ITAT allows time to produce relevant documents for claiming Exemption u/s 54 on Property constructed on Revenue Land [Read Order]

ITAT - Property Constructed - Revenue Land - Claiming Exemption - Assessing Officer - Taxscan

The Income Tax Appellate Tribunal (ITAT) Bangalore on February 4th allowed an assessee an opportunity to produce all the relevant documents for claiming under section 54 of the Income-tax act on the residential property built on revenue land.

The assessee, Shri Lakshmi Narayana Prasad filed his return of income on 30.1.2014 declaring an income of Rs.3,37,070/-. In the course of the scrutiny assessment, it was found that he had sold the property for the consideration of Rs. 79,72,000/- and the long term capital gains were determined at Rs.63,50,344/-. The assessee claimed the exemption under section 54 of the Income-tax (IT) Act, 1961 to the tune of Rs.62,77,000/- and also claimed brokerage of Rs.80,000/-. The assessee was asked to furnish the documents to support the claim. The assessee submitted that the residential property was constructed on a revenue site under his own supervision and for his own occupation and consequently he did not maintain the records in full and it was also submitted that there was no approval for the plan since it could not be obtained as construction was on a revenue site and the revenue authorities were only keen to collect the taxes and not providing any approval to the plan despite giving the details of the break-up of the cost was given.

The Assessing Officer (AO), however, held that no part of the cost of construction was liable to be allowed on account of the fact that the assessee did not produce any evidence by way of vouchers and documents to prove the construction. Even the valuation report submitted by the assessee from the approved value to support the cost of construction wherein the cost was determined by applying CPWD rates was not accepted. Consequently, the claim for deduction was disallowed and a total income of Rs.66,14,070/- was determined.

Vice President N.V. Vasudevan and Accountant Member Chandra Poojari while allowing the appeal for statistical purposes held, “. . . . in our opinion, the CIT(Appeals) is not justified in holding that the property sold was not a residential house. We are of the opinion that the ld. AR’s request for an opportunity to produce all the relevant documents has to be accepted. Accordingly, we remit the entire issue to the file of the Assessing Officer for fresh consideration and direct the assessee to produce all the evidence in support of his claim for deduction u/s. 54.”

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