TaxTMI 
TaxTMI 
2021 (10) TMI 777
X X X X Extracts X X X X
X X X X Extracts X X X X
....which includes property at Matunga. 2. On the facts and circumstances of the case, and in Law, the Ld. CIT(A) stressed upon capability of generating income from house property ignoring the ownership which is evident from the records. 3. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored. 4. The appellant craves leave to add, amend, alter or delete any ground of appeal." 2. Briefly stated, the assessee had filed his return of income for A.Y. 2016-17 on 10.10.2016, declaring a total income of Rs. 1,84,03,513/-. Subsequently, the case of the assessee was selected for scrutiny assessment through "Computer Aided Scrutiny Selection " (for short "CASS"). 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had during the year under consideration sold shares of m/s Monarch Catalyst Pvt. Ltd (for short "MCPL"). It was observed by the A.O that the assessee had claimed the Long Term Capital Gain (for short "LTCG") of Rs. 18,13,71,487/- arising from the aforesaid transaction of sale of shares as exempt under Sec. 54F of the Act. It was observed by the A.O that the assessee had sol....
X X X X Extracts X X X X
X X X X Extracts X X X X
....had thereafter been upheld by the Hon'ble Supreme Court while dismissing the 'Special Leave Petition' (for short "SLP") filed by the assessee in M.J Siwani Vs. CIT (2015) 232 Taxman 335 (SC). As such, the A.O by drawing support from the aforesaid position of law rejected the assessee's claim that as he was a joint owner of the properties in question, therefore, he could not be held to be the owner of more than one residential house on the date of transfer of the original asset. Insofar the claim of the assessee that as one of the property in question i.e Flat No. 2602, Indiabulls Greens, Panvel, Mumbai, was an under construction property on the date of transfer of the original asset, therefore, the same could not be brought within the meaning of a residential house u/s 54F of the Act, the same too was rejected by the A.O. It was observed by the A.O that as the assessee had claimed exemption u/s 54F on the basis of the investment that was made by him in an under construction residential property at Matunga, which as per him was to be construed as an investment in a residential house, therefore, on a similar footing the purchase of flat by him at Indiabulls Greens, Panvel, though und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rther observed by the CIT(A) that the aforesaid view of the High Court had been approved by the Hon'ble Supreme Court while dismissing the SLP filed by the assessee in M.J Siwani vs. Commissioner of Income-tax (2015) 232 Taxman 335 (SC). It was, thus, concluded by the CIT(A) that the assessee on the date of sale of the original asset i.e shares of MCPL was the owner of a residential house at 31/348, Akshar Mahal, Telang Cross Road, Matunga within the meaning of Sec. 54F of the Act. However, it was observed by the CIT(A) that as the property of the assessee i.e Flat No. 2602, Indiabulls Greens, Panvel, Mumbai, at the time of transfer of the original asset was an under construction property that was not capable of generating income from house property, therefore, the same did not satisfy the requirement contemplated in condition (b) of the 'proviso' to Sec. 54F of the Act. Backed by his aforesaid observations, the CIT(A) observed that as the assessee on the date of transfer of the original asset was the owner of only one residential house, viz. residential house at 31/348, Akshar Mahol, Telang Cross Road, Matunga, that was capable of generating house property income, therefore, he wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....could not be brought within the meaning of a residential house as contemplated in clause (a)(i) to the '1st proviso' r.w clause (b) of the '1st proviso' to Sec. 54(1) of the Act. It was submitted by the ld. A.R that as the assessee owned only one residential house i.e House no. 31/348 Akshar Mahol, Matunga, Mumbai, on the date of transfer of the original asset, therefore, the CIT(A) had rightly concluded that the assessee satisfied the requisite conditions for availing the exemption contemplated u/s 54F of the Act. 7. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. As is discernible from the records, the assessee had during the year under consideration sold 49,584 shares of MCPL which were held by him in his own name. As the wife of the assessee had also inter alia sold 5,000 shares of MCPL that were gifted to her by the assessee, thus, the LTCG arising therefrom was clubbed u/s 64(1)(iv) in the hands of the assessee. On a perusal of the records, we find, that the LTCG of Rs. 18,13,71,487/- earned by the assessee on sale of the aforesaid 54,584 shares of MCPL [49,584 shares (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nvested in a new residential house, the same, had been dislodged by the CIT(A) and the revenue has not assailed the same any further before us. As regards the claim of the assessee that he on the date of transfer of the original asset did not own more than one residential house, the same, as observed by us at length hereinabove comprised of two limbs, viz. (i). that as the assessee was a joint owner of the residential house at 31/348, Akshar Mahol, Matunga, thus, not being the 'absolute owner' of the said property he could not be held to be the owner