TaxTMI 
TaxTMI 
2013 (5) TMI 837
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....he resultant capital gain is the subject matter of the dispute in the captioned appeals. 3. The facts and circumstances in the case of all the three assessees are common therefore the cross-appeals in the case of Shri Narsing Gopal Patil i.e. ITA No. 1544/PN/2012 filed by the assessee and ITA No. 1815/PN/2012 filed by the Revenue are taken up as lead case. 4. The relevant background to appreciate the controversy raised by the assessee in its appeal vide ITA No. 1544/PN/2012 and by the Revenue in its cross-appeal vide ITA No. 1815/PN/2012 is as follows. The assesses is an individual who filed his return of income for the assessment year 2008-09 declaring total income of Rs. 12,44,720/-, which was subject to scrutiny assessment whereby the total income was assessed at Rs. 3,55,35,574/-. During the year under consideration, assessee sold his land situated at Survey No. 100, Tathawade, admeasuring 5 Hectares for a consideration of Rs. 5,31,40,000/- to M/s Broadway Integrated Park Pvt. Ltd. vide sale deed dated 23.05.2007. The assessee declared long term capital gain of Rs. 3,48,70,434/- and the Assessing Officer computed the same at Rs. 3,49,34,327/- after making an addition of R....
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....wo years before the date of transfer, agricultural activities were being carried out. It has also been pointed out by the learned counsel that the copies of the 7/12 extract are annexed in the Paper Book filed at pages 50 to 53 and it is also asserted that in the returns of income filed for the earlier years, the assessee was declaring agricultural income. It has been submitted that the CIT(A) correctly analyzed the position by observing that there was a presumption of correctness of the entries made in the Land Revenue records in terms of Section 157 of the Maharashtra Land Revenue Code, 1966 and that there was no material with the Assessing Officer to rebut such presumption and as a result the CIT(A) was justified in holding that the test of the land being used for agricultural activities for two years prior to the date of transfer, stands fulfilled. 8. We have carefully considered the rival submissions. Section 54B prescribes that where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes, and t....
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....at entries in Revenue records are rebuttable but the A.O. has not done this. The Appellant too has not demonstrated that agricultural activities were carried out in the said land for two years prior to date of sale. In this situation, the question is whether entries in 7.12 extracts are sufficient to meet the requirements of section 54B of Income-tax Act. In my opinion entries in 7/12 extracts which remains uncontroverted by the A.O. are sufficient enough to meet the requirements of section 54B of I.T. Act. Accordingly, the A.O. is directed to delete the addition of Rs. 1,59,09,583/- and allow the claim u/s 54B of I.T. Act. The ground is thus allowed." 9. Ostensibly, as per the CIT(A) the entries in 7/12 extract, which show growing of crops during the relevant period, have not been controverted by the Assessing Officer and therefore there was no justification to deny assessee's claim for exemption under Section 54B of the Act. The aforesaid position articulated by the CIT(A) in the impugned order is the subject-matter of consideration before us. Admittedly, one of the pre-conditions for availing of exemption under Section 54B requires that the land which is the subject matter....
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....of declaration of agricultural income by the assessee in the respective assessment years. The Assessing Officer has merely disbelieved the explanation furnished by the assessee without any credible material to negate the same. Having regard to the material and evidence on record and the legal position, in our view, the CIT(A) was justified in holding that the assessee discharged the burden cast on him to establish that the land was being used for agricultural purposes in the two years immediately preceding the date of transfer. We hereby affirm the same and accordingly the Revenue has to fail on this aspect. 10. In the result, appeal of the Revenue in ITA No. 1815/PN/2012 in the case of Shri Narsing Gopal Patil is dismissed. 11. Now we may take up assessee's claim for exemption under Section 54F of the Act, which has since been denied by the Assessing Officer as well as by the CIT(A). In this regard, brief facts, are that in the return of income, assessee claimed exemption under Section 54F of the Act amounting to Rs. 1,83,17,378/- on the ground of having invested the requisite sale consideration for construction of his residential house at Thergaon. The Assessing Officer has....
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....was not justified in holding that exemption u/s54F cannot be allowed if construction of residential house was not completed within 3 years of date of transfer of old asset. Therefore denial of exemption u/s 54F on this account cannot be upheld. However, claim of the appellant is seriously hit by alternative finding of the AO which is discussed in subsequent paras." As per the CIT(A), the objection taken by the Assessing Officer on the completion of construction was not justified. The aforesaid aspect emerging from the order of the CIT(A) is not challenged by the Revenue in its appeal before us, and therefore we do not elaborate any further on the same as we are presently dealing with only the appeal of the assessee against the ultimate denial of exemption under Section 54F of the Act. 14. The other objection of the Assessing Officer, and which has been upheld by the CIT(A) to sustain the disallowance of exemption under Section 54F of the Act is to the following effect. As per the Assessing Officer, assessee had invested the sale consideration in a "commercial-cum-housing complex" and not in residential house as mandated by Section 54F of the Act. The Assessing Officer noticed th....
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....building. Further with regard to the plea of the Revenue that the building constructed by the assessee consisted of several residential units, it was pointed out that the same would not act as a bar for allowance of exemption under Section 54F of the Act and reliance was placed on the judgement of the Hon'ble Delhi High Court in the case of CIT vs. Gita Duggal (2013) 257 CTR 208 (Delhi) in this regard. Reliance has also been placed on the judgement of the Hon'ble Karnataka High Court in the case of CIT vs. D. Ananda Basappa (2009) 309 ITR 329 (Kar.), which has further been approved by the Hon'ble Supreme Court vide its order dated 10.08.2009 whereby SLP (CC) 1046/2009 preferred by the Revenue was dismissed. 17. On the other hand, the learned Departmental Representative has defended the case of the Revenue by relying on the reasoning advanced by the Assessing Officer and the CIT(A) to deny the assessee's claim for exemption under Section 54F of the Act, which we have already noted in para 14 above, and is not being repeated for the sake of brevity. 18. We have carefully considered the rival submissions. Section 54F of the Act prescribes exemption of capital gain arising from t....
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....ourt (supra) and his decision was approved by the Tribunal. The Tribunal expressed the view that the words "a residential house" appearing in Section 54/54F of the Act cannot be construed to mean a single residential house since under Section 13(2) of the General Clauses Act, a single includes plural. It is the correctness of the above that is questioned by the revenue and it is contended that the interpretation placed by the Tribunal gives rise to a substantial question of law. The assessee strongly relies upon the judgement of the Karnataka High Court (supra) which, it is stated, has become final, the special leave petition filed by the revenue against the said decision having been dismissed by the Supreme Court as reported in the annual digest of Taxman publication. The judgement of the Karnataka High Court supports the contention of the assessee. An identical contention raised by the revenue before that Courts was rejected in the following terms : "A plain reading of the provision of section 54(1) of the Income-tax Act discloses that when an individual-assessee or Hindu undivided familyassessee sells a residential building or lands appurtenant thereto, he can invest capit....
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....r instance, a person may construct a residential house in such a manner that he may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly post-requirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consist of s....