction of residential house. Even the way it is constructed, it cannot be used for residential purposes. It can be used for Godown or office only.
4. The appellant was asked to submit approved plan for construction, appellant could not submit any approval for residential house. The JDA approved plan is for commercial construction only.
5. Even the photograph of the property submitted by the appellant nowhere indicates that it was residential house. Residential bungalow does not look like the structure created on the commercial plot by the appellant.
7 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO
6. It is common knowledge that commercial plots are much costlier than residential plots and therefore no sensible person will construct residential house on commercial plot. Even otherwise commercial area developed by JDA cannot have residential house since no such permissible will be allowed by JDA.
Considering all the above, it is clear that appellant did not construct residential house property within 3 years of transfer. The entire claim of residential house is without any basis and just to claim deduction under Section 54F even without fulfilling the basic conditions. The decisions relied upon by the appellant are not relevant to the facts of the appellant's case. When appellant did not construct residential house, there is no question of allowing such claim. One can use even commercial building also temporarily for residence but that will not make the house residential. Considering all these facts and also evidences submitted by the appellant, I am of the firm view that appellant's claim under Section 54F is without any basis and the same is not allowable. Accordingly, the action of the A.O. in rejecting deduction under Section 54F is confirmed."
4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the assessee is a lady assessee. She had shown long term capital gain at Rs. 54,22,542/- on the basis of 40% sale 8 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO consideration at Rs. 60,80,000/- minus indexation cost at Rs. 6,57,458/- and claimed 100% deduction U/s 54F in respect of such claim as Rs. 61,08,175/- were invested in new asset purchased for the purpose of residential plot in Narayan Vihar (R), Jaipur through auction from JDA, Jaipur and declared NIL capital gain from the sale of the old asset. All the relevant documents were submitted before the Assessing Officer for claiming of deduction U/s 54F including construction work vide letter dated 04/3/2013. The ld Assessing Officer disputed the sale consideration which was shown in the instrument and valued for the stamp duty purposes. The ld AR further argued that Section 50C for claiming of deduction U/s 54F is not applicable. This issue has been considered by the various ITATs including Hon'ble Jaipur ITAT that deem provision could not be applied beyond intention of Legislature, for which he relied on the decision in the case of Gyan Chand Baira Vs. ITO (2010) 133 TTJ (JP) 482, 45 DTR 41 (2010) 6 ITR 147. The ld AR requested to consider the sale consideration, which has been received by the assessee i.e. at Rs. 60.80 lacs. The assessee had purchased a plot from JDA for Rs. 61,08,175/-. The ld CIT(A) had failed to consider the photographs of building constructed, which was for the purpose of residence. He further found the fault in the agreement entered with the contractor that there is 9 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO no mention about construction of residential house in that agreement. However, facts are clear from the map and evidence submitted before the ld CIT(A). He has drawn our attention on page No. 14 to 21 of the paper book and tried to demonstrate that assessee had constructed a residential house on the plot in question. The ld CIT(A) has disallowed the assessee's claim by considering the nature of the plot as commercial. It is purely and solely the discretion of the appellant for what purpose, the building was being used. Thus, the purpose of building was solely the decision and wisdom of the appellant which could not be questioned by general feelings, surmises and presumptions as held by the lower authority. He further relied on the decision of Hon'ble ITAT, Jaipur Bench "A", Jaipur in the case of ACIT Vs. Om Prakash Goyal (2012) 53 SOT 158 in ITA No. 647/JP/2011 order dated 2nd February, 2012 wherein the assessee claimed deduction U/s 54F on investment made in purchase of agricultural land, which was allowed by the ld CIT(A) on the ground that benefit of Section 54 cannot be denied on the ground that land on which construction was done was agricultural in nature. It is established by the assessee that purchase of plot of land and then constructed a residential house on it. House constructed on agricultural land or on other land does not matter but the fact that house should be constructed, thus the Hon'ble 10 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO ITAT has confirmed the order of ld CIT(A). The ld AR on the basis of above argument and case law cited above has prayed to allow the appeal in favour of the assessee.
5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A).
6. We have heard the rival contentions of both the parties and perused the material available on the record. The plot was allotted by the JDA itself shows that it was a commercial plot and on that the assessee constructed some rooms. He also submitted the copy of agreement dated 31/7/2010 made with M/s Kalyani Engineering, Jhotwara, Jaipur for construction as per map provided by the assessee. The total contract amount was Rs. 10.50 lacs. There was a receipt for payment of Rs. 19,281/- for filling the soil. The another evidence on page 19 of paper book is a copy of boundary constructed on the plot, which shows that the assessee had made some investment in construction, therefore, the ld Assessing Officer is directed to verify these detail payments and construction made by M/s Kalyani Engineering, Jhotwara, Jaipur and also consider the case law cited by the assessee i.e. ACIT Vs. Om Prakash Goyal (supra). Accordingly, we set aside this issue to the file of Assessing 11 ITA 199/JP/2014_ Sarita Devi Garg Vs. ITO Officer to reconsider all the evidences furnished by the assessee and make spot inquiry for use of the plot, electricity connection and other facilities created by the assessee to decide the nature of building.
7. In the result, the assessee's appeal is allowed for statistical purposes only.
Order pronounced in the open court on 30/10/2015.
Sd/- Sd/-
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(R.P.Tolani) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 30th October, 2015
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Smt. Sarita Devi Garg, Jaipur
2. izR;FkhZ@ The Respondent- The ITO, Ward 4(2), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 199/JP/2014) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar