TaxTMI 
TaxTMI 
2019 (7) TMI 1274
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....6.2.2014. While framing the assessment, the A.O. observed that assessee had sold 3 pieces of agricultural lands for Rs. 1.20 crores and computed long term capital gain as at Rs. Nil by claiming that he purchased 3 pieces of agricultural lands for Rs. 33,93,445/- and invested Rs. 86,90,000/- in construction of new residential property within 3 subsequent years and claimed deduction u/s 54F of the Act. The assessing officer rejected the claim of deduction u/s 54F of the Act. The A.O. further made addition in respect of estimation of profit from manufacturing of bricks of Rs. 1,60,000/-. Aggrieved against this, the assessee preferred an appeal before the CIT(A), who after considering the submissions, dismissed the appeal. Now the assessee is in present appeal. 3. Ground No.1 of the assessee's appeal is against rejection of his claim made u/s 54F of the Act amounting to Rs. 86,90,000/- for construction of a new asset. Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the assessee are reproduced as under: 4. During the present proceedings, the assessee has also filed an application under rule 29 of the Income Tax Appella....
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....ee wife which would not qualify for deduction u/s 54F of the Act. 6. We have heard the rival contentions, perused the materials available on record and gone through the orders of the authorities below. We find that the evidences furnished are electricity bills, property tax receipts, inaugural photograph of house and the affidavit from the assessee. Considering the totality of the facts, these evidence goes to the root of the issue, and are material evidence to prove the construction of a new asset. We therefore, admit the same and set aside the orders of the authorities below on this issue and remit the issue of allowability of deduction u/s 54F of the Act to the A.O. The A.O. would decide the issue after considering the evidences placed on record in accordance with law. This ground of the assessee's appeal is allowed for statistical purposes. 7. Ground No.2 is in respect of addition made by the A.O. towards enhancement of business income. Ld. Counsel for the assessee reiterated the submissions as made in the synopsis. The assessee has been engaged in the business of manufacturing of bricks and declared profit at Rs. 1,39,990/-. The A.O. however estimated the same to Rs. 3 l....
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....t. We find that the Ld. CIT(A) in his order has stated a figure of Rs. 7,29,700/- as the sale proceeds which could be taken as gross receipts. Therefore, the very foundation of making estimation is not correct. Hence, we cannot confirm this adhoc and casual approach of the assessing authority, he is therefore hereby directed to delete the addition. This ground of the assessee's appeal is allowed. 11. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order was pronounced in the open court on 24.07.2019. ============= Document 1 GROUND NO 1. EXEMPTION U/S. 54F RS. 86,90,000/- A.O. Pg 4 Para 5.2. CIT(A) Pg. 10 Para.6 (Findings) FACTS Sold New Asset/Purchased Constructed u/s 54F Computation : : 3 Agricultural Land dated 08.04.2010 & 04.10.2010 for Rs. 1,20,00,000 a.) 3 Agricultural Lands at Rs. 33,93,445 b.)Residential House. Plot already owned in name of Wife (Smt. Kiran Choukse) Construction cost- Rs. 86,90,000 (PB 17-19) : Sale Consideration Less: deduction u/s 54B Purchase of Agricultural land Less: deduction u/s 54F (Funds utilised in construction of Residential Hous....
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....66 additional construction was taken Sq Mtr Rs. 25 lacs incurred prior to 01.04.10, out of sale proceeds of agricultural land. a. The advance receipt of Rs. 25 lacs from sale of agricultural lands, as appearing as opening balance in House construction account on 01.04.10, was not supported by any documentary evidence. b. The entire sale proceeds from agricultural land was received in cash, and thus there was no trail of advance receipt. The House construction account shows entire amount invested in purchase of material for construction, no amount towards labour payment was shown, which was unbelievable. C. The appellant begs to submit the point-wise reply on the allegations of Id AO and Id CIT(A) are as under:- Sr. Allegations No 1. 2. 3. 3 Ld AO: That the cash was utilized for construction of house in name of his wife was not eligible u/s. 54F. Ld AO: The appellant could not prove that invested money is from sale of old asset, as neither books of account was maintained and nor payment was through cheque Ld CIT(A): a. The advance receipt of Rs. 25 lacs from sale of agri....
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....might be without taking permission from society. The Exemption u/s 54F cannot be denied on the ground that permission was not taken from the society. a. The undisputed fact is that construction was done, might be approval taken later on. Even if construction was without permission it does not mean that exemption u/s 54F can be denied. The fact that construction on the said plot of land was carried out can be proved by the following:- •Electricity Bill Payment receipt from M.P state electricity board of House no 439, Clerk Colony. (PB-29) Property tax receipt from Nagar Nigam along with calculation of property tax as per construction (PB 30-31) Construction Completion certificate from Techno Expert construction Engineer. (PB 32) •Statement of source and Investment - along with House Construction ledger account totalling up to Rs. 86,90,000 (PB 34) •Inaugural photographs of House constructed at 439, Clerk Colony. (PB 39- 41) b. The Construction was completed in March 2011, whereas the permission was granted on 1.4.2011. The violation of Nagar Nigam Act may attract penalty provi....