The sole issue before us is whether the building in question constructed by the assessee on which exemption u/s 54F of the Act has been claimed is a residential building as claimed by the assessee or a building constructed for commercial use.
As can be seen from the assessment order the Assessing Officer has come to a conclusion that the building is not a residential building basically for the reason that the building is used for a school. However, only because the building is used as a school cannot change the nature and character of the building from residential to commercial. Even a residential building can be used as a school or for any other commercial purpose but the relevant factor to judge is whether the construction made is for residential house or for commercial purpose. If the building has been constructed for residential use with all amenities like kitchen, bath room etc., which are necessary for residential accommodation then even if it is used as a school or for any other commercial purpose, it cannot lose its character as a residential building.
However, if the construction is made in such a way that it is not normally for residential use but purely commercial use, then it cannot be considered to be a residential house. Therefore, the primary fact which is required to be examined is whether the building has been constructed for residential use or not. This can be verified from the approved plan and architectural design of the building. However, the plan of the constructed building has not been brought on record either before the revenue authorities or before us. Therefore, it is difficult to arrive at a conclusive finding with regard to the nature of the building. In the aforesaid view of the matter, we are inclined to remit the matter back to the file of the Assessing Officer who shall conduct necessary enquiry to find out the exact nature of construction i.e., whether it has been constructed for residential use or for commercial use. If the building has been constructed for residential use with all amenities, which are necessary for a residential accommodation, then exemption u/s 54F cannot be refused only because it is being used as a school subsequently.
