2015 (10) TMI 2788 - AT - Income Tax

ITAT Directs Reevaluation of Deduction Claim, Mandates Further Inquiry into Property's Residential Status for Section 54F.

The ITAT set aside the Assessing Officer's decision, directing a reevaluation of the appellant's claim for deduction under Section 54F. The appeal was ... Disallowance deduction u/s 54F - apply provisions of Section 50C for computing the capital gain - As per AO property was commercial plot and lease deed was issued for the use of commercial activity only. There was no evidence with the assessee that any construction has been done on it - nature of investment was commercial, which cannot be considered for deduction u/s 54F - HELD THAT:- The plot was allotted by the JDA itself shows that it was a commercial plot and on that the assessee constructed some room - copy of agreement dated 31/7/2010 made with M/s Kalyani Engineering, Jhotwara, Jaipur for construction as per map provided by the assessee. The total contract amount was ₹ 10.50 lacs. There was a receipt for payment of ₹ 19,281/- for filling the soil. Another evidence is a copy of boundary constructed on the plot, which shows that the assessee had made some investment in construction, therefore, the ld AO is directed to verify these detail payments and construction made by M/s Kalyani Engineering, Jhotwara, Jaipur and also consider the case law cited by the assessee i.e. ACIT Vs. Om Prakash Goyal [2012 (8) TMI 547 - ITAT JAIPUR]- set aside this issue to the file of Assessing Officer to reconsider all the evidences furnished by the assessee and make spot inquiry for use of the plot, electricity connection and other facilities created by the assessee to decide the nature of building. Assessee’s appeal is allowed for statistical purposes only. Issues:1. Interpretation of provisions of Section 50C for deduction U/s 54F.2. Addition of amount on account of claim made U/s 54F.3. Rejection of claim U/s 54F based on the nature of property.Analysis:1. The appellant appealed against the order dismissing the interpretation of Section 50C for deduction U/s 54F. The Assessing Officer found discrepancies in the sale consideration of an immovable property jointly owned by the appellant's family. The appellant claimed deduction U/s 54F based on the purchase of a plot in Narayan Vihar, Jaipur. However, the Assessing Officer valued the property differently and disallowed the deduction U/s 54F due to lack of evidence supporting the claim. The CIT(A) upheld the decision, emphasizing that the property purchased was commercial and not for residential use, as evidenced by documents and approvals from JDA. The appellant failed to prove that the property was used for residential purposes, leading to the rejection of the claim under Section 54F.2. The appellant contested the addition of an amount on account of the claim made U/s 54F. The appellant had shown long-term capital gain and interest income in the return for A.Y. 2010-11. The Assessing Officer scrutinized the case and found discrepancies in the valuation of the property sold by the appellant's family. The appellant claimed 100% deduction U/s 54F for investing in a new property in Narayan Vihar, Jaipur. However, the Assessing Officer disputed the sale consideration and disallowed the deduction U/s 54F. The appellant argued that Section 50C was not applicable and cited relevant case law. The ITAT directed the Assessing Officer to verify the construction details and payments made by the appellant, setting aside the issue for further consideration.3. The rejection of the claim U/s 54F was based on the nature of the property purchased by the appellant. The CIT(A) dismissed the appellant's appeal, stating that the property was commercial and not residential, as confirmed by JDA approvals and documents. The appellant failed to provide sufficient evidence to support the claim that the property was used for residential purposes. The ITAT directed the Assessing Officer to reevaluate the evidence and conduct a spot inquiry to determine the nature of the building constructed on the plot. The appeal was allowed for statistical purposes, indicating a need for further investigation into the nature of the property and the validity of the deduction claimed under Section 54F.