Section 54F ownership test: house subject to retained life interest did not bar exemption.

A residential house received under a settlement deed subject to the settlor's retained life interest was not treated as fully owned by the assessee for Section 54F purposes. Because the deed conveyed the property subject to the settlor's continuing life interest, the assessee did not obtain full and absolute ownership during the settlor's lifetime. Applying the meaning of "gift" under Section 122 of the Transfer of Property Act and the requirement that "own" in Section 54F refers to a wholly owned residential house, the house could not be counted as an owned house to deny the exemption. The denial of Section 54F relief was therefore unsustainable, and the exemption was to be granted.

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Issues: Whether a residential house received under a settlement deed subject to the settlor's retained life interest could be treated as a house "owned" by the assessee so as to deny exemption under Section 54F of the Income-tax Act, 1961.

Analysis: The settlement deed conveyed the property to the assessee subject to the life interest reserved by the settlor, so the assessee did not obtain full and absolute ownership during the settlor's lifetime. Applying the definition of gift under Section 122 of the Transfer of Property Act, 1882, and the principle that the word "own" in Section 54F refers to full and wholly owned residential house property, the house could not be treated as absolutely owned by the assessee for the purpose of denying the exemption.

Conclusion: The house property subject to the retained life interest did not disentitle the assessee from exemption under Section 54F; the denial of the claim was unsustainable and the exemption was to be granted.

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