Sandeep Hooda Vs PCIT (Delhi High Court)
Delhi High Court held that putting together a structure of plywood sheets cannot be construed as constructing a residential house for claiming exemption under section 54 of the Income Tax Act. Accordingly, appeal dismissed.
Facts- The appellant had sold a residential property on 25.09.2014, for a consideration of ₹6,88,00,000/- and had earned a capital gain of ₹5,63,74,550/-. However, the assessee claimed exemption in respect of the said gains on the ground that he had constructed ‘a residential house’ within a period of three years. Therefore, the said gains were exempted u/s. 54 of the Act.
AO found that the Assessee was not eligible for the exemption under Section 54 of the Act. CIT(A) passed the order deleting addition on account of disallowance of exemption u/s. 54 of the Act. ITAT allowed the appeal of the revenue. Being aggrieved, assessee has preferred the present appeal.
Conclusion- Held that the Inspector’s report is a makeshift guardroom made of plywood of 7 feet x 6 feet was found on the site and a similar room of plywood of 16 feet x 12 feet with a toilet attached was found at the said site. Putting together a structure of plywood sheets cannot be construed as constructing a residential house. The Inspector had also reported that there was no electricity or water connection on the land and electricity was used by genset.
