DCIT Vs Vijay Hathising Shah (ITAT Ahmedabad)
Summary : In this case, the Revenue challenged the order passed by the Commissioner of Income Tax (Appeals), who had allowed deduction under Section 54F of the Income Tax Act for Assessment Year 2015-16.
The assessee had filed a return declaring total income of Rs.16.43 crore, including Long Term Capital Gain of Rs.15.85 crore. The return was originally accepted under Section 143(3). Subsequently, revision proceedings under Section 263 were initiated. During the relevant year, the assessee, along with co-owners, sold two non-agricultural lands situated at Ambli village and claimed deduction under Section 54F amounting to Rs.3.96 crore on purchase of a new residential house.
The Principal Commissioner denied the deduction on the ground that the assessee owned more than one residential house. Two properties were referred to: (i) Ambli Gam Tal House with a book value of Rs.15.73 lakh, and (ii) a residential bungalow with a book value of Rs.1.02 crore. Consequent to the revision order, the Assessing Officer passed an order denying the deduction under Section 54F and recomputed the Long Term Capital Gain at Rs.19.82 crore.
Before the CIT(A), the assessee submitted agreements, photographs, and sale documents to show that the disputed Ambli property was not habitable. It was contended that although the property may originally have been residential, all structures such as walls, kitchen, and bedrooms had been demolished. The assessee argued that the property had become only an open plot of land and therefore could not be treated as a residential house. It was also pointed out that no income from house property had been offered in respect of the said property and no addition under that head had been made by the Assessing Officer.
