TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 333
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....f the I.T. Act on the ground that the Assessing Officer has allowed the claim of deduction u/s 54F without proper verification of the facts in the wake of assessee's contention that some of the properties were given on rent and hence commercial in nature. He further observed that the contentions were not raised during the course of assessment proceedings. He, therefore, set aside the order passed by the Assessing Officer u/s 143(3) r.w.s. 153A of the Act with a direction to examine all the issues as per his order and redo the assessment after making detailed inquiry and investigation and examining the claim of the assessee. 3. Subsequently, in the light of the above direction, the Assessing Officer issued notice u/s 143(2) of the I.T. Act and asked the assessee to furnish certain details which were furnished by the assessee. From the details furnished by the assessee, the Assessing Officer noted that during the impugned A.Y, the assessee has earned capital gain income of Rs.19,61,62,476/- and after reducing the claim of deduction u/s 54F of Rs.9,54,10,035/- had offered the net taxable gain at Rs.10,57,52,441/-. From the various details furnished by the assessee, he noted that the ....
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....g Officer was not satisfied with the arguments advanced by the assessee. He accepted the contention of the assessee in respect of property at Sai Nivas, Shaikpet Village, Hyderabad which is a vacant site(S.No.1) and, the House No.A-102, Noida, Uttar Pradesh (S.No.7) which is an industrial property and therefore, not to be reckoned while considering the claim of deduction u/s 54F. 5. However, so far as properties situated at Sai Pavan Kuteer (S. No.2), Flat No.1, Flat No.4, Flat No.204 of Sai Lakshmi Nilayam, Hyderabad (S.Nos.3 to 5) and Swastik Apartment at Siliguri (S.No.6) are concerned, he observed from verification of the agreements that the same are in the nature of residential units only and the assessee has shown the income from these units under the head "Income from House Property" only. According to the Assessing Officer, though the assessee claims that these properties are used for commercial purposes, however, assessee failed to show with proper evidences that the properties are commercial in nature and any distinction between rental income from a residential property and rental income from a commercial property. In absence of any such detail, the Assessing Officer hel....
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....fficer in denying deduction u/s 54F of the Act by observing as under: "6.0 I have carefully considered the submissions made by the appellant as the as well observations of the A0 in the impugned order. It is the contention of the appellant's AR that the exemption u/s.54F has been wrongly denied, since the properties in question i.e., three flats in Nos.010, 104 & 204 at 1-63/126/B, Kavuri Hills, Hyderabad, and one property at Siliguri, are leased to a limited company, and further that merely showing the income from such properties under the head Income from House Property' does not prove that the units are residential units. This contention of the appellant's AR, however, does not hold any water, since as accepted by the appellant's AR himself, the properties in question are 3 flats which are clearly in the nature of residential units, and merely the fact that they have been leased out to a limited company, does not change the character or nature of the said units. As rightly pointed out by the Assessing Officer, the onus is upon the assessee to prove that the properties are commercial in nature, and merely furnishing the lease deed of the properties does not abso....
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....xemption claimed u/s 54F be allowed". 10. The learned Counsel for the assessee strongly challenged the order of the ld.CIT(A) in confirming the denial of deduction u/s. 54F of the I.T.Act. He submitted that the assessee has conclusively proved that the property situated at Sai Praveen Kuteer(S.No.2), Flats at Sai Lakshmi Nilayam being Flats No, 1,4 & 204 and the Flat at Swastik Apartment at Siliguri(S.No.6) are let out for commercial purpose and therefore are not residential units. The assessee does not own any house property other than the new asset purchased. Referring to the decision of the Delhi Bench of the Tribunal in the case of Sanjeev Puri vs DCIT reported in 2016 (72 taxmann.com 147), he submitted that the Tribunal in the said decision has held that it does not make any difference as to whether the property has been shown as residential house on the record of the government authority but actual user thereof by the assessee will be considered while adjudicating upon the eligibility of the deduction u/s. 54F of the I.T.Act claimed by the assessee. Referring to the decision of Hon'ble High Court of Karnataka in the case of Navin Jolly vs ITO reported in 117 taxmann.com 323,....
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....e benefit of deduction u/s. 54F of the I.T.Act. 12.1 So far as the various decisions relied on by the ld.counsel for the assessee are concerned, he submitted that these decisions are distinguishable and not applicable to the facts of the present case. So far as the decision in the case of Sanjeev Puri(supra) is concerned, the ld.DR submitted that the Flat in that case was used by the assessee for his profession as a Lawyer. Similarly, in the case of Navin Jolly(supra), which was decided by the Hon'ble Karnataka High Court, these Flats were let out to be used for commercial use which are in the nature of service apartments. However, in the instant case, the assessee has let out the properties to a company which are situated in residential societies and there is no evidence on record to show that the properties are being used for commercial purposes by paying the requisite taxes levied by the Municipal Authorities for commercial use of the properties. Therefore, it cannot be said that the flats are let out for commercial purposes. Referring to the statement of facts, the ld.DR submitted that the assessee himself is the Managing Director of the Coastal Projects Ltd. which is a Privat....
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....o not find any merit in the above arguments of the ld.counsel for the assessee. A perusal of the details furnished by the assessee shows that although, the property at Siliguri, West Bengal is let out to Coastal Project Ltd. and the flats No.101, 104 & 204 at Hyderabad to M/s. Coastal Reality Ltd, however, all these properties are situated in residential societies and the ld.counsel for the assessee could not prove with evidence that these flats situated in the residential societies are in fact used for commercial purposes. On being a pointed query raised by the Bench as to whether the local authorities are charging taxes applicable to commercial properties for the flats which have been let out for commercial use, the ld.counsel for the assessee could not prove the same. In fact the ld.counsel for the assessee in his written submission has admitted that the Municipal Authorities levied the taxes applicable for commercial use of the premises only w.e.f 2015 for the property situated at Flat No.1, 4 & 204 at Sai Lakshmi Nilayam, Hyderabad. Similarly, there is no levy of tax for commercial use of the property by the Municipal Authority for the property situated at Siliguri. There is a....