TaxTMI 
TaxTMI 
2024 (10) TMI 529
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....the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the decision of the Karnataka High Court in the case of CIT vs M J Siwani, (2014) 366 ITR 356 (Kar) wherein on the issue of ownership/co-ownership of property for purpose of section 54F has been dealt in considerable detail and the Hon'ble Court did not agree with the view expressed by the tribunal and upheld the contention of Revenue, The SLP preferred against this decision of the Karnataka High Court has been dismissed by the Hon'ble Supreme court wherein Apex court has upheld that, "we find no reason to entertain this special leave petition and same is accordingly dismissed." 3. The appellant prays that the order of the CIT(A) on the grounds be set aside and confirm the order of the AO." 3. The sole grievance of the Revenue is against the deletion of the disallowance of deduction claimed by the assessee under section 54F of the Act. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual. During the assessment proceedings, it was observed that the assessee sold the following two properties and cla....
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....gh Court in CIT v/s M.J. Siwani, reported in [2014] 366 ITR 356 (Karn.). Accordingly, the AO disallowed the deduction claimed under section 54F of the Act in respect of the total capital gains amounting to Rs. 3,23,18,002 from the sale of the aforementioned two properties and added the same to the total income of the assessee. 7. The learned CIT(A), vide impugned order, following the judicial pronouncements in favour of the assessee held that when a person is co-owner/joint owner he cannot be considered the absolute owner in the said property, therefore such a person is to be allowed the deduction under section 54F of the Act. Accordingly, the learned CIT(A) directed the AO to delete the addition of Rs. 3,23,18,002. Being aggrieved, the Revenue is in appeal before us. 8. We have considered the submissions of both sides and perused the material available on record. The only issue which arises for our consideration, in the present case, is whether joint ownership of more than one residential house shall disentitle the assessee from claiming deduction under section 54F of the Act. In the present case, the assessee sold two properties for a total consideration of Rs. 3,67,50,000 ....
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....it stood at the relevant point of time, shows that exemption from payment of tax on the capital gains arising on the transfer of any long-term capital asset not being a residential house is available to an assessee being a Hindu Undivided Family or an individual, if the long-term capital gain is invested in purchasing a residential house or constructing the residential house within the time stipulated therein. Proviso to sub section (1) states that the exemption contemplated under sub section (1) would not be available where an assessee owns a residential house as on the date of the transfer and that the income from the residential house is chargeable under the head "income from house property". The Finance Act, 2001 amended the proviso with effect from 2001-02 to permit exemption under Section 54F, even if the assessee has owned one residential house as on the date of transfer, other than the new asset, or purchase in investments any residential house other than the new asset within a period of one year or three years as the case may be, but after the date of transfer of the original asset and the income from such residential house other than the one owned on the date of transfer ....
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....s well as the Hon'ble Madras High Court, observed as under: - "17. We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee. We note that assessee claimed deduction u/s 54F of the Act to the tune of Rs. 48,96,993/- on the ground that assessee owns only one house at the Oberoi Palace Housing Society in this name at the time of the sale. It is the contention of the assessee that the other two properties are owned jointly with others and therefore it is not required to be considered for the purpose of condition of section 54F of the Act. The assessing officer relied on the order of the Hon'ble Supreme Court in the case of M. J. Siwani v. CIT [2015] 53 taxmann.com 318/232 Taxman 335 where the SLP filed by the taxpayer was dismissed. The Id Counsel stated that by way of the SLP, the Hon'ble Supreme Court did not concur with the finding of the Hon'ble Karnataka High Court in the case of CIT v. M. J. Siwani [2014] 46 taxmann.com 170/226 Taxman 394/366 ITR 356. Mere dismissal of the SLP does not constitute the judgment by the Supreme Court in the favour of the revenue. The Id Counsel placed r....
