TaxTMI 
TaxTMI 
2022 (2) TMI 520
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....wo parts situated in India during the year for a total consideration of Rs. 7,31,76,075/- wherein long-term capital gains of Rs. 6,57,25,559/- has accrued. The assessee purchased a new residential house property in India for Rs. 5,66,89,527/- during the year itself which includes an investment of Rs. 9,28,079/- to make it habitable and claimed exemption u/s 54 of the IT Act. The AO asked the assessee to justify the claim made u/s 54 of the Act since the assessee has sold two plots of land instead of a residential house. It was explained by the assessee that exemption claimed u/s 54 of the Act should be allowed. It was argued that the assessee inherited 1/4th share in the ancestral residential house property No.22, Radice Road (Gokhley Marg), Lucknow on 21.02.1997 by way of will of her grandfather. The said house was being used for residential purposes. The said residential house with land appurtenant thereto was demarcated between the appellant and other three coowners as a result of which part of the existing house property along with part of the land appurtenant to the house building had fallen to the share of the assessee. The nature of the property right from the date of its pu....
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....expenditure incurred to make the house habitable was given according to which an amount of Rs. 3,84,963/- related to wood work, chimney, bathroom, etc. and an amount of Rs. 5,43,116/- relates to various other items such as blinds, Eureka Forbes Air Purifier, LG Refrigerator, Panasonic MW, LG Washing Machine, dining table, study table, etc. 5. Based on the arguments advanced by the assessee, the ld.CIT(A) directed the AO to recompute the capital gains after allowing deduction u/s 54F to the extent of amount invested in residential house and also the amount spent on necessary furnishing and fittings on the said house so as to make the house habitable totaling to Rs. 3,84,963/-. 6. Aggrieved with such order of the CIT(A), the assessee as well as the Revenue are in appeal before the Tribunal by raising the following grounds:- Assessee's Appeal (ITA No.1367/Del/2020) "1) Because the CIT(A) has failed to appreciate the facts of the case and erred in law in arbitrarily holding that the appellant is not eligible for deduction u/s.54 of the Act, 1961 on account of sale of the residential house with land appurtenant thereto, treating it to be a case of sale of land, thereby....
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....cumstances of the case, the Ld. CIT(A) erred in allowing deduction u/s 54F of the Income Tax Act, 1961 relying upon fresh evidence without providing an opportunity to the assessing officer for verifying it or calling the remand report? 3. Whether on fact and the circumstances of the case, the Ld. CIT(A) erred in allowing the deduction u/s 54 of the Income Tax Act, 1961 without appreciating or indicating in his order as to how and on what evidence he has come to conclusion that the assessee satisfied the condition for allowing of deduction of u/s 54F of the IT Act 1961 including that the assessee had only one house in India. 4. The appellant craves to add, amend, modify or alter any grounds of appeal at any time or before the hearing of the appeal." 7. The ld. Counsel for the assessee stronglychallenged the order of the CIT(A) in not allowing the benefit of section 54 of the IT Act as claimed by the assessee. Referring to the last two lines of page 2 of the paper book, the ld. Counsel drew the attention of the Bench to the same and submitted that the dispute in the present appeal centres around the computation of long term capital gains and deduction of the same....
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.... registered valuer who valued the same after inspection of the property, the assessee has filed the Municipal receipts relating to the house property situated on the land sold, the lower authorities should not have considered the property sold as mere sale of land instead of land and building and, thereby denying the benefit of deduction u/s 54 of the Act. 9.1 Referring to the decision of the Hon'ble Andhra Pradesh High Court in the case of Zaibunnissa Begum, reported in 151 ITR 320, he submitted that the Hon'ble High Court has explained the meaning of 'land appurtenant' and has laid down certain guidelines which is squarely applicable to the facts of the present case. Referring to the decision of the Hon'ble Karnataka High Court in the case of C.N. Anantharam vs ACIT, vide ITA No.1012 to 2008, order dated 10th day of October, 2014, copy of which is placed at pages 43 to 55 of the paper book, he submitted that the Hon'ble High Court, following the decision of the Hon'ble Karnataka High Court in the case of Azra Abdulla vs. CIT, ITRC No.146 of 1995 dated 9th April, 1997, has allowed the claim of deduction u/s 54 of the IT Act. He submitted that since the assessee, in the instant ....
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....AO denied the claim of the assessee on the ground that the assessee, during the year under consideration and at the time of execution of sale deed has described the property as a plot. He, therefore, held that there is no relevance whether there was a house in the past or not and the only fact is that at the time of executing the sale deed the capital asset is a plot and, therefore, the exemption claimed by the assessee u/s 54 cannot be allowed. The AO further held that the assessee did not furnish the satisfaction of condition u/s 54F and, therefore, the same cannot be allowed to the assessee. We find, before the CIT(A) the assessee submitted certain detail, on being asked by him. Based on the details and considering the fact that the assessee has invested an amount of Rs. 5,66,89,527/- including the expenditure of Rs. 9,28,079/- to make the house habitable, allowed the claim of deduction u/s 54F, but, restricted the cost of making the house habitable to Rs. 3,84,963/- as against Rs. 9,28,079/- claimed by the assessee meaning thereby that the ld.CIT(A) considered the asset sold by the assessee as a piece of land and not land and building. It is the submission of the ld. Counsel th....
