Sh Anil Kumar Jain, Agra v. ACIT, Agra

ITA 108/AGR/2005 | 2001-2002
Pronouncement Date: 23-07-2010 | Result: Dismissed

Appeal Details

RSA Number 10820314 RSA 2005
Assessee PAN AAVPJ6220G
Bench Agra
Appeal Number ITA 108/AGR/2005
Duration Of Justice 5 year(s) 4 month(s) 24 day(s)
Appellant Sh Anil Kumar Jain, Agra
Respondent ACIT, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 23-07-2010
Date Of Final Hearing 24-05-2010
Next Hearing Date 24-05-2010
Assessment Year 2001-2002
Appeal Filed On 01-03-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.108/AGR/2005 ASST. YEAR: 2001-02 SHRI ANIL KUMAR JAIN VS. A.C.I.T. CENTRAL CIR CLE 4(1) C/O. M/S. CHANDRA COPY HOUSE AGRA. HOSPITAL ROAD AGRA. (PAN : AAVPJ 6220 G). ITA NO.120/AGR/2005 ASST. YEAR: 2001-02 A.C.I.T. CENTRAL CIRCLE 4(1) VS. SHRI ANIL KUM AR JAIN AGRA. C/O. M/S. CHANDRA COPY HOUSE HOSPITAL ROAD AGRA. (PAN : AAVPJ 6220 G) (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI K.K. JAIN ADVOCATE REVENUE BY : SHRI R.C. SHARMA JR. D.R. ORDER PER P.K. BANSAL A.M.: THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF THE LD. CIT(A) DATED 06.01.2005. 2. THE ONLY GROUND TAKEN IN REVENUES APPEAL RELATE S TO THE DELETION OF THE ADDITION OF RS.1 00 000/- MADE UNDER SECTION 68 OF THE INCOME-T AX ACT 1961 (THE ACT HEREINAFTER). AT THE OUTSET THE LD. A.R. POINTED OUT THAT THE TAX EFFEC T INVOLVED IN THIS APPEAL IS LESS THAN RS.2 LAKHS. THEREFORE THE DEPARTMENT SHOULD NOT HAVE FILED ANY APPEAL AND THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 2 3. COMING TO THE APPEAL FILED BY THE ASSESSEE THE ASSESSEE HAS TAKEN THREE EFFECTIVE GROUNDS OF APPEAL. THE FACTS RELATING TO GROUND NO.1 ARE T HAT THE ASSESSING OFFICER MADE THE ADDITION UNDER SECTION 68 OF THE ACT AMOUNTING TO RS.3 10 00 0/- IN RESPECT OF THE LOAN RECEIVED BY THE ASSESSEE. WHEN THE MATER WENT BEFORE THE LD. CIT ( A) THE ADDITION OF RS.1 00 000/-AS LOAN TAKEN FROM SHRI KANHAIYA PANDIT WAS SUSTAINED BY THE LD. CIT(A) ON THE BASIS THAT IN THE CASE OF SHRI NARESH CHAND JAIN IN APPEAL NO.CIT(A)-II/AGR/77/ACI T4(1)/AGRA/2004-05 DATED 05.01.2005 THE LD. CIT (A) HAS UPHELD THE ACTION OF THE ASSESS ING OFFICER NOT ACCEPTING THE DEPOSITS SHOWN FROM THIS FAMILY. WHEN QUESTIONED THE LD. A.R. WA S FAIR ENOUGH TO CONCEDE THAT THE TRIBUNAL HAS CONFIRMED THE ORDER IN THE CASE OF SHRI NARESH CHAND JAIN. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT EVEN DURING THE REMAND PROCEEDINGS THE ASSESSEE COU LD NOT SATISFY THE ASSESSING OFFICER AND EVEN OTHERWISE IN THE CASE OF SHRI NARESH CHAND JAI N TO WHOM THE SAID CREDITOR HAD ADVANCED THE MONEY THE CREDITWORTHINESS AND GENUINENESS OF THE LOAN WAS NOT ACCEPTED BY THE DEPARTMENT AND THIS FACT HAS BEEN CONFIRMED BY THE TRIBUNAL EV EN THOUGH THE MATTER IS PENDING AS PER LD. A.R. BEFORE THE HONBLE HIGH COURT AGAINST THE ORDE R OF THE TRIBUNAL. SINCE THERE IS NO DIFFERENCE IN THE FACTS INVOLVED AS COMPARED TO THE CASE OF SHRI NARESH CHAND JAIN EVEN THE ORDER OF THE TRIBUNAL HAS NOT BEEN STAYED BY THE HONBLE HIGH COURT. WE THEREFORE DO NOT FIND ANY MERIT IN THE GROUND TAKEN BY THE ASSESSEE AND ACCOR DINGLY WE CONFIRM THE ORDER OF THE LD. CIT(A) SUSTAINING ADDITION OF RS.1 00 000/- LOAN RECEIVED FROM SHRI KANHAIYA PANDIT UNDER SECTION 68 OF THE ACT. THUS GROUND NO.1 STANDS DISMISSED. 5. GROUNDS NO.2 AND 3 RELATE TO THE ACTION OF THE L D. CIT(A) IN ALLOWING THE DEDUCTION UNDER SECTION 54 OF THE ACT ONLY AFTER BIFURCATING THE PR OPERTY BETWEEN THE RESIDENTIAL PORTION ALONG 3 WITH LAND REASONABLY APPURTENANT THERETO AND NON-RE SIDENTIAL PORTION. THE FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE WAS THE OWNER OF 1/5 TH SHARE OF THE LAND AND HAD SOLD THE SAID PROPERTY TO A BUILDER M/S. BGLA & SONS (P) LTD. ON 15.12.2000 FOR A TOTAL CONSIDERATION OF RS.50 00 000/- AND THE ASSESSEES SHARE CAME TO RS. 10 00 000/-. THUS RS.8 00 000/- WAS TO BE PAID BY WAY OF A FLAT AND RS.2 00 000/- WERE TO BE PAID IN CASH/CHEQUE. THE FLAT WAS TO BE GIVEN WITHIN SIX MONTHS FROM THE DATE OF THE SALE BUT AC TUALLY THE POSSESSION OF THE FLAT WAS GIVEN TO THE ASSESSEE ON 30.11.2003. THE ASSESSEE CLAIMED E XEMPTION UNDER SECTION 54-F OF THE ACT BUT THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS A CASE OF PURCHASE AND NOT THE CONSTRUCTION OF THE FLAT. AS PER SECTION 54-F OF THE ACT PURCHASE SHO ULD HAVE BEEN MADE WITHIN TWO YEARS OF THE SALE. SINCE THE ASSESSEE PURCHASED THE FLAT WITHIN THREE YEARS THE ASSESSING OFFICER DENIED THE EXEMPTION UNDER SECTION 54-F OF THE ACT. THE ASSES SEE WENT IN APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE WHEN COUNTERED MADE THE ALTERNATE CL AIM BEFORE THE LD. CIT(A) FOR THE DEDUCTION UNDER SECTION 54 OF THE ACT EVEN THOUGH HE CONFIRME D THAT ONE OF THE CO-OWNERS SHRI HARI CHAND JAIN BROTHER OF THE ASSESSEE WAS RESIDING IN THE PROPERTY SOLD. THE LD. CIT(A) HAS GIVEN DETAILED REASONING IN PARAS 9.5 TO 9.5.3 OF HIS ORD ER. 6. THE CIT(A) NOTICED THAT IN THE STATEMENT OF CAPI TAL GAINS ATTACHED WITH THE RETURN THE ASSESSEE HAS CLEARLY MENTIONED 1/5 TH LAND AT 1/57 DELHI GATE AGRA SOLD FOR RS.10 00 000/-. THIS SHOWS THAT THE ASSESSEE HAS TREATED THE PROPER TY AS LAND AND NOT RESIDENTIAL UNIT. EVEN IT WAS ALSO NOTED THAT THE ASSESSEE HAS PURCHASED ANOTHER PROPERTY WHICH WAS IN CONTRAVENTION OF SECTION 54F AND SINCE THE ASSESSEE FIND THAT HE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 54F HE CHANGED HIS STAND FOR CLAIMING DEDUCTION UNDER SECT ION 54F. THE ASSESSEE HAS ACQUIRED TWO MORE FLATS WITHIN ONE YEAR FROM THE DATE OF TRANSFE R OF PROPERTY UNDER REFERENCE. BESIDES THE