TaxTMI 
TaxTMI 
2025 (7) TMI 117
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....as not the appellant but her husband, Mr. Manoj Damani and further erred in denying the exemption u/s. 54 to the appellant in respect of the long-term capital gains arising from the sale of that property which has been assessed in the hands of the appellant. 2. On the facts and circumstances of the case and in law, without prejudice to the above, the very fact that the long-term capital gains of Rs. 4,21,83,273 arising from sale of the said property (Flat No. 402A/402B, Glen Classic CHS, Hiranandani Gardens, Powai, Mumbai) has been assessed fully in the hands of the appellant by the lower authorities implies that the appellant was the only real / economic/deemed owner of the said property and not her husband. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in agreeing with the decision of the Assessing Officer to disallow the exemption claimed by the appellant u/s.54 in respect of 50% of the long-term capital gains on the ground that the 50% share in the said property was gifted by her husband to her and, therefore, the provisions of Section 64(1)(iv) were applicable making her husband as the deemed owner but without appreciating....
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....l economic owner of the said flats was her husband and not the assessee. As the real /economic/deemed owner of the property flat No. 402A/402B was Mr Manoj Damani and owner of property situated at Lodha Estella (on which the exemption u/s.54 was claimed) is also Mr. Manoj Damani, it is well established in law that to constitute sale, there must be two separate parties/entities to the transaction and no person can transact with oneself. Here, seller and purchaser are the same person. Accordingly, the sale agreement was held as void and the exemption claimed by the assessee of Rs. 3,96,55,000/- cannot be accepted hence the same was disallowed by the AO. 4. It was held by the AO that on 01st April 2017, Mr Manoj Damani has gifted his share of 50% to her wife Kavita Damani. As husband gifted his share of property to his wife, husband is considered as the deemed owner of the said property. Without prejudice to above, if it presumed that the assessee has made the payment in respect of her share at the time of purchase of the said property i.e flat No. 402A/402B, then also her husband is the deemed owner of 50% of the said property as per section 64(1)(iv) of the I.T. Act. 5. It was....
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....ing Pvt Ltd. The same rotation was followed for the another payment of Rs. 3,00,00,000/- (1,50,00,000 and 1,50,00,000/-) on the same day i.e 12.03.2021. Hence, it is seen that the payment of Rs. 3.7 crore was moved from M/s. Altan Engineering Pvt Ltd and reached to M/s. Altan Engineering Pvt Ltd through Kavita Damani and Manoj Damani in a single day. In view of the above, it is clear that no actual consideration was paid by the assessee for purchase of new property from her husband, but moved the fund of M/s. Altan Engineering Pvt Ltd/ her husband from one hand to another. This is nothing but the rotation of money just to evade tax, no actual transfer of money, no right to use the property changed, only title of the property has changed. In view of the above, it is nothing but a colourable device used to evade tax and reliance was placed on the Hon'ble Supreme Court Order in McDowell and Company Ltd. Vs Commercial Tax Officer, 154 ITR 148 wherein it was held that the "Tax planning may be legitimate provided within the framework of law and the colourable device cannot be a part of the tax planning." 8. It was further held by the AO that without prejudice to above, in view of the ....
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....said transaction was calculated by the assessee at Rs. 4,21,83,273/-, Further, the assessee claim exemption u/s. 54 of the Act by investing in a new residential property of Rs. 3,96,55,000/-. This new property has been purchased by the assessee from her husband. The case of assessee was selected for complete scrutiny under CASS and the notice u/s. 143(2) of the I T Act, 1961 was issued on 29.06.2021 by NaFAC. The assessee being a non resident, his case was transferred to the assessment work list of the undersigned in ITBA for completion of the scrutiny assessment. The major issues based on which the case was selected are as follows: 1. Increase in TDS in Revised Return 2. Refund Claim 3. Capital Gains Deduction Claim Assessee has purchased purchased flat N. 402A for Rs 34,51,000/- and fat No.402B for Rs 17,40,000/- at Glen Classic CHS Ltd., Hiranandanı, Powai on 14.03.2002 in the joint name with her Husband Mr Manoj Damani). Assessee was asked to provide documentary evidence regarding payment made in respect of purchase of property ve flat No. 402A/402B Assessee and her husband were failed to prove that the assessee had made any payment in r....
