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2024 (10) TMI 303
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....odara ["the AO"] in disallowing the claim of deduction u/s. 54F of the Income Tax Act, 1961 ("the Act") amounting to Rs. 14,14,55,783. 2. The learned CIT(A) erred in fact and in law in confirming the action of the ld. AO in invoking proviso to section 54F for making disallowance of deduction u/s 54F despite that the Appellant did not own more than one residential house at the time of transfer of the capital asset. 3. The learned CIT(A) erred in fact and law in confirming the action of the ld. AO in invoking proviso to section 54F and consequently disallowing the claim of deduction u/s. 54F without properly appreciating the provisions of section 2(1 A) of the Act. 4. The learned CIT(A) erred in fact and law in confirming the action of the ld. AO in invoking proviso to section 54F and consequently disallowing the claim of deduction u/s. 54F despite the fact none of the conditions specified under proviso to section 54F were fulfilled in the case of the Appellant. 5. The learned CIT(A) erred in fact and law in confirming the action of the ld. AO in invoking /proviso to section 54F and consequently disallowing the claim of deduction u/s. 54F without a....
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....e Raipura House") and (ii) Vishubaug Farm property at Kharakhadi ("the Farm"). 3.1. The assessee claimed that the Farm property is an agricultural land used for carrying out agricultural activities wherein there is a Manager's office, storehouse for farm equipments and agricultural produce stored there. Further the farm property also has a cow shed with 66 cows. The milk from these cows is sold and income is from generated the same. Thus the farm is exclusively used for agricultural purposes and it's not a residential building and the employees of the assessee are carrying out the agricultural activities. The assessee also claimed that he is one of the co-owners of the above land along with his wife and daughter. Thus the farm is exclusively used for agricultural purposes and it's not a residential building and the employees of the assessee are carrying out the agricultural activities. Thus the assessee claimed that the reinvestment in new residential property at Colaba Mumbai is eligible for deduction u/s. 54F of the Act. 3.2. To verify the details, the A.O. deputed Inspector of the Income Tax Department to conduct enquiry of the residential properties owned by the assessee.....
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....ffice of the manager of the farm house Mr. Sangram Singh Bharvad is also constructed separately from cowshed and outhouses and is in sound and perfect condition. None of these mentioned constructed buildings are in a dilapidated condition and are all separate entities. The office is mad the entrance gate of the property and is around 50 to 100 feet away men other properties existing in the farm house. Most important of all, which makes the calm of the Assessee outrageously incorrect la the fact that apart from these three properties the Assessee is having a separately built beautiful residence, a Bungalow, surrounded with all around verandah and covered boundary. It is situated inside the Vishubaug property and is more than 50 to 100 feet away from all other three constructed buildings mentioned above. Not only this Banglow is aesthetically built and in a sound condition but has all the furniture/furnishings befitting of a house of an elite/rich person like the Assessee. The House/bungalow is about more than twenty years old. Though it is not being frequented by the Assessee lately, as told by the workers/caretakers present there, but it is not due to the reason of the bunglow bein....
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.... Raipura, Vadodara. In support of his claim the assessee has quoted another case-law CIT Vs Dr. Smt. P.K. Vasanthi Rangarajan [2012] 23 taxmann.com 299 (Mad) where it has born held that "joint ownership of a property could not be held to stand in her way of claiming exemption u/s. 54F of the Act". However, the case of the assessee is distinguishable from the quoted case in that case the assessee had not owned any property in status of any individual, as on date of transfer. She was only a joint owner in one property. Thus the quoted case law is not at all applicable to the facts of the assessee's case. In the proviso of section 54F the claim of deduction barred the person who punt more than one residential house, other than the new asset Harmonious reading of the section 54F(1) with the proviso (1) clearly indicates that the assessee who owns more than one house, that means if an assessee already owning a residential house in his separate capacity, holds even a miniscule percentage of share in second/another property that makes it more than one residential house. Thus it means that it is not necessary to be the hundred percent owner of second house to get barred for deduction u....
