AI Drafter 
TaxTMI 
TaxTMI 
2017 (10) TMI 1084
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..... CIT(A) granted the relief to the assessee on various additions. 4. Now the revenue is in appeal before the ITAT by taking following grounds: "1. On the facts and in the circumstances of the case and in law Id. CIT(A) erred in allowing the claim of deduction of Rs. 87,75,000/- u/s 54 of the IT Act disallowed by the AO for taking into account to compute capital gain as the assessee was not entitled to such claim as per provisions of section 54 of the IT Act 1961. 2. On the facts and circumstances of the case and in law Id. CIT(A) erred in allowing the claim of expenses incurred on sale of property of Rs. 8,00,000/- disallowed by the AO for computing net consideration received, without appreciating the material facts of the case. 3. On the facts and circumstances of the case and in law Id.CIT(A) erred in allowing benefit of the claim of Rs. 39,43,196/- disallowed by AO while computing capital gain indexed cost of construction of house and it improvement the assessee has filed to substantiate its claim with documentary evidence." 5. In the ground No. 1 of the appeal, the issue involved is deleting the addition of Rs. 87.75 lacs on account of deduction....
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....t the said property was given on rent and that the property included a house appurtenant to the land. 5.3.2 I have considered the above mention facts. The moot point in this case is whether the land under consideration was having a residential property or not? It is true that at the time of sale of the property, the appellant has declared it as- agricultural land only. It is submitted by the appellant that such declaration was made to save on stamp duty. However, while filing the return of income before the income tax authorities the appellant has claimed residential property on the land transferred in this case. Therefore, there are -two sets of declaration (i) before the Stamp Duty Authorities where the land has been shown as agricultural property where no residential property has been shown on the land and (ii) before the Income Tax Authorities where a residential property has been shown on the land. In this regard, I have taken into consideration Hon'ble Supreme Court decision on the SLP (2008) 307 ITR (ST) 3, filed in the case of CIT v/s M/s Veerdip Rollers Pvt. Ltd. 323 ITR 341 (Gujarat High Court). The Hon'ble Gujarat High Court and Hon'ble Supreme Court has held as....
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....set), the difference between the amount of the capital gain and the cost of the new asset shall be' charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the-cost shall be nil, or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing suc....
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....rong information to the stamp duty authorities for the purpose of sale deed, he is liable to be penalized under the Stamp Duty Act. So far as Income Tax Act is concern, it is my considered view that based on factual matrix of the case the appellant is liable to get benefit u/s 54 of the Act. Furthermore, A.O's contention that the appellant has not taken permission to construct residential property on the agricultural land is also not tenable as is decided in the case of Mahavir Prasad Gupta vs. CIT [20061 5 SOT 355 (Delhi) that even a farmhouse can be a residential house and investment is eligible for benefit of section 54F of the IT Act. Thus there is no prohibition regarding construction of a residential house on agriculture land. CBDT Cir. No. 667 dt. 18.10.1993 (204 ITR (St) 103) has clarified that for the purpose of computing exemption u/s. 54 or 54F, the cost of the plot together with cost of the building will be considered as cost of new asset, provided the acquisition of the plot and also the construction thereon are completed within the period specified in these sections. Even otherwise, for argument sake, if section 54 is not available then alte....
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.... regard to the address. This property was given on rent for Rs. 35,000/- per month. The necessary agreement on this regard was submitted. A certificate of the Chairman of the Municipal Committee was also submitted and finally, the assessee submitted an affidavit in this regard. After considering all these documents and evidences, the ld. CIT(A) overruled the observation of the Assessing Officer in this regard and he granted relief to the assessee. 9. We have heard both the sides on this issue. The Assessing Officer disallowed the claim of the assessee U/s 54 of the Act on the basis of report of the Tehsildar and Inspector obtained by the Assessing Officer during the assessment proceedings stating that it was an agricultural land and at the time of inspection, it was an open land. The Assessing Officer observed that the electricity connection and LPG connection cannot be taken as a conclusive evidence and he also observed that no evidence with regard to construction or improvement was furnished. It was also observed that no evidence of contract of demolition of the house was produced and the land was not got converted from agricultural land to non-agricultural. The assessee submi....
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....ned property. 4. That the appellant has claimed a brokerage payment of Rs. 8,00,000/- to the brokers incurred on account of sale of the above mentioned property. 5. That the above brokerage was paid through cheque as is evident from the bank account of the appellant. 6. That the AO has disallowed the payment for want of adequate verification. 6.3.2 I have considered the above mentioned facts. In this regard, I have also taken into consideration the fact that the brokerage payment was made through cheque and details of the recipient was filed during the assessment proceedings also. In this regard, I have also taken into account prevalent brokerage rate in the sale/purchase' of Real Estate. As per Confederation of Real Estate Brokers of India (CREBI), the standard rate of brokerage on sale of real estate is 2%. In this case the appellant has claimed brokerage of Rs. 8 lakhs on the total sale proceed of Rs. 4.5 crores, which is within the range of prevalent brokerage/commission rate in Real Estate. Therefore, it is my considered view that the brokerage paid in this case is reasonable, hence appellant is given the benefit of brokerage paid of Rs.....