Bhag Chand Jain, through its Legal Heir Vs DCIT (ITAT Jabalpur)
ITAT Jabalpur held that as per the sale deed what was purchased was only a plot of land for construction of residential house. However, in absence of construction of residential house thereon, exemption under section 54F of the Income Tax Act not admissible.
Facts- The assessee having expired on 03/05/2021, his son and legal heir, Shri Vikrant Kumar Jain, stands brought on record as his legal representative u/s. 159 of the Act, filing revised Form 36 (memorandum of appeal) before the Tribunal.
The issue, as would be apparent from the foregoing, is the exigibility to tax of the capital gain arising to the assessee during the relevant previous year, which is on the sale of agricultural land and two residential flats and, for the purpose, the eligibility to deduction, if any, u/s. 54F of the Act in view of the investment of the transfer proceeds. The reference to s.54C in Ground 2 of the Grounds of Appeal (GoA) is clearly a typing error; the correct provision being s. 54F.
The claim u/s. 54F by the assessee was on the premise of purchase of a residential house, denied by the Assessing Officer (AO) with reference to the sale deed, which reflected the subject property as a plot of land.
Conclusion- Held that what has been in effect and substance purchased in the instant case, as also evidenced by the sale deed, is only a plot of land for construction of a residential house thereon. Rather, but for the demolition having been completed by the date of inspection, no stamp duty would have been paid on the structure part. No case for construction of a residential house has been preferred or pressed at any stage, including before us. The assessee is, accordingly, not entitled to any exemption u/s. 54F on the purchase of plot.
FULL TEXT OF THE ORDER OF ITAT JABALPUR
This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals)-1, Jabalpur (‘CIT(A)’, for short) dated 06/09/2016, partly allowing his appeal contesting his assessment u/s. 143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for Assessment Year (AY) 2012-13 vide order dated 26/03/2015 (typed mistakenly as 26/03/2013 in the assessment order).
2. The assessee having expired on 03/05/2021, his son and legal heir, Shri Vikrant Kumar Jain, stands brought on record as his legal representative u/s. 159 of the Act, filing revised Form 36 (memorandum of appeal) before the Tribunal, adopting the same grounds as per the original Form 36, as under:-
1. The learned CIT (Appeals) has not appreciated that order has been passed by DCIT, Circle-1(1) by violating rule of natural justice.
2. The learned Commissioner of Income Tax (Appeals) failed to appreciate that benefit of section 54C cannot given in parts.
3. The learned Commissioner of Income Tax (Appeals) failed to appreciate the relevant material or evidence on record regarding house property, and partly disallowed exemption u/s. 54F of the I.T. Act which is arbitrary and unjustified.
4. The learned Commissioner of Income Tax (Appeals) erred in law in giving relief only to the extent of constructed area of the house whereas as per section 54F cost of complete house including garden open space and parking space other etc. are exempted.
5. The learned Commissioner of Income Tax (Appeals) erred in law in not appreciating the documents produced before him as copy of agreement property tax payment receipt, receipt of municipal corporation, Nagar Nigam lease deed, electricity bill, certified copy of lease deed, copy of diversion Khasra, which clearly shows that the complete unit of houses are for residential purpose.
6. That the ld. CIT (Appeals) failed to appreciate that there is no provision u/s. 54F of the IT Act to allow exemption up to the limit of constructed area or in part.
7. The appellant craves for leave to amend, add or omit any ground upto the time of hearing of appeal.
3. The issue, as would be apparent from the foregoing, is the exigibility to tax of the capital gain arising to the assessee during the relevant previous year, which is on the sale of agricultural land and two residential flats and, for the purpose, the eligibility to deduction, if any, u/s. 54F of the Act in view of the investment of the transfer proceeds. The reference to s.54C in Ground 2 of the Grounds of Appeal (GoA) is clearly a typing error; the correct provision being s. 54F.
4.1 It shall be relevant to discuss the background facts of the case, leading to the instant appeal, in brief. The assessee during the relevant previous year sold the following assets for Rs. 87.36 lacs, and purchased (along with Smt. Divya Jain, with 50% share each) a plot of land at Golebazar, Jabalpur, for a consideration of Rs. 85 lacs on 26/03/2012, claiming exemption u/s. 54F in respect of the entire capital gain, returned at Rs. 46.93 lacs:
