2023 (6) TMI 663 - AT - Income Tax

Tribunal grants exemption under Section 54F Income Tax Act for sole property ownership

Zainul Abedin Ghaswala Versus CIT (A), NFAC, Mumbai

Zainul Abedin Ghaswala Versus CIT (A), NFAC, Mumbai - TMI Issues Involved:1. Disallowance of exemption claimed under Section 54F of the Income Tax Act.2. Ownership and co-ownership of residential properties.3. Failure to produce documentation to establish ownership.4. Non-consideration of judicial pronouncements relied upon by the appellant.5. Reliance on the decision in the case of M.J. Siwani vs. CIT.6. Non-discussion of decisions relied upon by the appellant.Summary:Disallowance of Exemption under Section 54F:The Ld. Assessing Officer (AO) disallowed the exemption claimed by the assessee under Section 54F of the Income Tax Act, amounting to Rs. 2,60,00,000/-, on the grounds that the assessee owned interest in more than one residential property. This decision was upheld by the Ld. Commissioner of Income-tax (Appeals) [CIT(A)].Ownership and Co-ownership of Residential Properties:The AO held that the assessee was a co-owner of six residential flats, which disqualified him from claiming the exemption under Section 54F. The assessee contended that he was the owner of only one flat, inherited from his late father, and provided electricity bills and confirmation letters from other flat owners to substantiate his claim.Failure to Produce Documentation:The Ld. CIT(A) observed that the appellant failed to produce any documents or agreements to establish that he had purchased or acquired only one flat. The assessee argued that no such agreement existed because the property was self-constructed by his late father.Non-consideration of Judicial Pronouncements:The appellant argued that the Ld. CIT(A) did not consider various judicial pronouncements, including those from jurisdictional benches of the Hon'ble ITAT, which were binding.Reliance on M.J. Siwani vs. CIT:The Ld. CIT(A) relied on the decision in M.J. Siwani vs. CIT, which held that owning more than one residential house, even jointly, disqualifies an assessee from claiming exemption under Section 54F. The appellant contended that this decision did not attract the doctrine of merger and was not a declaration of law by the Supreme Court under Article 141 of the Constitution.Non-discussion of Decisions Relied Upon:The appellant claimed that the Ld. CIT(A) did not discuss or distinguish the various decisions relied upon by the appellant.Tribunal's Decision:The Tribunal found that the decision of the Hon'ble Madras High Court in Dr. P.K. Vasanthi Rangarajan v. CIT supported the assessee's claim that joint ownership of a property does not disqualify an assessee from claiming exemption under Section 54F. The Tribunal also noted that in case of conflicting decisions from non-jurisdictional High Courts, the view favorable to the assessee should be followed, as per the Supreme Court's decision in CIT v. Vegetable Products Ltd.Conclusion:The Tribunal allowed the appeal filed by the assessee, granting the exemption under Section 54F, as there was no material to show that the assessee was the exclusive owner of the other five residential properties. The grounds of appeal were accordingly allowed.