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....Hon'ble Madras High Court, observed as under: - "4. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute before us is whether the co-ownership of the assessee in more than one residential properties could make assessee liable for non-eligibility of deduction u/s 54F of the Act. The fact of the case as culled out from orders of lower authorities and submissions of the assessee are that the assessee's father late Shri Iqbal Ghaswala along with other five family members had inherited land being 142/148, Ghaswala Estate Jogeshwari (west), on which land, all the six members constructed 6 flats (ie one flat each on their own as per their requirements which were occupied by each owner namely Shri Mohd. Ali Suleman Ghaswalla (flat no. 201), Shri Sikander Suleman Ghaswalla (flat no. 202), Shri Abdul Rahim Ghaswalla (flat no. 301), Shri Munaf & Moinuddin Anwar Ghaswalla (legal heirs of late Shri Anwar Ghaswalla) (flat no. 302), Shri Ilyas & Zainul Ghaswalla (legal heirs of late Shri Iqbal Ghaswalla) (flat no. 401) and Shri Abdul Suttar Suleman Ghaswala (flat no. 402). According to assessee, all th....
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....mplete residential house and would not include shared interest in residential house. On revenue's appeal to Hon'ble Karnataka High Court it was held as under: "Section 54F provides that if the assessee has a residential house he cannot seek the benefit of long term capital gain. Under this provision, merely because, the words residential house are preceded by article 'a' would not exclude a house shared with any other person. Even if the residential house is shared by an assessee, his right and ownership in the house, to whatever extent, is exclusive and nobody can take away his right in the house without due process of law. In other words, co-owner is the owner of a house in which he has share and that his right, title and interest is exclusive to the extent of his share and that he is the owner of the entire undivided house till it is partitioned. The andlogy applied by the Tribunal based on the judgment of the Supreme Court in Banarsi Dass Gupta (supra), wherein, the Supreme Court considered the provisions contained in section 32 of the Act, would not apply to the faces of the present case. The right of a person, may be one half, in the resident....
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....nded the proviso with effect from 2001-02 to permit exemption under section 54F, even if the assessee has owned one residential house as on the date of transfer, other than the new asset, or purchase in investments any residential house other than the new asset within a period of one year or three years as the case may be. but after the date of transfer of the original asset and the income from such residential house other than the one owned on the date of transfer of the original asset is chargeable under the head "income from house property". 13. As far as the present case is concerned, contrary to the contention of the assessee, the assessee as well as her husband had offered 50% share each in the clinic in the income tax assessment and had claimed depreciation thereon. So too 50% share in the property in the wealth tax proceedings is offered by the assessee and her husband. The note submitted to the Assistant Commissioner of Income Tax, City Circle 5(1), Madras, by the assessee discloses that the assessee owned 50% of the property in 828, Poonamallee High Road, Chennai, for use as residential property and 50% as clinic, so too for the property at Door No. 828A, Poonama....
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....n in these circumstances, ie. when there are conflicting decisions of Hon'ble Courts above and when we do not have the benefit of the guidance by Hon'ble jurisdictional High Court, we find guidance from the decision of a co-ordinate bench in the case of Tej International Pvt Ltd. v. DCIT [(2000) 69 TTJ 650 (Del)] wherein the coordinate bench has, inter alia, observed as follows:- "6. We have considered the rival submissions and perused the records. It is not in dispute that two High Courts, namely, Gauhati High Court and Karnataka High Court, have expressed conflicting views regarding levy of interest under sections 234B and 234C on deemed income under section 115J. Hon'ble Gauhati High Court has opined that when legal fiction is to be created for an obvious purpose, full effect to it should be given. Quoting Lord Asquith who said, "the statute says that you must imagine a certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to inevitable corollaries of that state of affairs", Hon'ble Gauhati High Court has held that there is no statutory exception excluding the operations of sectio....
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....judgment of Hon'ble Supreme Court in the matter of CIT v. Vegetable Products Ltd. [1973] CTR (SC) 177: [1972] 88 ITR 192 (SC) Hon'ble Supreme Court has laid down a principle that "if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This principle has been consistently followed by the various authorities as also by the Hon'ble Supreme Court itself. In another Supreme Court judgment, Petron Engg. Construction (P.) Ltd. & Anr. v. CBDT & Ors. [1988] 75 CTR (SC) 20: [1989] 175 ITR 523 (SC). it has been reiterated ITA No. 2237/Ahd/2014 Assessment Year: 2011-12 that the above principle of law is well established and there is no adopt about that. Hon'ble Supreme Court had, however, some occasion to deviate from this general principle of interpretation of taking statute which can be construed as exception to this general rule. It has been held that the rule of resolving ambiguities in favour of tax- payer does not apply to deductions, exemptions and exceptions which are allowable only when plainly authorised. This exception, laid down in Littman v. Barron 1952 (2) AIR 393 and followed by apex Court....