TaxTMI 
TaxTMI 
2018 (2) TMI 177
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.... On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that the proviso to section 54F(1) stipulates that the provisions of section 54F(1) shall not apply where the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset. 1(c). On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the Tara Manzil & Noor Manzil properties owned by the assessee cannot be considered as residential properties in the true sense of the term within the meaning of section 54F of the Income Tax Act, 1916. The appellant prays that the order of the Ld. CIT(A) be set aside and the order of the AO be restored. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary. 2. Briefly stated, the facts of the case are that the assessee had efiled his return of income for A.Y. 2011-12 on 29.03.2013 declaring total income of Rs. 5,96,947/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was thereafter taken up for scrutiny assessment under Sec. ....
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....ties and not residential properties; (ii) that as the properties were tenanted and the assessee did not have any occupancy rights in the said properties but only limited legal ownership and rent collection rights; and (iii) that even if the respective properties were to be taken as residential properties, as the assessee had only a share in the properties, i.e. 25 % in Tara Manzil and 20% in Noor Manzil, therefore, he was not the absolute owner of the same, did find favour with the same and held that the assessee was duly entitled for claim of deduction under Sec. 54F as raised by him in his return of income. 5. The revenue being aggrieved with the order the CIT(A) had carried the matter in appeal before us. The Learned Authorized Representative (for short 'A.R') for the assessee Mr. Nitesh Joshi took us through the relevant observations of the lower authorities. The Ld. A.R. submitted that the claim of deduction raised by the assessee under Sec. 54F was well in order and had wrongly been dislodged by the A.O. It was submitted by Mr. Joshi that as both of the properties owned by the assessee i.e. Tara Manzil and Noor Manzil were commercial properties, therefore, the proviso of S....
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....clude that the aforesaid observations of the CIT(A) are either perverse or militated against the actual factual position. We find that the disqualification contemplated in the proviso of Sec. 54F(1) comes into play only where the assessee on the date of transfer of the original asset owns more than one residential house, other than the new asset. We are of the considered view that as observed by us hereinabove the properties under consideration, i.e. Tara Manzil and Noor Manzil which were owned by the assessee on the date of surrender of the tenancy rights were commercial properties and not a residential house, therefore, the proviso of Sec. 54F(1) would not be applicable to the case of the assessee. 7. We have further deliberated on the claim of the assessee that as he was not the absolute owner of the aforesaid properties, i.e. Tara Manzil and Noor Manzil, but was only a co-owner having fractional ownership in the said respective properties, therefore, the precondition of being the owner of more than one residential house, other than the new asset, on the date of transfer of the original asset was not satisfied. We find substantial force in the contention of the Ld. A.R and ar....
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....rty is considered, it would continue to be owned by co-owners. Joint ownership is different from absolute ownership. In the case of residential unit, none of the co-owners can claim that he is the owner of residential house. Ownership of a residential house, in our opinion, means ownership to the exclusion of all others. Therefore, where a house is jointly owned by two or more persons, none of them can be said to be the owner of that house. This view of ours is fortified by the judgment of the Hon'ble Supreme Court in the case of Seth Banarsi Dass Gupta vs. CIT (1987) 64 CTR (SC) 142 : (1987) 166 ITR 783 (SC), wherein, it was held that a fractional ownership was not sufficient for claiming even fractional depreciation under s. 32 of the Act. Because of this judgment, the legislature had to amend the provisions of s. 32 w.e.f. 1st April, 1997 by using the expression "owned wholly or partly". So, the word "own" would not include a case where a residential house is partly owned by one person or partly owned by other person(s). After the judgment of Supreme Court in the case of Seth Banarsi Dass Gupta (supra), the legislature could also amend the provisions of s. 54F so as to include p....