Himanshu Garg VS ACIT (Delhi High Court)
Denial of capital gain exemption u/s 54F for property described in registered sale deed as “Makaan” was justified as having Brick-Kiln construction
Conclusion: Tribunal was justified in declining capital gain exemption under Section 54F with respect to a property described as “makaan” (house) in the registered sale deed but in reality having a brick kiln construction.
Held: Assessee had sold certain lands and sought capital gain exemption under Section 54F against investment made in a new property (makaan), jointly with two others. AO had reported a brick-kiln on the new property and on the basis of this evidence, Tribunal had concluded that assessee’s investment was not in a residential house. Assessee on the other hand claimed a residential house with a covered area of 500 sq. ft. was existing on the new property and was described in the registered sale deed as “makaan”. He submitted that the brick kiln was not in his portion of the property but on the portion of the land which fell to the share of the other co-owners. He further produced a lease deed whereby the alleged residential house had been leased to a tenant. It was held that Tribunal had concluded that the word “makaan” used in the registry was not in a reference to a residential house. This view was supported by the fact that a brick-kiln and sheds had been constructed on the land in question and the registered sale deed did not mention any other structure on the new property, other than a ‘makaan’. The contention that the brick-kiln and the built up share had fallen to the shares of other co-owners and, therefore, was not required to be considered, overlooked this point. The present case was centered on appreciation of evidence on record. It admitted that the registered sale deed of the new property was not confined to the share of assessee but also to the other co-owners. It did not mention any structure other than a “makaan” and brick kilns and sheds stand on the new property. Tribunal noticed that the sale deed of the new property did not refer to the structure as rihayasi makaan, which would be a literal translation of “a residential house”. Therefore, concluded that the reference to a makaan in the registered deed was not a residential house. Tribunal also found that the new property was described in the revenue records as agricultural land and the registration fee was paid on the said basis. Therefore, the finding of Tribunal in the given facts, could not be held to be perverse.
