AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 505
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.... of two sale deeds dated 21.09.2012 for a consideration of Rs. 1,74,40,000/- each. The Assessee had furnished the workings of the capital gains on the above sale of land which is at Page No.2 of the Assessment Order. The Assessee after claiming deduction u/s.54F of the Income Tax Act, 1961 to the tune of Rs. 2,35,96,816/- had arrived at 'NIL' capital gains from the sale of the land. The Assessee vide his letter dated 20.11.2015 had stated as under: "I have claimed exemption for the above property u/s.54F of the Income Tax Act, 1961, as I was owning the following properties only at the time of sale of the above land by sale deed dated 21.09.2012 a) Residential property at Desika Raod, Chennai b) Commercial property at Royapettah High Road, Chennai I was owning ½ share in two flats i.e. one at Bangalore and one at Chennai, along with my wife, Mrs. Kalyani kumar and subsequently, I have released my ½ share in the above flats in favour of my wife through settlement deeds dated 31.08,.2012 and 11.09.2012." 4. The Assessing Officer after considering the above letter has observed as under: "3.1 It is very clear that the Assessee was owning more than one property b....
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....t is clearly established that the settlement of ½ share of properties in Assessee‟s name to his wife‟s name was a method adopted for avoidance of tax. Hence, applying the ratio of the above decision of the Hon‟ble Supreme Court, the Assessee is deemed to be the owner of the properties settled in his wife‟s favour for income tax purposes. Thus, the Assessee is found to own more than one property and hence, become ineligible for the claim of deduction u.s.54F. Therefore, the claim of deduction u/s.54F of the Act to the tune of Rs. 2,35,96,816/- is disallowed and added back to the total income. 3.6 Based on the above discussion, the Long Term Capital Gain is reworked disallowing the claim of deduction u/s.54F of the Act." 5. On appeal, after considering the submissions of the Assessee, the learned Commissioner of Income Tax (Appeals) has observed that the Assessing Officer has rightly followed the decision of the Hon'ble Supreme Court in the case of Sevantilal Maneklal Sheth Vs. Commissioner of Income Tax (Central), Bombay [1968 AIR 697] and further observed that the settlement of half the share of the properties by the Assessee in the name of his wif....
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.... he was having only one residential property as on the date of sale of the land i.e.21.09.2012. Prior to the date of sale, the Assessee was having half share in two flats held jointly along with his wife. Subsequently, his half share was settled in favour of his wife by way of settlement deed dated 31st August, 2012 and 11th September, 2012. 11. From the above facts, it is very clear that on the date of sale of the land, the Assessee is only having one residential property. The case of the Assessing Officer is that, the Assessee has relinquished his rights on the two flats by settling in favour of his wife only to avoid tax. This view is even confirmed by the learned Commissioner of Income Tax (Appeals) also. We find that the Assessee has relinquished his half share in two properties in favour of his wife. It is not the case of the Department that the Assessee had transferred the entire property which is in the name of the Assessee. It is as a matter of convenience between the husband and wife, this arrangement is made and therefore it can be safely concluded that the relinquishment of the half share of his two properties is a family arrangement which cannot be considered as a tax....
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....urpose of Section 54F of the Act, it has to be construed that the Assessee is not the owner of the residential house at No.24, Vijayaraghavachari Road, T. Nagar, Chennai - 600 017 and therefore he has only one house, accordingly he is entitled to claim exemption u/s.54F of the Act as held by the learned Commissioner of Income Tax (Appeals). Hence, we do not find it necessary to interfere with the order of the learned Commissioner of Income Tax (Appeals)." 14. Against the order passed by the Hon'ble Tribunal, the Department had carried the matter before the Hon'ble Jurisdictional High Court of Madras in the case of Commissioner of Income Tax, Chennai Vs. Mr. Ajit Thomas, Chennai, [Tax Case Appeal No.497 of 2016 dated 30th August, 2016] (supra); wherein the Hon'ble Jurisdictional High Court of Madras has observed as under: "11.....................Therefore, in that case, the learned Senior Counsel has interpreted the language of Section 22 of the Act in the context of that particular section, the Hon‟ble Supreme Court has interpreted the meaning of "ownership". The Hon‟ble Supreme Court has held that "owner" means a person who has got valid title legally conveyed to hi....