FLAT IN BAGLA KUNJ HE PURCHASED ONE MORE FLAT IN PUNEET VRINDABAN SANJAY PLACE AGRA JOINTLY WITH 4 HIS WIFE SMT. SHASHI JAIN. IN THE BALANCE SHEET AS ON 31.03.2002 THE ASSESSEE HAS CLEARLY STATED THAT THE AMOUNT OF RS.2 00 000/- PAID FOR FLAT AT P UNEET VRINDAVAN SANJAY PLACE. THIS IS SUPPORTED BY THE FACT THAT IN THE AOS RECORDS THER E WAS A LETTER DATED 05.02.2001 IN WHICH THE HEADING MENTIONED WAS POSSESSION LETTER. THE ASS ESSEE ALSO ACCEPTED THIS FACT BY MAKING MENTION IN THE STATEMENT OF LTCG SUBMITTED ALONG WI TH THE RETURN WHILE CLAIMING EXEMPTION UNDER SECTION 54F THAT RS.8 00 000/- PAID FOR FLAT AT BAGLA KUNJ AND RS.2 00 000/- I.E. 50% PAID FOR FLAT AT PUANEET VRINDAVAN. THE CIT(A) IN VIEW OF THE PROVISO TO SECTION 54F(1) DENIED THE EXEMPTION AND CONFIRMED THE ORDER F THE A.O. 7. BEFORE US THE LD. A.R. VEHEMENTLY CONTENDED THA T THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54 OF THE ACT. AS THE ASSESSEE IS EN TITLED FOR THE DEDUCTION UNDER SECTION 54 OF THE ACT AS THE HOUSE IS BEING USED PRIOR TO THE SALE FO R RESIDENTIAL PURPOSES THE FACT THAT THERE WAS LAND APPURTENANT THERETO WILL NOT DISENTITLE THE AS SESSEE FOR CLAIMING EXEMPTION UNDER SECTION 54 OF THE ACT. EVEN OTHERWISE ALSO THE LD. CIT(A) WAS NOT CORRECT IN LAW IN BIFURCATING THE RESIDENTIAL PORTION AND THE NON-RESIDENTIAL PORTION . IT IS NOT DENIED THAT THE HOUSE AND THE LAND WAS BEING USED FOR RESIDENTIAL PURPOSES SECTION 54 OF THE ACT DOES NOT REQUIRE THAT THE HOUSE MUST BE USED BY THE ASSESSEE FOR HIS RESIDENCE. 8. LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(A). 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE HAVE GONE THROUGH THE ORDERS OF THE TAX AUTHORIT IES BELOW. THE ASSESSEE INITIALLY CLAIMED DEDUCTION UNDER SECTION 54F ON THE SALE OF THE PROP ERTY ALTHOUGH MENTIONED IN THE RETURN LAND AT 1/57 DELHI GATE AGRA AS CO-OWNER FOR RS.10 00 000/ - IN RESPECT OF HIS SHARE. BUT SUBSEQUENTLY 5 WHEN HE REALIZED THAT HE IS HIT BY PROVISO TO SECTI ON 54F HE CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT. HIS CLAIM IS THAT HE HAS SOLD THE RESI DENTIAL UNIT ALONG WITH LAND APPURTENANT THERETO ALONG WITH OTHER CO-OWNERS AND THE CAPITAL GAINS SO ARRIVED HAS BEEN INVESTED BY HIM IN THE PURCHASE OF A FLAT. THE TOTAL AREA OF THE PROPERTY WAS 2116.44 SQUARE METER OUT OF WHICH THE COVERED AREA WAS 49.88 SQ. MTR. I.E. 2.3% OF THE TO TAL AREA. THE CIT(A) WAS OF THE VIEW THAT IN SECTION 54 THE WORDS LANDS APPURTENANT THERE TO I NDICATE THAT THE MAJOR AREA SHOULD BE OF THE BUILDING AND ONLY A PART THEREOF WOULD BE TREATED A S LAND APPURTENANT THERETO. SINCE IN THE CASE OF THE ASSESSEE THERE IS LARGE OPEN AREA WITH ONLY 2.3% CONSTRUCTED PORTION HE DIRECTED THE A.O. TO ALLOW THE DEDUCTIONS TO THE ASSESSEE FOR RESIDEN TIAL PORTION (ALONG WITH LAND REASONABLY APPURTENANT THERETO) UNDER SECTION 54 AND NO DEDUCT ION SHALL BE ALLOWED ON NON-RESIDENTIAL PORTION. BEFORE US THE LD. A.R. EVEN THOUGH VEHEME NTLY CONTENDED THAT ONE OF THE CO-OWNER WAS PUTTING UP IN THE PROPERTY AND THEREFORE THE HOUSE IS BEING USED FOR RESIDENTIAL PURPOSE AND ACCORDINGLY THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54. 10. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 54(1) WHICH READS AS UNDER:- 54 [(1)] [SUBJECT TO THE PROVISIONS OF SUB-SECTION (2) WHERE IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDE D FAMILY] THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG TERM CAPITAL AS SET BEING BUILDINGS OR LANDS APPURTENANT THERETO AND BEING A RESIDENTIAL HOUSE THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY (HEREINAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESS HAS WITHIN A PERIOD OF [ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHI CH THE TRANSFER TOOK PLACE PURCHASED] OR HAS WITHIN A PERIOD OF THREE YEARS AF TER THAT DATE CONSTRUCTED A RESIDENTIAL HOUSE THEN] INSTEAD OF THE CAPITAL GA IN BEING CHARGED TO INCOME TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFE R TOOK PLACE IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION THAT IS TO SAY - (I) IF THE AMOUNT OF THE CAPITAL GAIN [IS GREATER T HAN THE COST OF [THE RESIDENTIAL HOUSE] SO PURCHASED OR CONSTRUCTED (HER EAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET] THE DIFFEREN CE BETWEEN THE 6 AMOUNT OF THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVI OUS YEAR AND FOR A THE PURPOSE OF COMPUTING IN RESPECT OF THE NE W ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PER IOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION AS THE CASE MAY BE THE COST SHALL BE NIL; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET THE CAPITAL GAIN SHALL NOT BE CHARGE D UNDER SECTION 45; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION AS THE CASE MAY BE THE COST SHALL BE REDUCED BY THE AMOUNT OF THE CAPITAL GAIN. 11. FROM THE PLAIN READING OF THIS SECTION IT IS AP PARENT THAT THE ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY THE CAPITAL GAIN ARISE S FROM THE TRANSFER OF A LONG TERM CAPITAL ASSET BEING BUILDINGS OR LANDS APPURTENANT THERETO AND BE ING A RESIDENTIAL HOUSE THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. IF THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON W HICH THE TRANSFER TOOK PLACE PURCHASED OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONS TRUCTED A RESIDENTIAL HOUSE THEN INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE THE ASSESSEE WILL BE ENTITLED FOR DEDUC TION IN ACCORDANCE WITH THE PROVISIONS GIVEN UNDER SUB-SECTION (I) AND (II) OF SECTION 54(1). T HERE IS NO DISPUTE IN THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS MADE THE INVESTMENT IN NEW FLAT WI THIN THE PERMISSIBLE TIME. THE ONLY QUESTION RELATES WHAT DOES THE WORD LAND APPURTENANT THERET O MEAN. THE SECTION TALKS OF LTC ASSETS BEING BUILDING OR LAND APPURTENANT THERETO AND BE ING A RESIDENTIAL HOUSE. LAND APPURTENANT THERETO MEANS THE LAND WHICH IS APPURTENANT TO THE BUILDING WHICH IS SOLD. HAD THE ASSESSEE BEEN ENTITLED FOR THE DEDUCTION IN RESPECT OF THE LAND A PPURTENANT WHICH IS NOT CONNECTED WITH THE BUILDING THE WORD APPURTENANT THERETO WOULD NOT HA VE BEEN USED. HONBLE A.P. HIGH COURT IN 7 THE CASE OF CIT VS. ZAIBUNNISA BEGUM 151 ITR 320 H AS OCCASION TO EXAMINE THE MEANING OF THE WORD LAND APPURTENANT THERETO. IN THIS CASE THE HO NBLE HIGH COURT HAS HELD AS UNDER :- THE EXPRESSION LAND APPURTENANT THERETO OCCURRIN G IN S.54 HAS NOT BEEN DEFINED. IT MUST THEREFORE BE UNDERSTOOD IN ITS POPULAR AND NON-TECHNICAL SENSE. IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION THAT D. (B) OF THE EXPLANATION TO S. 5(1)(IVC) OF THE W.T.ACT 1957 DEFINING LAND APPURT ENANT FOR THE PURPOSE OF THAT CLAUSE SHOULD BE CONSIDERED EQUALLY APPLICABLE FOR THE PURPOSE OF UNDERSTANDING THAT EXPRESSION OCCURRING IN S.54OF THE I.T. ACT. T HE EXPLANATION IN THE W.T. ACT IS ONLY FOR THE PURPOSE OF S.5(1)(IVC) BECAUSE IT IS S PECIFICALLY STATED SO. THE MEANING ASSIGNED TO THAT EXPRESSION IN THE URBAN CEILING AN D REGULATION ACT IS ALSO NOT RELEVANT. THE TAX AUTHORITIES WILL HAVE TO DETERMIN E THE EXTENT OF LAND APPURTENANT TO A BUILDING TRANSFERRED TAKING INTO CONSIDERATIO N A VARIETY OF CIRCUMSTANCES THAT MAY BE RELEVANT FOR THE PURPOSE. IT IS NOT POSSIBLE TO LAY DOWN INFALLIBLE TESTS TO BE APPLIED AS THE TESTS WOULD VARY DEPENDING UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. FOR INSTANCE: (1) IF THE BUILDING TOGETH ER WITH THE LAND IS TREATED AS AN INDIVISIBLE UNIT AND ENJOYED AS SUCH BY THE PERSONS OCCUPYING THE BUILDING IT IS AN INDICATION THAT THE ENTIRE EXTENT OF LAND IS APPURT ENANT TO THE BUILDING; (2) IF THE BUILDING HAS EXTENSIVE LANDS APPURTENANT THERETO AN D EVEN IF THE BUILDING AND THE LAND HAVE BEEN TREATED AS ONE SINGLE UNIT AND ENJOY ED AS SUCH BY THE OCCUPIERS AN ENQUIRY COULD BE MADE TO FIND OUT WHETHER ANY PA RT OF THE LAND CONTIGUOUS TO THE BUILDING CAN BE PUT TO INDEPENDENT USER WITHOUT CAUSING ANY PART OF THE LAND CONTIGUOUS TO THE BUILDING CAN BE PUT TO INDEPENDEN T USER WITHOUT CAUSING ANY DETRIMENT TO THE ENJOYMENT OF THE BUILDING AS SUCH. SUCH AN ENQUIRY SHOULD BE CONDUCTED NOT BASED ON ANY ARTIFICIAL CONSIDERATION S BUT FROM THE POINT OF VIEW OF THE PERSONS OCCUPYING THE BUILDING. THE NUMBER OF P ERSONS OR DIFFERENT BRANCHES OF FAMILIES RESIDING IN THE BUILDING THE REQUIRE MENTS OF THE PERSONS OCCUPYING THE BUILDING CONSISTENT WITH THEIR