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.....6 The thrust of appellant's arguments are that - a. The Farm is not a residential house and is only used for carrying out agricultural activities and commercial activities. b. The income, if any, from the building on the Farm would not be- chargeable to tax under the head "Income from House Property" and hence, proviso to section 54F is not applicable. c. The Appellant is not personally carrying out any agricultural activity and he is not required to reside at the Farm and therefore he does not reside at the Farm. d. The Appellant has made heavy investment in constructing his elegant bungalow at Raipura and the same is mainly for residential purpose and it cannot be assumed that the Appellant would reside at the Farm instead of the House at Raipura. e. Without prejudice to above, the Appellant in any case is a joint owner of the land and hence proviso to section 54F is not applicable to the Appellant. 5.7 From the description of the property Vishubag at Kharkhadi in the assessment order based on the Inspector's report, it is clear that the property is an agricultural land spread over 22 acres and on one third portion of....
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....produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on: Provided that - if the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other out-building and the land is either assessed to, land revenue in India or is subject to a local rate assessed and collected by the Officers of the Government or where the land is not so assessed is situated in any area which is comprised within the jurisdiction of the Municipal Corporation or in any area within the specified distance from the local limits of any Municipality. 5.11 No dispute has been created by the AO as to 22 acres of land not being agricultural land. Thus it may be presumed that the land is agricultural land and is situated well beyond the prescribed limits outside the Municipal Corporation of Baroda. However, in the submission made during the assessment proceedings, the claim has been made that the property at Vishubag is used as farm for milk production ....
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....es if the assessee has more than one residential property and the appellant definitely has more than one residential property. 5.15 In the facts and circumstances of the case the appellant is found to be-owner of more than one residential house other than the new asset (residential property at Colaba, Mumbai) on the date of transfer of the original asset (shares). I find no basis to interfere with the assessment order impugned in the appeal by the appellant. The addition is confirmed and the related grounds are dismissed. 6. Before us, Ld. Counsel for the assessee submitted that the lower authorities failed to consider that there is only residential property available with the assessee namely Raipura House wherein the assessee is residing. The Vishubag Farm property is jointly held by the assessee with his wife and daughter as co-owners which is nothing but a commercial property. The net result of such commercial activities carried out is negative therefore the same is not declared by the assessee in its Return of Income. In fact the assessee was maintaining a bank account with Axis Bank and State Bank of India wherein amount received from sale of dairy products, vegeta....
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....ion carried out by the Department and the photographs is reproduced in the assessment order clearly depict that there is a residential house namely a bungalow in the property which is habitable in nature, other than the one Raipura House. The assessee's claim of agricultural activity and dairy activity is not substantiated with proof of evidence and not declared in the Return of Income filed by the assessee. In the absence of the same, the assessee's claim of Vishubag Farm property as a commercial property cannot be accepted. The Hon'ble Orissa High Court in the case of State of Orissa vs. Ramchandra Chaudhary 46 ITR 246 has held that "dairy farming will not be an agricultural operation and income from dairy farming will also not be agricultural income. Therefore income from milk derived from milk booth maintained by the assessee, is not an "agricultural income". Thus assessee failed to prove and disclose the agricultural income in his Return of Income. Therefore the assessee's claim of commercial activity is not properly established wherein the Bungalow is also situated is to be treated only as a second residential property of the assessee. Therefore the lower authorities are corr....
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.... for the assessee relied on several judicial precedents, in support of the contention that in order to be denied the claim of deduction u/s. 54F of the Act, the assessee should be exclusive owner of the property and joint ownership in the property would not disentitle the assessee from claim of deduction u/s. 54F of the Act. In our view, certain points in this regard are noteworthy. Firstly, it has not been denied by the assessee that the entire investment in the property at Vishubaug was made by the assessee himself and only for the purposes of registration that the property had been jointly registered in the name of his wife and his daughter. Accordingly, in our view, the case laws cited by the assessee would not come to the rescue of the assessee for the simple reason that if the entire investment is made by the assessee, then simply by putting the name of other co-owners being the close relatives say wife, daughter, son, etc., would not take away the case from the purview of the restrictions imposed under the provisions of Section 54F being that the assessee should not be owner of more than one immovable property at the time of purchase of new property. The assessee has made in....