2021 (7) TMI 1240 - AT - Income Tax

Tribunal affirms deduction under Section 54F, emphasizing possession and control. Revenue appeal dismissed.

ITO, Ward 32 (4) New Delhi Versus Smt. Swati Oberoi

ITO, Ward 32 (4) New Delhi Versus Smt. Swati Oberoi - TMI Issues Involved:1. Justification of the CIT(A) in deleting the addition disallowing the deduction under Section 54F of the Income-tax Act.2. Satisfaction of primary requirements under Section 53A of the Transfer of Property Act for the transfer of immovable property.3. Consideration of the Inspector’s report regarding possession of the property.Detailed Analysis:Issue 1: Justification of the CIT(A) in Deleting the Addition Disallowing the Deduction under Section 54F of the Income-tax ActThe Revenue challenged the CIT(A)'s decision to delete the addition made by the AO, who had disallowed the deduction under Section 54F of the Income-tax Act. The AO's disallowance was based on the assessee's failure to furnish a registered sale deed for the 2/3rd share of the property claimed to be purchased. The CIT(A) relied on various judicial precedents, including decisions from the Supreme Court and High Courts, to conclude that the deduction under Section 54F could be allowed even without a registered sale deed, provided the assessee had possession and had made payments for the property.Issue 2: Satisfaction of Primary Requirements under Section 53A of the Transfer of Property Act for the Transfer of Immovable PropertyThe AO argued that the transfer of the immovable property was incomplete without a registered sale deed, thereby disqualifying the assessee from claiming the deduction under Section 54F. However, the CIT(A) and the Tribunal found that the assessee had provided sufficient documentation, including an Agreement to Sell, General Power of Attorney, possession letter, and payment details, which satisfied the conditions under Section 53A of the Transfer of Property Act. This section allows for the transfer of property rights without a registered deed if possession and part payment are made under an agreement.Issue 3: Consideration of the Inspector’s Report Regarding Possession of the PropertyThe AO also disallowed the deduction based on an Inspector's report indicating that the property was in possession of another individual. The Tribunal, however, noted that the assessee had provided evidence of possession, including photographs, electricity, and water bills, proving her dominion over the property. The Tribunal emphasized that for the purposes of the Income-tax Act, ownership could be construed based on possession and control over the property, even without a registered deed.Conclusion:The Tribunal upheld the CIT(A)'s decision, allowing the deduction under Section 54F. It emphasized that the assessee had sufficiently demonstrated possession and control over the property, aligning with judicial precedents that interpret ownership in a broader sense under the Income-tax Act. The appeal filed by the Revenue was dismissed, affirming that the benefit of deduction under Section 54F cannot be denied merely due to the absence of a registered sale deed when other substantial evidence of ownership and possession is provided.Order Pronouncement:The order was pronounced in open court on July 30, 2021.