SOCIAL STANDING ETC. ARE RELEVANT FOR THE PURPOSE. IF ANY SURPLUS IS ARRIVED AT ON SUCH ENQUI RY THEN THE EXTENT OF SUCH SURPLUS LAND MAY NOT QUALIFY TO BE TREATED AS LAND APPURTENANT TO THE BUILDING; (3) IF THERE IS ANY EVIDENCE TO INDICATE THAT ANY PORTI ON OF THE LAND CONTIGUOUS TO THE BUILDING WAS APPLIED TO USER OTHER THAN THE ENJOYME NT OF THE BUILDING THEN THAT PROVIDES A SAFE INDICATION REGARDING THE EXTENT OF LAND APPLIED FOR SUCH USER. FOR INSTANCE THE LAND USED BY THE OCCUPIERS FOR COMMER CIAL OR AGRICULTURAL PURPOSES ALTHOUGH FORMING PART OF THE LAND ADJACENT TO THE B UILDING DOES NOT QUALIFY TO BE TREATED AS LAND APPURTENANT TO THE BUILDING; (4) IF THE OWNER OR OCCUPIER IS DERIVING ANY INCOME FROM THE LAND WHICH IS NOT LIAB LE TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY UNDER S.22 OF THE I.T. ACT THE N THE EXTENT OF SUCH LAND DOES NOT QUALIFY TO BE TREATED AS LAND APPURTENANT TO TH E BUILDING; AND (5) ANY MATERIAL POINTING TO THE ATTEMPTED USER OF THE BUILDING FOR PURPOSES OTHER THAN THE EFFECTIVE AND PROPER ENJOYMENT OF THE HOUSE WOULD ALSO AFFORD A SAFE GUIDE TO DETERMINE THE EXTENT OF SURPLUS LAND NOT QUALIFYING TO TREATE D AS LAND APPURTENANT TO THE BUILDING. THE ABOVE TESTS ARE ILLUSTRATIVE AND BY N O MEANS EXHAUSTIVE. IT IS FOR 8 THE TAX AUTHORITIES TO APPLY THEIR MIND PROPERLY TO THE FACTS OF EACH CASE AND TO DEVISE TESTS SUITABLE AND APPROPRIATE TO EACH CASE. 12. SIMILARLY HONBLE MADRAS HIGH COURT HAS ALSO H AD OCCASION TO EXAMINE THE WORD LAND APPURTENANT THERETO AS USED UNDER SECTION 54 OF TH E ACT. IN THIS CASE THE HONBLE MADRAS HIGH COURT IN THE CASES OF CIT VS. SMT. M. KALPAGAM 227 ITR 733 (MAD.) HAS HELD AS UNDER :- THE QUESTION WHETHER CERTAIN LAND IS APPURTENANT T O A HOUSE IS ONE OF FACT. THE FOLLOWING FIVE TESTS CAN BE APPLIED TO UN DERSTAND THE MEANING OF THE WORDS LAND APPURTENANT MORE PRECISELY(1) IF THE B UILDING TOGETHER WITH THE LAND IS TREATED AS AN INDIVISIBLE UNIT AND ENJOYED AS SUCH BY THE WITH THE LAND IS TREATED AS AN INDIVISIBLE UNIT AND ENJOYED AS SUCH BY THE PERSONS OCCUPYING THE BUILDING IT IS AN INDICATION THAT THE ENTIRE EXTEN T OF LAND IS APPURTENANT TO THE BUILDING;(2) IF THE BUILDING HAS EXTENSIVE LANDS AP PURTENANT THERETO AND EVEN IF THE BUILDING AND THE LAND HAVE BEEN TREATED AS ONE SINGLE UNIT AND ENJOYED AS SUCH BY THE OCCUPIERS AN ENQUIRY COULD BE MADE TO FIND OUT WHETHER ANY PART OF THE LAND CONTIGUOUS TO THE COULD THE MADE TO FIND O UT WHETHER ANY PART OF THE LAND CONTIGUOUS TO THE BUILDING CAN BE PUT TO INDEPENDEN T USER WITHOUT CAUSING ANY DETRIMENT TO THE ENJOYMENT OF THE BUILDING AS SUCH. SUCH AN ENQUIRY SHOULD BE CONDUCTED NOT BASED ON ANY ARTIFICIAL CONSIDERATION S BUT FROM THE POINT OF VIEW OF THE PERSONS OCCUPYING THE BUILDING. THE NUMBER OF P ERSONS OR