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....e demise of Shri Shyam Krishna Aggarwal, the property was inherited by above four grandchildren, all being coowners. As per the demarcation of the property, each coowner got the specified area in the house and the assessee Smt. Charu Aggarwal got 10840.90 sq. ft. The assessee, during the instant year, has sold her 1/4th share in the immovable property i.e., the residential house at 22, Radice Road, Gokhale Marg, Lucknow. The assessee has executed two separate agreement to sell on 2nd September, 2016: one with Ravinder Kumar Gupta and the others and the other with Vishnu Ballabh Rastogi and others to sell the property falling to her share. These agreements were registered with Sub-Registrar at Kolkata. As per the above sale deed, the total consideration received was Rs. 7,31,76,075/- and the assessee, after deducting the indexed cost of land and building at Rs. 74,50,516/-, determined the long-term capital gain at Rs. 6,57,25,559/-. After deducting the deduction u/s 54F towards cost of new house property including the cost of improvement to make it habitable at Rs. 5,66,89,527/- determined the capital gain at Rs. 90,36,032/-. As mentioned earlier, the assessee has filed the copy of ....
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....t from the point of view of the persons occupying the building. The number of persons or different branches of families residing in building, the requirements of the persons occupying the building, consistent with their social standing, etc., are relevant for the purpose. If any surplus is arrived at on such enquiry, then the extent of such surplus land may not qualify be treated as land appurtenant to the building ; (3) if there is any evidence to indicate that any portion of the land contiguous to the building was applied to user other than the enjoyment of the building, then that provides a safe indication regarding the extent of land applied for such user. For instance, the land used by the occupiers for commercial or agricultural purposes although forming part of the land adjacent to the building, does not qualify to be treated as land appurtenant to the building; (4) if the owner or occupier is deriving any income from the land which is not liable to be assessed as income from house property under s. 22 of the I.T. Act, then the extent of such land does not qualify to be treated as land appurtenant to the building ; and (J) any material pointing to the attempted user of the b....
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....Act. Thus the meaning of the word building in Section 54 has to be construed in the same way as to be considered in the way considered for the purpose of Section 22. The rental income from the land is not taxable under Section 22. 5. The Tribunal held as follows : The word 'or' in law relating to statutory interpretation need not be disjunctive, thought it is normally so. The word 'and' is normally used where the intention is not disjunctive but it is not unusual to use the word or' to mean 'and' in a statute. 'Or' can be disjunctive word. The clear intention elsewhere in the provision requires to be so understood as "and" in the context of section 54, the reasoning is that section does not contemplate two separate sales of building and appurtenant land. If appurtenant land can be sold independently, it ceases to be appurtenant which goes with the building. Hence the deduction under Section 54 will be admissible in case the capital asset is a residential house. Such capital asset must be a long term capital asset. A house consists of building and land appurtenant thereto. Hence building as well as appurtenant land should be long....
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.... the Tribunal. The benefit is not available to sale of lands independent of the buildings, and therefore, he submits no cause for interference with the impugned orders is made out. 10. In fact, it is useful to refer to a judgment of this court in the case of Smt. Azra Abdulla v. CIT in I.T.R.C.No. 146/1995 decided on 09.04.1997 where the questions which arose for consideration was whether land appurtenant thereto the sale of land appurtenant is entitled to the benefit of Section 54(1) of the Act?. This court after referring to - several judgments has held as under: "Section 54 of the Act deals with capital gain arising from transfer of a long term. capital asset being building or lands appurtenant thereto and being a residential house the income of which is chargeable under the head 'Income from House Property', in the present case, it is not in dispute that entire property held by the assessee prior to sale was subject matter of assessment under the Head 'Income from House Property'. What was sold was a part of that property now which is contiguous to the same. The test whether the sale is in relation to a residential house is satisfied. The sale is in rel....
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....ings or lands appurtenant thereto to should be understood disjunctively having regard to the context in which it is used. It cannot be read as 'and'. If it is read as 'and', it amounts to court rewriting the section by substituting the word 'and' in place of the word "or" which is not permissible in law. A person may be residing in a residential house and the land pertinent thereto. That house he may be using it for his benefit. As long as the said land is not used for any commercial or non-residential purpose, the user of the land by the resident is for residential purpose only. If such a person chooses to sell only the land which he was using for residential purpose, the legislature has conferred the benefit in respect of/to the capital gains arising there from under Section 54(1) of the Act. If a land appurtenant to a residential house is entitled to the said benefit, we find it difficult to accept that the land on which the residential building is constructed is not entitled to the said benefit. 12. When a property, residential house is sold, the sale consideration includes the value of the land and the value of the construction. Though there is....