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....count scheme before furnishing the return of income. However, in his case, rotation of money has been made to evade the tax. Taking into the consideration all the aspects of this case, I uphold the decision of the AO and agree with the decision of disallowing the exemption claimed by the appellant u/s 54 of the Act. Accordingly, this ground of appeal is dismissed." 11. Against the said findings and directions of the ld CIT(A), the assessee is in appeal before us. 12. During the course of hearing, the Ld. AR submitted that on 14-3-2002, two adjacent residential flats (402A & 402B, Glen Classic, Hiranandani Gardens, Powai, Mumbai) were purchased vide Agreements for Sale. The agreements were executed jointly by the assessee and her husband (Manoj Damani) and the assessee's name being the first. It was submitted that on 1-4- 2017, a registered gift deed was executed whereby husband of the assessee gifted his undivided share in the said property to the assessee whereby the assessee became the exclusive owner of the said property. Thereafter, the rental income earned from the said residential property was also fully offered by the assessee in her ITR. 13. It was submitted th....
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....aid property to the assessee on 1-4-2017. By virtue of the said gift, the assessee had become the owner of the said property. Further, the rent income earned from the said property was also offered to tax by the assessee fully in her hands right from the day on which the husband of assessee gifted her share to the assessee. The sale agreement in respect of the said property was executed by the assessee in her individual capacity. The certificate to deduct tax at source at the lower rate in respect of the entire sale consideration was also issued in favour of the assessee. The sale consideration was fully received by the assessee and it was being credited to her bank account. Therefore, the assessee was only required to be considered as the real and economic owner of the said property. 17. In the context of Ground No. 3, wherein the AO has denied the exemption claimed u/s. 54 to the extent of 50% on the ground that the provisions of Section 64(1)(iv) were applicable to that extent on account of gift made by the husband of the assessee to the assessee, it was submitted that once again, even if the provisions of Section 64(1)(iv) are to be invoked, then the capital gain itself (ari....
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.... be said that the gift was made with the intention to evade the tax. This is for a simple reason that it could not have been imagined in 2017 that the property would be sold. With respect to the purchasing of the residential property from the husband, it was submitted that it was a legitimate transaction wherein a registered agreement was executed, stamp duty as applicable was fully paid, procedure for obtaining the certificate for deducting the tax at lower rate was fully completed and certificate was granted and consideration was fully paid to the husband from the bank account of the assessee. 20. It was further submitted that the only point on the basis of which the AO alleged that it was a colourable device was the rotation of funds between the assessee, Altan Engineering Pvt. Ltd. and assessee's husband. In this respect, a summary of how the sale consideration received by the assessee was being utilized by her was submitted as under: Date of Receipt Consideration Received Date of Payment Nature of Payment Amount Paid 3-10-2019 5,50,000 5-10-2019 Manoj Damani-against purchase of flat 10,00,000 3-10-2019 5,50,000 5-10-2019 ....
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....revity. 25. We have heard the rival contentions and purused the material available on record. The Assessing officer has brought to tax long term capital gains of Rs 4,21,83,273/- on sale of two flats without allowing the exemption claimed by the assessee u/s 54 amounting to Rs 3,96,55,000/-. The sale of flats have been executed vide agreements to sell dated 9/1/2020 and the said flats were initially purchased vide agreement to purchase dated 14/03/2002 read with registered gift deed dated 1/04/2017. The contents of these sale agreements (and purchase/gift deed) are not in dispute and the same have been executed by the assessee in her individual capacity and the consideration has been received by her in her bank account and which has been duly offered to tax by the assessee and has been brought to tax by the AO in the hands of the assessee. 26. Now, coming to exemption claimed by the assessee u/s 54 amounting to Rs 3,96,55,000/-, the same relates to purchase of another flat by the assessee from her husband vide registered agreement to sell dated 18/03/2021 for a stated consideration of Rs 3,85,00,000/- on which the assessee has paid stamp duty of Rs 11,55,000/-. The factum of ....