of a residential house within the meaning of Sec. 54F of the Act; and (ii). that as the residential property owned by the assessee at Indiabulls Greens, Panvel, Mumbai was on the date of transfer of the original asset an under construction property, therefore, it could not be brought within the meaning of a residential house u/s 54F of the Act. Insofar the claim of the assessee that as he was a joint owner of the residential house at 31/348, Akshar Mahol Matunga, thus, not being the 'absolute owner' of the said property he could not be held to be the owner of a residential house within the meaning of Sec. 54F of the Act is concerned, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property". (emphasis supplied by us) On a perusal of the aforesaid, the conditions contemplated in Clause (a)(i) to (iii) to the '1st proviso' of Sec. 54F(1) can be summed up as, viz. (i) that the assessee on the date of transfer of the original asset should not own more than one residential house, other than the new asset; or (ii) that the assessee shall not purchase any residential house, other than new asset within a period of one year after the date of transfer of the original asset; or (iii) that the assessee shall not construct any residential house, other than the new asset within a period of 3 years after the date of transfer of the original asset. At the same time, we find that the embargo contemplated in the Clause (a)(i) to (iii) to the '1st proviso' of Sec. 54F(1) is further supplemented by Clause (b) to the '1st proviso' of Sec. 54F(1), which provides that the income from such residential property, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head 'income from house p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essly provided or unless some ambiguity is arising out of the plain reading. The proviso to Section 54F is clear and there is no ambiguity as regards it. The plain reading of the section and its proviso states that the benefit of deduction shall be allowed to a person if he fulfils certain conditions. As per the principles of interpretation, words are to be construed strictly. In this case, the legislature has used the word "and" amongst the two parts of the proviso (a) and (b). As per English Grammar, use of the word 'and' is conjunctive, meaning whereby that all the listed requirements must be satisfied. The word 'and' requires that the appellant assessee has to satisfy both conditions, (a)(i) or (ii) or (iii) and condition (b). Hence, to be eligible for exemption u/s 54F, the appellant should not have more than one residential house which is capable of generating house property income." As observed by the CIT(A), as the property owned by the assessee at Indiabulls Greens, Panvel, Mumbai, on the date of transfer of the original asset was an under construction property, therefore, the same, as observed by her, and rightly so, could not have generated any income chargeable under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....54F(1) qua the under construction property of the assessee at Indiabulls Green, Panvel, Mumbai, were not found to have been cumulatively satisfied, therefore, the assessee on the date of transfer of the original asset could safely be held to have owned only one residential house, viz. House No. 31/348, Akshar Mahol, Telang Cross Road, Matunga, Mumbai, other than the new asset. 10. Now, coming to the grievance of the revenue, that the CIT(A) had failed to appreciate that as the assessee had purchased the flat at Indiabulls Greens, Panvel, vide agreement dated 11.09.2012 executed between m/s Lucina Land Development Ltd. and Mrs. & Mr. Krishanan Muthukumar, therefore, he was on the date of investment an owner of two houses i.e including the house at Matunga. In our considered view, the aforesaid claim raised by the revenue before us does not arises from the orders of the lower authorities, and in fact militates against the factual position that was admitted by the A.O and formed the very basis for framing the assessment. As is discernible from the records, it was the claim of the assessee that as on the date of transfer of the original asset his property at Indiabulls Greens, Panve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the A.O that in the registered purchase deeds pertaining to both the flats at 'Akshar Mahol' and 'Indiabulls Greens' as were filed by the assessee in the course of the assessment proceedings the name of the assessee and his wife was clearly mentioned as purchasers, therefore, they were owners of both the residential properties, but then, he had at no stage denied the fact that the property in question, viz. Indiabulls Greens, Panvel was an under construction property on the date of transfer of the original asset by the assessee. In fact, it is a matter of fact borne from the record that both the lower authorities had adjudicated the issue in hand considering the fact that the property in question, viz. Indiabulls Greens, Panvel was an under construction property on the date of transfer of the original asset. In our considered view, the department on the basis of certain facts which are not borne from the record is trying to change the entire complexion of the case and is seeking to improve upon the assessment, which we are afraid is not permissible under Sec. 254 of the Act. Our aforesaid conviction is fortified by the order of the 'Special Bench' of the ITAT, Mumbai in the case....