TaxTMI 
TaxTMI 
2024 (7) TMI 1798
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....ax (Appeals) ('CIT(Appeals)') grossly erred in upholding the action of AO in assessing the total income of the assessee at Rs. 1,56,03,349/- as against the returned income of Rs. 24,51,630/-. 2. That, on the facts and circumstances of the case, the CIT(Appeals) has erred in law and on facts in upholding the disallowance of Section 54 amounting to Rs. 1,13,04,000/- made by the AO. The CIT(Appeals) as well as the AO failed to appreciate that the Assessee had purchased only one residential property. 3. That, on the facts and circumstances of the case, the CIT(Appeals) as well as the AO have erred in law and on facts in treating the two floors of the same residential property as two separate residential units and therefore, have consequently erred in denying deduction u/s 54 on the alleged second residential unit. 4. That, without prejudice to the aforementioned contention, on the facts and circumstances of the case, the CIT(Appeals) has erred on facts and in law in upholding the computation of Long Term Capital Gain ('LTCG') done by the AO at Rs. 2,11,68,800/- disallowing indexed cost of improvement incurred by the Assessee-Appellant on the p....
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....6 and served upon the assessee. 5. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed indexed cost of improvement of Rs. 43,25,517/- Rs.27,28,791/- and Rs.4.20,216/- respectively for the FYs 1983-84, 1990-91 and 2003-04 for which the assessee has not submitted any evidence. 6. The Assessing Officer issued the show cause to the assessee stating the CBDT Circular no. 1/2015 dated 31.01.2015 provides that benefit was intended for investment in one residential house within India. Accordingly, sub section (1) of section 54 of the Act has been amended to provide that the rollover relied under the said section is available if the investment is made in one residential house. 7. The Assessing Officer further observed that the assessee has merely submitted that the assessee has discarded/weeded out all documents. Therefore, the Assessing Officer was of the opinion that the onus was on the assessee to submit the evidence of cost of improvement which the assessee has failed despite getting repeated opportunities. Accordingly, the Assessing Officer rejected the claim of cost of improvement for above mentioned F.Ys and th....
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....ruction of property were paid to MCD on 15-05-2007 and proof of the same had been submitted. The assessee had discarded/weeded out all the documents concerning the construction of the property as per the provisions of the Act 1961 as these documents were more than six years old. At the time of purchase of the said property by the assessee, the said property was a small single story building whereas, at the time of sale of the said property, the same property was a three storied fully built up property proves that improvements have been made on the said property. 12. The ld. counsel for the assessee vehemently contended that the purchase of two connected flats is to be considered as a purchase of one new property and the deduction should be allowed in respect of the whole property consisting of both the floors. For this proposition, the ld. counsel for the assessee drew support from various decisions of Tribunals and contended that even the decision of the Hon'ble Jurisdictional Hon'ble Delhi High Court supports the view of the assessee in its decision in the case of CIT v. Gita Duggal ITA 1237/2011 (Delhi HC) wherein the Hon'ble High Court followed a Supreme Court de....
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....as to get the third floor. The assessee accordingly handed over vacant physical possession of the entire property along with 22.5% undivided interest over the land. The handing over of possession of the entire property was however only for the limited purpose of development; the undivided interest in the land stood transferred to the developer/builder only to the extent of 22.5% for his exclusive enjoyment. It was on these facts that the assessing officer first took the view that the sale consideration for the transfer of the capital asset should be taken not merely at `four crores which was the cash amount received by the assessee, but the cost of construction incurred by the developer on the development of the property amounting to Rs. 3,43,72,529/- should also be added to the sale consideration. The assessee thereupon claimed that if the cost of construction incurred by the builder is to be added to the sale price, then the same should also be correspondingly taken to have been invested in the residential house namely the two floors which the assessee was to get in addition to the cash amount under the agreement with the builder, and the amount so spent on the construction shoul....
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....n raised by the revenue before that Court was rejected in the following terms : "A plain reading of the provision of section 54(1) of the Income-tax Act discloses that when an individual-assessee or Hindu undivided family- assessee sells a residential building or lands appurtenant thereto, he can invest capital gains for purchase of residential building to seek exemption of the capital gains tax. Section 13 of the General Clauses Act declares that whenever the singular is used for a word, it is permissible to include the plural. The contention of the Revenue is that the phrase "a" residential house would mean one residential house and it does not appear to the correct understanding. The expression "a" residential house should be understood in a sense that building should be of residential in nature and "a" should not be understood to indicate a singular number. The combined reading of sections 54(1) and 54F of the Income- tax Act discloses that, a non residential building can be sold, the capital gain of which can be invested in a residential building to seek exemption of capital gain tax. However, the proviso to section 54 of the Income- tax Act, lays down that i....
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....ns for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited. For the above reasons we are of the view that the Tribunal took the correct view. No substantial question of law arises for our consideration. The appeal is accordingly dismissed with no order as to costs." 16. SLP filed by the department before the Hon'ble Apex Court against the order of the Hon'ble High Court [supra] was held in favour of the assessee and against the Revenue by holding that merely because a residential house consists of several independent residential units, deduction u/s 54/54F cannot be disallowed. 17. A perusal of the above order shows that all the facts were before the Assessing Officer who misconstrued the property as two di....