DIFFERENT BRANCHES OF FAMILIES RESIDING IN THE BUILDING THE REQUIREME NTS OF PERSONS OCCUPYING THE BUILDING CONSISTENT WITH THEIR SOCIAL STANDING ET C. ARE RELEVANT FOR THE PURPOSE. IF ANY SURPLUS IS ARRIVED AT ON SUCH ENQUIRY THEN THE EXTENT OF SUCH SURPLUS LAND MAY NOT QUALIFY TO BE TREATED AS LAND APPURTENANT T O THE BUILDING;(3) IF THERE IS ANY EVIDENCE TO INDICATE THAT ANY PORTION OF THE LA ND CONTIGUOUS TO THE BUILDING THEN THAT PROVIDED A SAFE INDICATION REGARDING THE EXTENT OF LAND APPLIED FOR SUCH USER. FOR INSTANCE THE LAND USED BY THE OCCUPIERS FOR COMMERCIAL OR AGRICULTURAL PURPOSE ALTHOUGH FORMING PART OF THE LAND ADJACENT TO THE BUILDING DOES NOT QUALIFY TO BE TREATED AS LAND APPURTENANT TO THE BU ILDING;(4) IF THE OWNER OR OCCUPIER IS DERIVING ANY INCOME FROM THE LANDS WHIC H IS NOT LIABLE TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY UNDER SECTION 22 OF T HE INCOME TAX ACT 1961 THEN THE EXTENT OF SUCH LAND DOES NOT QUALIFY TO BE TREA TED AS LAND APPURTENANT TO THE BUILDING; AND (5) ANY MATERIAL POINTING TO THE ATTE MPTED USER OF THE LAND FOR PURPOSES OTHER THAN THE EFFECTIVE AND PROPER ENJOYM ENT OF THE HOUSE WOULD ALSO AFFORD A SAFE GUIDE TO DETERMINE THE EXTENT OF SURP LUS LAND NOT QUALIFYING TO BE TREATED AS LAND APPURTENANT TO THE BUILDING. THE AB OVE TESTS ARE ILLUSTRATIVE AND BY NO MEANS EXHAUSTIVE. IT IS FOR THE TAX AUTHORITIES TO APPLY THEIR MIND PROPERLY TO THE FACTS OF EACH CASE AND TO DEVISE TESTS SUITABLE AND APPROPRIATE TO EACH CASE OF EACH CASE AND TO DEVISE TESTS SUITABLE AND APPROPRI ATE EACH CASE. THE ASSESSEE SOLD A PROPERTY COMPRISING A SOUSE AN D LAND MEASURING 10 GROUNDS AND 29 SQ.FT. FOR A SUM OF RS. 2 70 000 IN THE ASSESSMENT YEAR 1975-76 9 WITH THE PROCEEDS THE ASSESSEE CONSTRUCTED A NEW HO USE AND CLAIMED RELIEF UNDER SECTION 54 OF THE INCOME-TAX ACT IN THE COMPUTATION OF CAPITAL GAINS EXIGIBLE TO TAX. THE INCOME-TAX OFFICER WAS OF THE OPINION THAT APPLYING THE NORMS OF THE URBAN LAND CEILING ACT ONLY AN AREA OF 2 GROUNDS A ND 580 SQ FT. COULD BE TAKEN AS LAND APPURTENANT TO THE BUILDING AND THE BALANCE OF THE VACANT LAND SHOULD BE TREATED AS A SEPARATE ASSET. ACCORDINGLY THE INCOME -TAX OFFICER APPORTIONED THE SALE CONSIDERATION OF RS. 2 70 000 AS RS. 1 10 000 FOR THE VALUE OF THE BUILDING AND APPURTENANT LAND SO RESTRICTED BY HIM AND THE B ALANCE OF RS. 1 60 000 RELATING TO THE PIECE OF THE VACANT LAND. THE TRIBU NAL FOUND THAT THE BUILDING WAS OF AN ODD SIZE WITH PROJECTIONS IN DIFFERENT DIRECT IONS AND THE SURROUNDING AREA OF LAND HAD BEEN MARKED IN AN ECONOMICAL MANNER BECAUS E EVEN A PERFECT RECTANGLE TO COVER THAT BUILDING WOULD HAVE BEEN LARGER THAN THE QUADRANT ACTUALLY MADE CIRCUMSCRIBE THAT BUILDING. THE TRIBUNAL FOUND THAT THERE WAS A CAR PORCH A COVERED SIT-OUT A LAWN WITH