Share sale verification and full Section 54F relief upheld where documentary evidence and sole funding were established

Section 68 addition on share sale consideration was deleted because the assessee produced a consistent documentary chain, including the share purchase agreement, offer letter, regulatory approval, purchaser confirmation, and audited financials, which established the purchaser's identity and source of funds; the Revenue did not rebut this evidence, so the addition was unsustainable. Section 54F relief was not to be restricted to half merely because the new residential house was jointly held with the assessee's wife, since the entire purchase consideration was paid by the assessee from his own bank account and no contrary ownership share was specified in the sale deed; full deduction was therefore allowed.

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Issues: (i) Whether the addition made under section 68 on account of sale consideration received on transfer of shares was sustainable; (ii) Whether deduction under section 54F could be restricted to 50% on the ground that the new residential house was jointly held with the assessee's wife.

Issue (i): Whether the addition made under section 68 on account of sale consideration received on transfer of shares was sustainable.

Analysis: The assessee had placed on record the share purchase agreement, letter of offer, approval of the competition authority, and later the confirmation and audited financial statements of the purchaser. The materials established the identity of the purchaser, the nature of the share transaction, and the source of funds used by the purchaser. The redacted bank statement and the absence of an independent inquiry by the Assessing Officer did not dislodge the documentary trail. The initial onus under section 68 stood discharged, and the Revenue failed to point out any infirmity in the evidence accepted by the first appellate authority.

Conclusion: The addition under section 68 was not sustainable and the finding deleting it was upheld in favour of the assessee.

Issue (ii): Whether deduction under section 54F could be restricted to 50% on the ground that the new residential house was jointly held with the assessee's wife.

Analysis: The entire purchase consideration for the new residential house was paid by the assessee from his own bank account, and the sale deed did not define any separate share of ownership. Applying the principle in section 45 of the Transfer of Property Act, 1882, the person who advances the whole consideration is entitled to the corresponding interest in the property in the absence of a contrary contract. The liberal view adopted in comparable authority on section 54F was followed, and the joint inclusion of the spouse's name did not justify curtailment of the exemption where the assessee alone had funded the purchase.

Conclusion: The restriction of deduction to 50% was unjustified and the full deduction under section 54F was rightly allowed in favour of the assessee.

Final Conclusion: The Revenue's appeal failed on both substantive grounds, and the appellate order granting relief to the assessee was sustained.

Ratio Decidendi: A section 68 addition cannot stand where the assessee produces a coherent documentary chain establishing the transaction, the purchaser's identity, and the source of funds, and a section 54F deduction cannot be curtailed merely because the spouse's name appears in the title deed when the assessee alone has paid the entire consideration.

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