Section 54F exemption available on Residential house constructed on agricultural land

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IN THE ITAT JAIPUR BENCH ‘A’

Assistant Commissioner of Income-tax

v.

Om Prakash Goyal

IT APPEAL NO. 647 (JP) OF 2011

[ASSESSMENT YEAR 2008-09]

FEBRUARY 2, 2012

 

The Commissioner (Appeals) considered the fact that there is no bar to purchase agricultural land on which house was to be constructed. The fact is that subject to the provisions of sub-section (4) of section 54F, where, in the case of an assessee being an individual or a HUF, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereinafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, found that assessee has purchased a plot of land and has constructed a house on the same, then taking into consideration the case of Addl. CIT v. Narendra Mohan Uniyal [2009] 34 SOT 152 (Delhi) and taking into consideration the decision of Hon’ble Rajasthan High Court in case of CIT v. Vishnu Trading & Investment Co. [2003] 259 ITR 724 and also the decision in case of Shyam Sunder Mukhija v. ITO [1991] 38 ITD 125 (JP) found that assessee is eligible for exemption under section 54F. The Assessing Officer’s contention was that land purchased by assessee was agricultural land, moreover, the property was not registered in his name. However, after taking into consideration the provisions of section 54F the Commissioner (Appeals) found that the only condition for claiming exemption under section 54F is that the asset transferred is long-term capital asset, not being a residential house. The assessee has not transferred a residential house but a long-term capital asset. This is an undisputed fact and the Assessing Officer has not doubted this fact. Second condition is that residential house is purchased within one year before or two years after the date of transfer of original asset. This condition is not applicable on the assessee as assessee has not purchased any new house either one year before or two years after the transaction. Third condition is construction of the house should be completed within three years from the date of transfer and this condition was satisfied as explained by Commissioner (Appeals). The Board Circular No. 667 dated 18-10-1993 was also taken into consideration by Commissioner (Appeals) whereby it was clarified that for the purpose of computing exemption under section 54 or 54F, the cost of the plot together with cost of the building will be considered as cost of new asset, provided the acquisition of the plot and also the construction thereon are completed within the period specified in these sections. These conditions were found satisfied by the Commissioner (Appeals) and, therefore, he has allowed the exemption to the assessee. The copy of valuation report which was obtained on 17-3-2011 showed that the house was constructed by assessee and the valuation of the construction is Rs. 16,29,600. It means, the exemption claimed by assessee which was at Rs. 1,20,50,000 only. This consideration was paid for the purchase of plot and Rs. 16,29,600 was also invested in construction of house of which the assessee has not claimed any deduction for the reason known to him. However, it is seen that house was constructed and, therefore, Commissioner (Appeals) has allowed the exemption to the assessee to the tune of Rs. 1,20,50,000. Since all conditions for claiming exemption under section 54F have been found satisfied, therefore, it will be futile exercise if the matter is sent back to the file of Assessing Officer. All the details are placed on record from which it is established that assessee purchased a plot of land and then constructed the house on it. The house constructed on agricultural land or on other hand does not matter, but the fact that house should be constructed and from the report it is very much clear that a residential house was constructed as this fact has been mentioned by valuer in his valuation report. In view of these facts and circumstances, the Commissioner (Appeals) was justified in allowing the claim of the house. Accordingly, the order of Commissioner (Appeals) is confirmed.