By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Chartered Accountants
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New Page 1
52 (2009) 34 SOT 152 (Delhi)
Addl.CIT vs Narendra Mohan
Uniyal
ITA No.1624 (Delhi) of 2009 and
Cross Objection No.157 (Delhi) of 2009.
A.Y.2006-07. Dated 31.08.2009.
Section 54F r.w.s. 54 Investment
in vacant land appurtenant to and forming a part of a residential unit is
eligible for exemption u/s.54F, even if no construction is done on the
appurtenant land.
Facts:
During the relevant assessment year, the assessee sold land
and invested the capital gains in a plot of land on which a residential house
was under construction and claimed exemption u/s.54F. The assessee also claimed
exemption u/s.54F in respect of investment in another continuous plot of land
which, according to him, was land appurtenant to the building constructed on the
first plot. The Assessing Officer held that exemption u/s.54F is provided only
if investment is in respect of a residential house and not for an empty plot.
He, therefore, held that the consideration invested in the purchase of the
second plot was not entitled to exemption u/s.54F, and restricted the exemption
to the extent of amount invested in purchase of the first plot. On appeal, the
CIT(A) held that the Assessing Officer had not adduced any evidence that the
second plot was not a contiguous one and it did not constitute a land
appurtenant to the building constructed within the statutory time limit u/s.54F.
He therefore, allowed the claim of deduction u/s.54F in respect of second plot.
Held:
The Tribunal allowed the assessee’s claim. The Tribunal noted
as under:
a. There is no rider u/s.54F that no deduction would be
allowed in respect of investment of capital gains made on acquisition of land
appurtenant to the building or on the investment on land on which a building
is being constructed. When the land is purchased and the building constructed
thereon, it is not necessary that such construction should be on the entire
plot of land, i.e., there is no denial of exemption on investment in a piece
of land which is appurtenant to the building and on which no construction is
made.
b. In the instant case, there was no dispute in the fact
that investment of capital gains was made within the statutory period and
within the same financial year. Another plot of land which was purchased by
the assessee was adjacent to the plot already purchased during the relevant
year itself out of capital gains. Only because construction was made on the
first plot of land, the exemption claimed in respect of investment made in
Adjacent plot of land, could not be declined when all the other conditions as
stipulated u/s.54F were satisfied.
c. Both the plots formed part of one residential unit and
were contiguous and adjoining to each other. 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 not appurtenant to the building so constructed was not eligible
for exemption, could be favourably accepted.
d. On a proper appreciation of material available on record, it was clear
that the property purchased by the assessee was a single unit and was being
used for residential purposes.
