THE issues before the Bench are - Whether Section 54F benefits
can be denied on the ground that the house purchased by the assessee was not fit
for residence as it had no doors nor windows and Whether the report of an
Inspector is the sole criteria of allowing exemption u/s 54F - Whether in case
it is proved that prior to sale, the vendor lived in the house and the same was
sold along with the residential construction, exemption u/s 54F can't be denied.
And the verdict goes against the Revenue.
Facts of the
case
The assessee, a
medical practitioner, had filed his returns of income for the AY 2008-09
declaring a total income of Rs.27,22,500/-, which was processed u/s 143(1).
Subsequently, it was taken up for scrutiny u/s 143(2). During assessment, income
was determined at Rs.1,03,25,814/- by denying the assessee’s claim for exemption
u/s 54F.
On
appeal, the CIT(A) dismissed the petition. On further appeal, the Tribunal, on
reappreciation of the entire materials on record, held that the sale deed under
which the assessee purchased the property clearly described that the assessee
purchased a site together with 02 Square RCC roofed house, cement floor, jungle
wood doors and windows. Form No.1A issued by the Department of Registration and
Stamps, Government of Karnataka, dated 16.10.2007 also referred to the schedule
‘C’ measuring 200 sq.ft. RCC house, with cement floor and all civic amenities. A
receipt dated 03.07.2007 showing the payment of property tax for the year
2006-07 and 2007-08 showed that the tax was paid for a site and a house and
therefore, it was of the view that what the assessee purchased was a residential
site with house. However, the Assessing Authority, three years after the
purchase of the house inspected and the said Inspector’s report dated 19.11.2010
showed that there was no house; there was only a watchman shed where building
material of the neighbor was collected and acted on the said report without
proper verification. Therefore, the Tribunal was of the view that the material
on record showed that the assessee purchased a house with a site, subsequently,
he had demolished it. He was in the process of putting up a construction. In the
meanwhile, he had accommodated his neighbor to keep his building material by
permitting a watchman to live there by putting a temporary shed, but that cannot
be construed as a fact, which showed that the case of the assessee was
incorrect. Therefore, Tribunal held that the findings recorded by both the
Authorities were unsustainable and therefore, it set aside the said findings and
granted relief to the assessee.
Before the HC, the Revenue's
counsel contended that the photographs produced by the assessee himself did not
show that the construction put up therein was not fit for residence which had no
facilities like electricity, water and toilet. It had no windows, no doors and
therefore, the Tribunal committed a serious error in interfering with the
concurrent finding of fact.
Held
that,
++
the orders by the lower Authorities are based on the report submitted by the
Inspector who visited the place three years after the sale. On the day he
inspected, there was a shed constructed for living of the watchman and to store
the building material of the neighbor of the assessee who was putting up a
construction. That is not the building, which is referred to in the sale deed.
On the day the property was purchased, a residential structure measuring about
200 sq.ft. was in existence. The photograph which was produced by the assessee
even before the Authorities demonstrates the said fact. May be, that structure
is not palatial, it does not have all civic amenities, that was the status of
the vendor of the assessee. He sold the site to the assessee who is a doctor by
profession. What the law contemplates is, after selling the property, if the
assessee invests the sale consideration in purchase of a residential property,
he is entitled to exemption under Section 54F. What should be the extent of
construction of residential building, what facilities should be provided in such
constructions to be eligible for the exemption, is not set out in the Act. All
that the Authorities have to look into is, whether what is purchased is a
residential construction or not? If the material on record shows, prior to sale,
the vendor lived there with his family and he has sold the site along with the
residential construction, merely because the property is not suitable to the
assessee and construction materials are kept there, is not a ground to deny
exemption under Section 54F of the Act. What the Tribunal has held is on careful
consideration of the entire material on record. In that view of the matter, we
do not see any justification to entertain this appeal. No substantial question
of law arises for consideration in this appeal, no merits, accordingly,
dismissed.
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