No Sec. 54 Relief if New House Didn’t Have Basic Amenities Like Water & Electricity Connection | ITAT

Case Details: DCIT vs. Sandeep Hooda - [2024] 162 taxmann.com 356 (Delhi-Trib.)

Judiciary and Counsel Details

• • Saktijit Dey, Vice President & M. Balaganesh, Accountant Member
  • Vivek Kumar Upadhyay, Sr. DR for the Appellant.
  • Dr Rakesh Gupta, & Deepesh Garg, Advs. for the Respondent.

Facts of the Case

The assessee sold a property and claimed a deduction under section 54 of the Income-tax Act. The Assessing Officer (AO) observed that the assessee had only entered into an agreement to sell for the purchase of 1.75 acres of agricultural land, on which he was desirous to construct a residential building. The house had not been constructed till the due date.

Further, the AO concluded that the assessee had confirmed that there was no electricity supply or water connection on the property for which deduction under section 54 was claimed. Even the assessee did not submit the approved map for the construction of the house.

Accordingly, the AO denied the assessee’s claim for deduction under section 54. The CIT(A) reversed the order of AO. Aggrieved by the order, the AO filed the instant appeal before the Tribunal.

ITAT Held

The Delhi Tribunal held that the AO had ensured that the concerned site where the property is situated had been visited physically by the Inspector and the Office Superintendent twice. In fact, one such visit was made physically to the site in the presence of the Authorized Representative of the assessee who appeared before the AO. Basic amenities like a boundary wall, kitchen, bathroom, bedroom, electricity, and water connection are essential for proper habitation, regardless of whether the residential house is located in an urban or rural area.

None of these basic amenities were present on the subject-mentioned property, for which the assessee claimed deduction under section 54. Even the Income-tax Inspector, along with the Office Superintendent attached to the office of the AO, together with the Authorized Representative of the assessee (who appeared before the AO), had physically visited the site and confirmed the alleged house did not even have the basic amenities listed herein above.

Therefore, the taxpayer did not build the residential property within the designated timeframe and did not construct any residential dwelling by 25.09.2017 that could be considered suitable for habitation. Accordingly, the AO had rightly denied the deduction under section 54.

List of Cases Referred to

• • Ashok Syal v. CIT [ITA no. 566 of 2005] (para 7).