TaxTMI 
TaxTMI 
2026 (4) TMI 1546
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....equests. 2. The Ld. CIT(A) has erred both on facts and in law in confirming the disallowance of deduction made by AO u/s 54/54F of the Act of Rs. 1,80,22,401/- and ignoring the fact that Assessing Officer("AO") has travelled beyond the directions given by Hon'ble ITAT vide their order dated 03.05.2017. 2.1. The Ld. CIT(A) has erred both on facts and in law in ignoring the fact that Hon'ble ITAT had restored the matter for a limited determination as to whether the use of impugned urban "appurtenant land" to residential house was for agriculture. 2.2. The Ld. CIT(A) has erred both on facts and in law in Ignoring the fact that no agricultural activity was being carried out In the impugned property acquired for on which deduction u/s 54F of the Act was claimed and same has been established by the photographs and the report of the Inspector. 2.3. The Ld. CIT(A) has erred both on facts and in law in ignoring the fact that Impugned urban "appurtenant land to residential house was situated in low Density Residential Area (LDRA) located in municipal limit of Delhi. 2.4. The Ld. CIT(A) has erred both on facts and in law in ignoring the fac....
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.... the assessee further made the following elaborate submissions :- "1. FACTS OF THE CASE 1.1 The assessee is an individual who filed his return of income for A.Y. 2012-13 on 26.03.13 declaring a total income of Rs. 1,84,764/-. (Copy of Income computation enclosed at PB from page 44 to 45 and Copy of ITR Acknowledgment enclosed at PB page 48). 1.1.1 During the year under consideration, the assessee had sold his with share in residential house no. W-25, Greater Kailash Part-1, New Delhi along with other co-owners and out of the total sale proceeds, his share was Rs. 3,50,00,000/- (Sale deed enclosed at PB from page 62 to 71). 1.1.2 On such sale, the assessee earned a net capital gain of Rs. 3,07,29,796/-. 1.2 The entire capital gain as above, was invested by assessee along with other co-owners in purchasing a residential farm house which had a residential house built therein, a servant quarter, a driveway and land appurtenant to residential house in low density urban area (LDRA), village Jaunapur, New Delhi (Sale deed enclosed at PB from page 49 to 61). Total purchase consideration Rs. 12,29,50,000 for 11124/4 sq. mtr.). 1.2.1 The ....
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....mined by the AO on verification of the land and in the light of the photographs filed by the assessee and after furnishing the copy of patwari's report to the assessee and after affording an opportunity to the assessee of being heard on this aspect. With this view of the matter, we set aside the orders of the authorities below and restore the matter to the file of the AO for determination of the nature of use of land for the purpose of extending the benefits of section 54 of the Act. The AO will furnish a copy of patwari's Report and afford a reasonable opportunity to assessee of being heard on this aspect. Second Round of proceedings 15 The Lal. A passed his order dated 31.12.2018 u/s 143(3)r.w.s254 of the Act, which, in all material aspects, is similar, to the order originally passed by the L41. AO 143(3) on 10.03.2015, blatantly ignoring the directions issued by the ITAT. 1.6. The order passed by AO was challenged before the CIT(A) 1.6.1 The CIT(A) dismissed the appeal in a summary manner merely reproducing and accepting the order of AO. 1.6.2 The assessee has preferred appeal before the Hon'ble ITAT. 2 With regards to the....
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.... the Appellate Assistant Commissioner in regard thereto, the Tribunal passed the following order: "He [ie., counsel for the assessee) desired that the Tribunal should set aside the Appellate Assistant Commissioner's order and direct him to deal with the assessee firm's claim for relief from super-tax on its merits. This request is not only reasonable bat proper. I would therefore vacate the Appellate Assistant Commissioner's order and restore the appeal with the direction that it be disposed of on its merits." Where the matter went back to the Appellate Assistant Commissioner, he not only inquired into the facts relating to super-tax relief but went further, suo motu, into the question whether there was a discontinuance of the business earlier in 1933 and held that there was such discontinuance and therefore no relief could be granted to the assessee under section 25(4) and after giving notice of enhancement withdrew the order for relief even in respect of income-tax: Held, that the order of the Appellate Tribunal, when read in the proper context, restricted the scope of enquiry by the Appellate Assistant Commissioner only to the question of merits affecting th....
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....tself and if we do so, as indeed we should do so, there is considerable force in the submission on behalf of the assessee that the order must be read as restricting the scope of the inquiry by the Appellate Assistant Commissioner only to the question of merits affecting the claim for relief from super-tax. We must, however, observe that there is in this case scope for the contention very strongly pressed before us by Mr. Joshi. On a consideration of the matter, we prefer to take the view that the order of the Tribunal required the Appellate Assistant Commissioner to inquire only into the matter of relief from supertax on its merits." Unquote 3.6.5 The Ahmedabad ITAT in the case of General Motors India Pvt Ltd v ACIT [TS-640 ITAT-2016(Ahd)-TP] (PB 109 to 161 @ page 130) Quote 22. We have noted that, in the remanded proceedings, the Transfer pricing officer has taken considerable pains to point out, what he perceived as, infirmities in the order if the Tribunal holding that GMDAT should be taken as tested party. Such an exercise was entirely uncalled for. Once a direction is given by the tribunal to the Transfer Pricing officer, whether such a dire....
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....ved from these photographs 4.2.5 It is also noteworthy that a judicious agriculturist after drawing out the "COST BENEFIT ANALYSIS" would not be ready to carry out agricultural operation such land with "sanctioned residential farm house" because the value of yield of agricultural produce (Benefit) won't commensurate with the value at which such Land is purchased (cost). 4.2.6 In the present case, as already mentioned, the assessee along with other co-owners invested an amount of Rs. 12,29,50,000 in purchasing a residential farm house at village Jonapur, New Delhi. The assessee owns a 25% share in the said property. A prudent investor would not invest such huge money in an agriculture land knowing that the amount of yield from agricultural produce/operations would not correspond proportionally to the cost of acquiring the land. 4.3 The Hon'ble ITAT also denied the determination of "nature of land" solely in accordance with the govt. records and underlined the need to determine the "nature of land" in the light of its "use". 5. A.O ignored the fact that "appurtenant land" to Residential House was situated in Low Density Residential Area (LD....
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....rty for the purpose of claiming deduction under section 54F of the Act or not. For that proposition, it is relevant to consider the purchase deed (copy of which is placed at page 21 to 32 of the assesses paper book), in the said purchase deed it is mentioned at para 3 of page 2 that the said property was having Tube well, electric connection and build-up Farm House within the boundary wall. Similar facts have been mentioned at para 2 of page 6 of the purchase deed which clarifies that the assessee had purchased land with boundary wall, tube well, electric connection and build-up farmhouse. In the present case, the Assessing Officer also made the verification by visiting the site which is evident from page no. 6 of the assessment order wherein photographs of the land in question are shown and the Assessing Officer also mentioned in para 2.2 of the assessment order that no agricultural activity was being carried out on the said premises. 20.2 Moreover, the Assessing Officer in the present case, himself admitted at page no. 16 of the assessment order that land purchased by the assessee came into Municipal Limit and in lower density residential area the relevant observation of....
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....lso submitted that she had not owned any other residential house as on the date of purchase made on 19/10/2012 i.e., before furnishing of Income Tax Return for the year under consideration, therefore, the assessee fulfilled all the conditions to claim the exemption under section 54F of the Act and the Ld. CIT(A) rightly directed the Assessing Officer to allow the claim of the assessee for deduction under section 54F of the Act. Unquote 5.5 From the relevant extract above, it can be observed that the facts of the case of Smt. Seema Bishnoi are similar to the facts of assessee' case to much extent. The property (referred in the judgment above) was ascertained to be a residential property on the basis of purchase deed and AO's findings. The purchase deed of the assessee also speaks similar as that in the above case. 5.6 The assessee further relies on following judicial precedents: 5.6.1 ITAT Delhi in the case of CIT Vs. Narendra Mohan Uniyal (34 SOT 152) (PB 181 184 @ 184) Quote 11. In view of the above discussion and keeping in view the detailed observation made by the CIT(A) at paragraphs 4, 5 and 6, we can safely conclud....
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....uous and adjoining to each other. The comments of the Assessing Officer to the effect that exemption under section 54F is eligible only for construction of house is not tenable insofar as even cost of land forming part of the residential unit on which no construction is done is also eligible for exemption under section 54F. Thus, the cost of vacant land appurtenant to and forming part of the residential unit is to be considered for claim of exemption under section 54F even if no construction has been done on the appurtenant land. The provisions of section 54F clearly provide for exemption if the net consideration received as a result of transfer of any capital asset, other than a residential house, is invested in the purchase or construction of a residential house. The new residential house is not debarred from having a land appurtenant to any size and it is also not the case of the Assessing Officer that the land appurtenant to the building is not entitled to exemption under section 54F. Had it been a case of land not appurtenant to the building so constructed, then the contention of the Assessing Officer to the effect that investment of capital gains made in the second plot ie. s....
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....the assessee of being heard on this aspect." 7. On reading of the Tribunal's order we observed that the Tribunal directed the AO to examine and determined the nature of use of land for the purpose of benefits u/s. 54 of the Act and also obtain Patwari's report. However, on perusal of the assessment framed pursuant to the Tribunal's order we find that the AO has travelled beyond the directions of the Tribunal and denied the deduction u/s. 54 of the Act once again. 8. We find that almost an identical issue came up for consideration before the Chandigarh Bench of the Tribunal in the case of ITO Vs. Smt. Seema Bishnoi in ITA No.103/Chd/2018 dated 20.02.2019 wherein the Tribunal held as under :- "15. We have considered the rival submissions of both the parties and perused the material available on record in the present case it is not disputed that the assessee sold agricultural land situated at Village Biwasan, Tehsil Vasant Vihar, Dethi on 18/09/2012 for a sum of Rs. 62,50,00,000/- and earned capital gain of Rs. Ra. 61.13.24,357/ The assessee made investment of Rs. 62,47,51,100/-in the purchase of land measuring 12 Bighas, at village Jonapur, Tehsil Mehrauli, New Delhi, ....
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....n that the capital gains exigible to fax under the Act. resulting from the acquisition of the land was exigible Consequently, in the return filed by the assessee under the Act for the assessment year 2015-16, he had disclosed the capital gains resulting from the acquisition of the land and paid tax on that basis for that purpose, the assessee had worked fair market valve as on April 1,1981 out the indexed cost of the land reckoning its for of Rs. 50.000 per cent, the return was taken under scrutiny. The deduction claimed by the assessee under the head "Capital gains" was the issue Identified for examination. An inquiry was started. In the meanwhile, in the light of section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act. 2013, the court held in a that compensation payable to persons for the lands acquired under the statute was exempted from payment of fax under the Act. In the circumstances, in so far as the acquisition of the land of the assessee was under that statute. the assessee submitted a reply to the notice requesting the Assistant Commissioner to drop the proceedings initiated against him under section 143 of t....
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....r must not take advantage of ignorance of the assessee as to his rights & liabilities, it is one of the duty of the officer to advice when approached by the assessee as to his rights and liability and as to the procedure to be adopted for claiming refund and relief. 18.1 in the present case the assessee claimed deduction under section 54F of the Act, during the course of assessment proceeding and also duty mentioned in the computation of income for the sald deduction. So, it was the duty of the Assessing Officer to allow the claim under section 54F of the Act if it was legally allowable to the assessee, in our opinion the Ld. CIT(A) rightly directed the Assessing Officer to allow the claim of the assessee under section S4F of the Act. 19. Now question arises as to whether the property purchased by the assessee at Village Jonapur was a residential property for the purpose of claiming deduction under section 54F of the Act or not. For that proposition, it is relevant to consider the purchase deed (copy of which is placed at page 21 to 32 of the assesses paper book), in the said purchase deed it is mentioned at para 3 of page 2 that the said property was having Tube ....
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....ctionary meaning, is a former's house attached to a farm. In the present case, there was no evidence that there was no evidence that there was any farm in existence. The assessee had paid Rs. 7,560 on 7-4-1984 as conversion charges. He again paid Rs. 4,200 as development charges to the UIT on the UIT on 26-5- 1984. Therefore, the ITO could not take the view that what was in existence could not be called as a residential house. The description of the construction, which was not in dispute. showed that it was a com complete unit having a big hall kitchen, toilet and verandah notwithstanding the size of the swimming pool, which was also there. As rightly pointed out by the assessee, there was no prohibition regarding the construction of a residential house on agricultural land. Therefore, the assessee was entitled to the deduction claimed under section 54F." 20.2 Moreover, the Assessing Officer in the present case, himself admitted at page no. 16 of the assessment order that land purchased by the assessee came into Municipal Limit and in lower density residential area, the relevant observation of the Assessing Officer reads as under: "It is pertinent to mention h....
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....ying the record, mentioned in para 5.6 of the impugned order that in the purchase deed it was clearly mentioned that the original owner had taken approval from the concerned authority le: Municipal Corporation of Delhi for construction of farmhouse on the said land on 07/06/2006 which clearly established that the assessee purchased the residential property with appurtenant land, duly approved by the concerned authority. The purchase of the sold residential property had been made within the statutory period of two years from the date of receipt of capital gains and the assessee also submitted that she had not owned any other residential house as on the date of purchase made on 19/10/2012 le: before furnishing of Income Tax Return for the year under consideration, therefore, the assessee fulfilled all the conditions to claim the exemption under section S4F of the Act and the Ld. CIT(A) rightly directed the Assessing Officer to allow the claim of the assessee for deduction under section 54F of the Act. 22. Before parting, it is relevant to point out that the case law relied by the Ld. CIT DR in the case of Municipal Corporation of Delhi & others Vs. Shri Naresh Kumar And Othe....