FLOWER BEDS OUTHOUSE COWSHED AND OTHERS IN THAT APPURTENANT LAND. THE DRIVEWAY FROM THE ROAD TO THE BUILDING ALONE OCCUPIED 6 750 SQ.FT. THE BUILDING WAS SITUATED IN AN AREA O F 4 500 SQ.FT. THE BALANCE 7 GROUNDS WAS SITUATED IN BETWEEN THE SIT-OUTS COWSH ED GARDENS ETC. AND COULD BE CONSIDERED AS PART OF THE COURTYARD. THE BUILDING W AS AN OLD ONE SITUATED FAR AWAY FROM THE CITY. THEREFORE THE TRIBUNAL CAME TO THE CONCLUSION THAT NO PART OF THE LAND COULD BE SEPARATED AND TREATED AS A SEPARA TE ASSET AND THE ENTIRE PROPERTY SOLD SHOULD BE TREATED AS ONE UNIT OF LAND AND BUILDING. ON A REFERENCE: HELD THAT ON CONSIDERING THE FACTS ARISING IN THIS CASE AND AFTER LOOKING INTO THE PLAN OF THE BUILDING THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ENTIRE EXTENT OF TEN GROUNDS AND 29 SQ.FT. WAS USED BY THE OWNER OF THE PROPERTY BY WAY OF RESIDENCE PATHWAY SIT-OUTS SERVANTS QUARTERS COWSHEDS ETC. THE PROPERTY WAS SOLD ABOUT TWENTY YEARS AGO. THE FACT THAT TH E PROPERTY WAS SITUATED FAR AWAY FROM THE CITY AND THE STANDARD OF LIVING AT TH AT TIME HAD TO BE TAKEN INTO ACCOUNT. THE TRIBUNAL WAS JUSTIFIED IN TREATING THE ENTIRE EXTENT OF LAND OF TEN GROUNDS AND 29 SQ. FT. AS APPURTENANT TO THE MAIN B UILDING. 13. FROM THE READING OF THE JUDGEMENTS IT IS APPAR ENT THAT BOTH THE HIGH COURTS HAVE PRESCRIBED 5 TESTS FOR DETERMINING WHETHER THE LAND IS APPURTENANT TO THE BUILDING OR NOT. WE NOTED THAT IN THIS CASE THE CIT(A) HAS RESTORED THE ISSUE TO THE FILE OF THE A.O. FOLLOWING THE DECISION OF A.P. HIGH COURT IN THE CASE OF CIT VS. ZAIBUNNISA BEGUM 151 ITR 320 AND ACCORDINGLY DIRECTED THE A.O. TO ASCERTAIN THE LAND APPURTENANT TO THE BUILDING AND DIRECTED THE A.O. TO ALLOW DEDUCTION UNDER SECTION 54 ONLY IN RE SPECT OF THE LAND APPURTENANT TO THE BUILDING. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE B Y THE LD. A.R. IN VIEW OF THIS FACT WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER O F THE CIT(A) AND IN OUR OPINION THE CIT(A) HAS 10 RIGHTLY DIRECTED THE A.O. TO ALLOW THE DEDUCTION TO THE ASSESSEE UNDER SECTION 54 IN RESPECT OF THE RESIDENTIAL PROPERTY ALONG WITH THE LAND APPURTENAN T THERETO IN VIEW OF THE TESTS LAID DOWN IN THE ABOVE DECISIONS OF A.P. HIGH COURT AND MADRAS HIGH COURT. THUS GROUNDS NO.2 & 3 TAKEN BY THE ASSESSEE STAND DISMISSED. 14. GROUND NO.4 RELATES TO THE INTEREST LEVIED UNDE R SECTION 234A 234B & 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. THE A.O. IS ACCO RDINGLY DIRECTED TO RECOMPUTE THE INTEREST AFTER GIVING EFFECT TO THIS ORDER. 15. IN THE RESULT APPEAL FILED BY THE REVENUE AS W ELL AS THE ASSESSEE BOTH ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.2010). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 23 RD JULY 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY