TaxTMI 
TaxTMI 
2020 (4) TMI 781
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....clusion that the Appellant was owning two premises on the date of sale of land, though, one of the premises was not ready for occupation and hence wrongly disallowed claim under section 54F of the Act. 4. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that investment in property of Rs. 49,50,500 is not allowable under section 54F of the Act. 5. On the facts and circumstances of the case and in law, the learned CIT (A) erred in confirming the disallowance u/s 54 of the Act in respect of deposit in Capital Gain account Scheme of Rs. 1,50,54,470. 6. On the facts and circumstances of the case and in law, the learned CIT(A) did not consider the grounds in respect of deni al of liability to charging of interest under section 234A and 234B of the Act." 2. Briefly stated, the assessee had e-filed his return of income for A.Y. 2013-14 on 31.03.2015, declaring a total income of Rs. 19,33,68,623/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. During the course of the assessment proceedings it was observed by the A.O that the assessee had in his return of income reflected income ....
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.... property at Lonawala: Rs. 8,63,000/-; and (ii) residential house at Kamothe: Rs. 5,94,150/-. Observing, that as per 'Proviso 1' of Sec.54F, no deduction was to be allowed to an assessee who owned more than one residential house on the date of transfer, other than the new asset, the A.O called upon the assessee to explain his eligibility for claim of deduction under Sec. 54F, in the backdrop of the fact that he owned two residential properties as on the date of transfer of the 'Original' asset. In reply, it was submitted by the assessee that though he had purchased the residential house at Lonawala for use for his weekly holidays, however, due to its poor quality of construction the possession of the same was not taken by him and the matter was sub-judice in the court. As regards the residential house at Kamothe, it was the claim of the assessee that the same was occupied by his son. On the basis of his aforesaid submissions, it was the claim of the assessee that he was not having any residential accommodation on the date of transfer of the 'Original' asset i.e sale of land. 5. The A.O after deliberating on the contentions advanced by the assessee was however not persuaded to subs....
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....ee on the date of transfer of the 'Original' asset i.e sale of land was owner of two residential properties viz. (i) residential house at Lonawala; and (ii) residential house at Kamothe, it was submitted by the ld. A.R that the said observations were factually incorrect. In order to buttress his aforesaid claim, it was submitted by the ld. A.R that as the residential house at Lonawala on account of its poor quality of construction was unfit for human habitation, therefore, the possession of the same had not been taken by the assessee till date. Also, it was submitted by the ld. A.R that as the land on which the aforesaid property is situated was a forest land, therefore, there is an ongoing dispute between the assessee and the seller on the said issue too. It was averred by the ld. A.R that the dispute of the assessee with the builder is pending before the Consumer Dispute Reddressal Forum at Pune. In order to drive home his aforesaid claim, the ld. A.R took us through the relevant extract of the complaint filed by the assessee against the builder/developer (Page 77-103) of assesses paper book (for short 'APB'). The ld. A.R drawing our attention to the aforesaid complaint, therein ....
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.... of deduction under Sec. 54F of the Act, for the reason, that as on the date of sale of the 'Original' asset the assessee owned more than one residential property viz. (i) residential house at Lonawala : and (ii) residential house at Kamothe. On the basis of his aforesaid observations, the A.O had declined the assesses claim of deduction under Sec. 54F aggregating to an amount of Rs. 2,00,04,970/- [Rs. 49,50,500/- (+) Rs. 1,50,54,470/-]. In order to test the maintainability of the view taken by the lower authorities, it would be relevant to cull out Sec. 54F of the Act, which reads as under: "54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capi....
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....h the amount so deposited shall be deemed to be the cost of the new asset:" On a perusal of the aforesaid statutory provision, we find, that for entitling the assessee to claim deduction, the same inter alia contemplates that the assessee on the date of transfer of the 'Original' asset should not own more than one residential house, other than the new asset. As observed by us hereinabove, the controversy in the present case hinges around the aspect as to whether or not the assessee as on the date of transfer of the 'Original' asset i.e the sale of the land on 01.03.2013 owned more than one residential house, other than the new asset. It is the claim of the revenue that the assessee on the date of transfer of the 'Original' asset owned two residential properties viz. (i) residential house at Lonawala and (ii) residential house at Kamothe. Rebutting the aforesaid observations of the lower authorities, it had consistently been the claim of the assessee that he did not own more than one residential house on the date of transfer of the 'Original' asset. As is discernible from the orders of the lower authorities, it has been the claim of the assessee that though he had acquired the prop....
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....uction with M/s Chaitanya Enterprises (hereinafter referred to as 'contractor') for construction of a Bungalow admeasuring about 75.32 sq. mtr., i.e 800 sq. ft. on the aforesaid plot (Page 57-66) of APB. As per the aforesaid 'agreement' for construction, the contractor was bound to complete the construction of the Bungalow within 6 months or before the 31st December, 2002 (Page 61) of APB. A copy of the Bungalow plan which was proposed to be constructed is found at Page 66 of APB. However, as the assessee was thereafter not satisfied with the quality of the Bungalow that was constructed by the aforesaid contractor, therefore, he along with his family members had filed a complaint against the contractor viz. M/s Chaitanaya Dham Associate and its partners with the Consumer Dispute Reddressal Forum, Pune. (Page 77 - 103) of APB. On a perusal of the aforesaid complaint filed by the assessee, we find that he had complained about the quality of the construction of the Bungalow on multiple grounds. The relevant extract of the aforesaid complaint of the assessee filed with the Consumer Dispute Reddressal Forum, Pune by way of an 'affidavit' under Sec. 13(4) of the Consumer Protection Act, ....
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....mproper water-proofing treatment; (xvi) I state that, the total workmanship is very poor; (xvii) I state that, the structural beams are not of the proper sizes; (xviii) I state that, the materials used are not of proper quality; (xix) I state that, the structure needs proper method of water-proofng; (xx) I state that, the structure needs very heavy repairs; (xxi) I state that, the structure requires demolition of the entrire plaster and re-do it; (xxii) I state that, the bungalow needs entirely reconstruction by demolishing the original structure; (xxiii) I state that, the construction is so bad that renovation will be equal to new construction costing about Rs, 10,00,000/- (Rs. Ten Lacs) (xxiv) I state that, the Opponents have not Installed ISI marked Electrical Appliances thereby there Is risk of short-circuit any time the said appliances are under use; (xxv) I state that, Pure drinking water tap for drinking Is not provided; (xxvi) I state that, W.B.M. Colony Road not done; (xxvii) I state that, General cleanliness of common areas i.e, Road, common open space, amenities area not provided; (xxviii) I state that , RCC precasts labs for roofing not provi....