TaxTMI 
TaxTMI 
2021 (7) TMI 900
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and on facts by upholding the order of the Ld. AO, wherein the Ld. AO has allegedly considered unfinished villas which are uninhabitable and not fit for dwelling, as residential houses owned by the Appellant on the date of transfer of the original asset, and thereby denying the exemption under Section 54F claimed by the Appellant on transfer of the original asset. 4. The Ld. CIT(A) has erred in law and on facts by upholding the order of the Ld. AO, wherein the Ld. AO has failed to appreciate the documentary evidence submitted to substantiate the fact that the villas owned by the Appellant on the date of transfer of original asset were uninhabitable and not fit for dwelling. 5. Any other ground that may be urged at the time of hearing with the previous approval of the Hon'ble Tribunal." 2. Briefly, the facts of the case are that the assessee, an individual, filed her return of income for the AY 2013-14 on 28/07/2013 declaring total income of Rs. 43,95,510/-. From the statement of computation of total income, the AO observed that the assessee had returned income from various heads viz., income from salary, capital gains and income from other sources. Subsequently, the case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee referred to Page 13 of sale deed of villa No.26, which states that the villas are semi-finished villas only and to the supplementary agreement which was entered between the appellant and the purchasers entered on 13.2.2013. The supplementary agreement was entered because the description of the villa as "semi-finished" was Inadvertently missed out in the sale deed. In the following case laws, it was held that inhabitable houses cannot be equated with a residential house: (i) Smt. UsharaniKalidindi v. Income Tax Officer (2013) 37 taxmann.com 360 (Hyd.Trib.). (ii) JagdishChander Malhotra v. Income Tax Officer (1998) 64 ITD 251 (Delhi). 2.4 The AO considered the explanation and found it as not acceptable for the following reasons:- (i) As per Annexure-IA of the JDA, it is beyond any doubt that 5 vi1las which were received during the AY 2012-13 by the appellant are residential houses. (ii) The sale deed entered into by the assessee for Villa No.25 states that it is "Bungalow with BUA of 5197.9 sq.ft, on Plot NO.25". Subsequently, the assessee entered into an unregistered supplementary agreement dated 27.02.2013, in which the nature of the property has been mentioned as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thought may be at the instance of the appellant. It is not for the developer to say whether the villas require additional work to be carried or not, which depends on the landowner who gave the land for development, either to sparsely finish/furnish or go for heavy investments. (iii) In the sale deed of Villa No.25 the property was mentioned as Bungalow with built-up area. It appears that as an afterthought, as noted by the AO, an un-registered supplementary document was entered mentioning the property as "semi finished bungalow". 6.1 From the above, it is evident that what the appellant got from the buyer are habitable villas. Mere spending of some more amount for finishing carried out by way of additional works by the appellant cannot make the villas handed over to the appellant as inhabitable. The appellant failed to demonstrate with any evidence that the said villas were not in inhabitable condition when they were handed over by the developer. Further, no evidence with documentary proof has been given regarding the amounts spent and nature of works carried out for making them habitable.AS per the terms of the JDA the developer had handed over 5 bungalows to the appellant. Wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he time of sale of the property, appellant was not in possession of more than one residential house as the villas handed over to appellant by Ambience Properties Limited are not in habitable condition and that they are semi-finished villas. This is evident from the letter given by the developer which clearly states that additional works are to be carried out by the owners to make them habitable. The Same is demonstrated by the letter given by Ambience Prooperties. 1.5 Hence, the 5 villas received by the appellant are semi-finished villas and the appellant is holding only one finished villa at the time of date of transfer of original asset. Refer para 3.3 of assessment order dated 17.03.2016 of appellant AY 2013-14. 1.6. Further, we would like to draw your reference to Para No. 1 of Page No.13 in the sale deed of semi finished villa No.26 which states that the villas are semi- finished villas only and the same is also evident from the supplementary agreement which was entered into between the Appellant and the purchaser on 27-02-2013 for sale of semi finished Villa. No. 25. This supplementary agreement was entered because the description of the villa as "semi-finished" was inadv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns that when amounts deposited under Capital Gains Account Scheme were not utilised wholly or partly for the purchase or construction within the period specified, then such amount would be charged as income of the previous year in which the period of three years, starting (rom the date of the transfer of the asset expired. The term used is 'shall'. Section 54F does not say that the amount shall be taxed in the year of withdrawal, if such withdrawal are not utilized for the purpose of construction. Even if the amount deposited in a Capital Gain Account, is utilized for any other purpose, in our opinion the result would be very same. He will have to pay tax for such amount in the previous year after expiry of the three years time period. Here, assessee had suo-motu offered the sum in Assessment Year 2009-10 as capital gains. As already mentioned, the circumstances do not warrant a conclusion can be drawn that assessee had no intention to construct a residential house (rom the very beginning. In the case of Smt VA Tharabai (supra), Coordinate Bench held that without purchasing land, house cannot be constructed . First step was purchase of land. If the next step could not be pu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9.2 Sft. of built-up area against 7.5 sft. to be built up as per 12.6 of the Development agreement cum GPA for every SQ. yd. of saleable plotted area for the owners allocation of 15807 sq. yd. Accordingly, the total built-up area comes to 1,45,424.40 sft. which Includes additional built up area of 26,872 Sft. 3. ..... 4. .. 5.. 6. An amount of Rs. 50,00,000 (Rupees Fifty lakhs only) paid by the land owner towards extra works carried out by the developer for the bungalows of land owner share will be adjusted against the cost of the same and there will not be further claim of the developer for the same. 7.. 8. The land owner will not be eligible to any other claim including compensation for delay from the developer and the developer will not be eligible to any additional cost for the additional extra built up area." 8.2 According to the above clauses, the settlement has been done for extra works to be carried out by the developer. Earlier, as per the Joint Development Agreement-cum-General Power of Attorney, the assessee was supposed to receive 5 Villas, which must have been complete villas, which had been allotted and ; the settlement agreement is only for extra works t....