I-T - If plot purchased has electricity connections and small house, fit for human habitation, is constructed on it then it is investment in residential house for which deduction u/s 54 can be claimed : ITAT
By TIOL News Service
JAIPUR, SEPT 24, 2018: THE ISSUE IS - Whether if the plot purchased has electricity fittings and connections and small house fit for human habitation is constructed on it then it is investment in residential house for which deduction u/s 54 can be claimed. YES IS THE VERDICT.
Facts of the case
The assessee an Individual, had filed return for relevant AY. During the relevant year, the assessee sold a residential house for a total sale consideration of Rs. 7.00 crores. The assessee claimed deduction u/s 54 of the Act and no capital gain liability was computed. Thereafter, the assessee filed a revised return of income wherein deduction u/s 54 of the Act was re-computed and capital gains liability was also computed. The AO observed that the assessee had not bought a residential house rather he had only bought a plot of land and had proposed to make construction in the years to come. Further the amount over and above the cost of plot should have been deposited in the capital gains accounts scheme but the assessee had failed to do so. Accordingly, the AO did not allow the claim of the assessee u/s 54 of the Act and computed long term capital gain liability in the hands of assessee at Rs. 2,54,95,782. On appeal, CIT(A) partly passed order in favour of assessee.
Tribunal held that,
++ a claim towards deduction under section 54 was made by the assessee while filing his original return of income and thereafter, there have been revision in the quantum of such claim during the course of assessment proceedings. The AO has not allowed the claim holding that what has been purchased is a plot of land and not a residential house, besides other reasons. The CIT(A) has however allowed the claim of the assessee to the extent of purchase consideration and related expenses as per conveyance deed dated 7.6.2012, however he has not allowed the claim of Rs. 30,65,000/-. The findings of the CIT(A) are based on right appreciation of the conveyance deed duly corroborated by the pictures of the constructed rooms as well as domestic electric connection taken in the name of the seller. During the course of hearing, nothing has been brought to notice to controvert the findings of the CIT(A). Hence, it was decided to confirm the findings of the CIT(A) that the property so purchased by the appellant was a residential house eligible for deduction under section 54 of the Act. As far as claim of Rs 30,05,000 is concerned, nothing has been brought on record which demonstrate that such cost has been incurred towards any refurbishment/renovation of the residential house so purchased. In the result, sole ground of the revenue's appeal and the assessee's additional ground of appeal is hereby dismissed and the order of the CIT(A) is hereby confirmed.
(See 2018-TIOL-1620-ITAT-JAIPUR)
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