Alauddin Vs ITO (ITAT Agra)
ITAT Agra held that property purchased, being four shops at ground floor and one room at first floor, was predominantly commercial in nature and hence disqualifies for exemption under section 54 of the Income Tax Act. Hence, appeal dismissed.
Facts- Post re-assessment proceedings, AO held that the second property consisting of 4 shops on ground floor and one room on the top floor purchased by the assessee for the consideration of Rs.28,00,000/-, cannot be treated as residential house property for the purpose of claiming deduction u/s. 54 of the Act. CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Held that in the present case, the immovable property in question admittedly consists of four shops at ground floor and one room at first floor, which is also substantiated by the conveyance deed dated 04.02.2014 submitted by the assessee through his paper book. In common parlance, shops are not capable to be characterized as residential house. Based on the composition and functional usage of the property, it is evident that the property purchased by the assessee was predominantly commercial in nature. The presence of a single room at the first floor of the commercial structure does not alter the dominant character of the property as the same is expected to be used for incidental and ancillary activities/for commercial purposes. The primary usage and income generation from the property appear to be from commercial activity and not from residential house, thereby disqualifying the eligibility of capital gains for exemption u/s. 54 of the Act.
