As seen from the above provisions of section 54F, the assessee is required to purchase with a period of one year before or two years after the date on which the transfer took place or constructed within a period of three years after the date of transfer, any new residential house. Before the lower authorities, the learned AR took a plea that the assessee has purchased the house bearing No. 1-50/3 at Kokapet village, Hyderabad vide sale deed dated 15.12.200. The AR also taken a plea that the assessee made a payment of Rs. 106 lakhs towards improvement thereof and being so, the assessee has appropriated the sale consideration for the purpose of a new house, the benefit u/s. 54F has to be given. To verify the facts of the case, the Assessing Officer carried on inquiry and found that there was no construction as mentioned in the sale deed. Instead, there was a small construction consisting of two rooms made of hollow bricks located from south to north measuring about 200 sq. ft. as against 600 sq. ft. in the sale deed. The assessee taken a plea before the lower authorities that this construction was used by servants as their residence. However, the Assessing Officer brought on record that the said construction was not fit for human habitation and also there is no evidence of carrying out any improvement after purchasing the property by the assessee. It is also brought on record that the assessee failed to substantiate the claim that some servants are staying in that construction.
9. Before us, the assessee repeated the arguments as made before the lower authorities. However, not placed necessary evidence in support of the claim of whatsoever to show that the said construction is in habitable condition. A construction in inhabitable position cannot be equated with a residential house. If a person cannot live in a premises, then such premises cannot be considered as a residential house. In our opinion, investment in the construction would be complete as a house only when such house becomes habitable. This view of ours is supported by the decision of co-ordinate Bench in the case of Saleem Fazelbhoy vs. DCIT in 106 ITD 167 (Mum) and Sonia Gulati (115 Taxman 231). The evidence brought on record by the Assessing Officer clearly shows that the property purchased by the assessee would not fall within the description of residential house. Being so, the claim of the assessee cannot be allowed u/s. 54F of the Act. This view is also supported by the co-ordinate Bench in the case of Smt. Rohini Reddy (supra).
10. Now coming to the additional investment of Rs. 106 lakhs said to be made on the construction of the above property as the payment has been made by cheque. It is brought on record by the Assessing Officer that the assessee has received back majority of the amount from the contractor to whom payment has been made. The contention of the assessee’s counsel is that the contractor Sri K. Eswar Reddy has confirmed the construction of AC sheets shed with two rooms and compound wall for the entire site area. Even if there is construction of a shed that construction cannot be considered as residential house so as to grant deduction u/s. 54F. As we discussed earlier, a residential house means, the house which is fit for habitation. Further a property not fit for residential purpose and which is only a temporary structure cannot be construed as residential house. In other words, we do not mean that a house means a palatial house. On the other hand, a house means a habitable building. Considering the facts of the present case, whatever construction shown by the assessee cannot be considered as “residential house” u/s. 54F of the Act. The popular meaning of the word “house” is a place or a building used for habitation of persons. “Residential house” is a dwelling house as distinguished from a house of business, warehouse, office, shop, etc. In other words, residential house is a building used as a place of abode in which people reside or dwell in contra distinction in one which is used for commercial or business purposes. Since a house is called residential house with reference to the purpose of its users, it may not be necessary that somebody should live in it continuously. It is enough if it was a house for residence. Therefore, the assessee’s plea cannot be considered as there is a residential house as the said structure cannot be considered as a dwelling unit and the investment claimed by the assessee is not eligible for deduction u/s. 54F of the Act. Being so, the claim of the assessee cannot be allowed u/s. 54F of the Act. Accordingly, we confirm the order of the CIT(A) on this issue.
INCOME TAX APPELLATE TRIBUNAL, HYDERABAD
ITA No. 705/Hyd/2011 – Assessment year 2007-08
Smt. Usharani Kalidindi vs. The Income Tax Officer
ITA No. 572/Hyd/2012 – Assessment year 2004-05
Sri K. Bala Vishnu Raju vs. The Asst. CIT
ITA No. 704/Hyd/2011 – Assessment year 2007-08
Sri K. Bala Vishnu Raju vs. The Add. CIT
Date of pronouncement: 15.03.2013
ORDER
