TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1515
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....ited scrutiny with reasons (i) Large long term capital gains (Schedule CG of ITR); (ii) Large deduction claimed u/s 54B,54C,54D,54G, 54GA (Schedule CG of ITR) and (iii) Large balance in foreign bank account (Schedule FA of ITR). Notice under Section 143(2) of the Act was issued on 13/07/2017 and served through email as well as speed post. Ld. Authorized Representative (A/R) of the assessee Sh. Vinay Malik, CA filed his Authorization to represent the case. During the relevant previous year, the assessee claimed to have earned income under the head Salary, Rental Income, Capital Gain and interest income etc. Further, notices under Section 142(1) of the Act was issued to the assessee through ITBA (Income Tax Business Application) on 31/01/2018 asking for various details which was responded by the assessee by filing details/submission on 15/02/2018. Notices under Section 142(1) of the Act were also issued on 15/09/2018, 22/11/2018 and thereafter asking to file various details/ evidences/clarification/explanation through ITBA and the assessee has duly responded the same. Notice under Section 133(6) of the Act were also issued to collect bank statements of the assessee. The issues releva....
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....ng deduction amounting to Rs. 21,28,34,670.00 u/s 54F. 2. That the ld Authorities below have erred in not appreciating that on the date of sale of Shares giving rise to Capital Gain, the Assessee did not own more than one residential house and thus entitled to deduction u/s 54F of the Income Tax Act, 1961. 3. That the ld AO has erred in not appreciating that the word "OWNS" as mentioned in proviso to Sec 54F means absolute owner and not a share in a property as has been held by various Courts of Law. 4. That the Id CIT Appeal, without giving any opportunity of being heard, has erred in coming to conclusion that the assessee is not able to establish joint and separate investment by co-owners in the property. 5. That the assessment order is bad in law and facts of the case. 6. Your Appellant Prays that he be allowed to add amend or withdraw any of the above at the time of hearing of appeal." 6. Learned Authorized Representative for appellant/assessee submitted that Ld. CIT(A) as well as Ld. AO erred in not allowing deduction amounting to Rs. 21,28,34,670.00 under Section 54F of the Act. Both the authorities below erred in not appreciati....
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....ion would render the restriction nugatory and defeat the object of the legislation." The said ownership was consistently rejected by the Courts where Revenue succeeded. 8. From examination of record in light of aforesaid rival contentions, it is crystal clear that the Ld. AO vide order dated 09.12.2018 held that assessee has fractional ownerships in more than one house property and so, deduction should have been allowed to her, cannot be accepted. Ld. CIT(A) vide order dated 12.12.2024 upheld the additions made by the Ld. AO amount to Rs. Rs.21,28,34,670/-. 8.1 As per order of Ld. AO, it is evident that assessee claimed deduction under Section 54F(1) of the Act for investment made in purchase of residential at the Camellias, Golf Drive DLF-5, Gurgaon-122009 for a consideration of Rs. 21,28,34,670/- Lacs. The assessee invested this amount in the ongoing project of Camellias under construction by the DLF. The assessee had a commercial flat no.903 Rajendra Place Pragati Tower which is commercial in nature. The property at Mehrauli is agricultural and governed by DLR Act, 1954 under which there is no ownership on assessee in possession of the land. The property at Mehrauli is ....
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....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 6 ITA No. 2835/Mum/2024 AY 2018-19 Sheriar Phirojsha Irani 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, Poonamallee High Road, Chennai. The facts thus reveal that as joint owners of the property, the assessee and her husband had shown 50% share with reference to the clinic and the residential portion in their respective returns. Thus, it is clear that as on the date of the transfer, the assessee did not own a residential house in her name only, the income from which was chargeable under the head "income from house property", to bring into operation, the proviso to Section 54F. The rejection of the claim for exemption would arise if only the property stands in the name of the assessee, namely, individual or HUF. Given the fact that the assessee had not owned the property in her name only to the exclusion of anybody else including the husband, but in joint name with he....
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....T [2001] 114 Taxman 404/247 ITR 210 (Patna) (FB) 18. The Id Counsel further submitted that Hon'ble Madras High Court in case of Dr. Smt. P. K. Vasanthi Rangarajan v. CIT [2012] 23 taxmann.com 299/209 Taxman 628 wherein it was held that where the assessee held the property jointly with her husband in equal proportion, it cannot be said that she is the owner of the house property at the time of the sale for availing the deduction u/s 54F of the Act. It is to be noted that w.e.f. 1-4-2001, there was the amendment in section 54F to the effect that assessee could be owner of one house at the time of the sale. Here in the case of the assessee he was sole owner of only one house and other houses under the joint ownership are not required to be considered as per the judgment of the Hon'ble Madras High Court in case of Dr: Smt. P. K. Vasanthi Rangarajan (supra). 19. We also note that on the identical facts, the Coordinate Bench of ITAT Mumbai, in the case of Ashok G. Chauhan v. Asstt. CIT [2019] 105 taxmann. com 204/176 ITD 717 held that where Assessing Officer rejected assessee's claim for deduction under section 54F of the Act, on ground that at time of sale ....
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.... owners of the other flats to the effect that none of them had any right/or interest of whatsoever nature in each other's flats. However, the Assessing Officer disregarded the submission of the assessee and held that since the assessee owned six residential house properties though jointly, therefore the conditions mentioned in section 54F of the Act are not fulfilled in this case hence, the assessee is not eligible for exemption u/s 54F of the Act. The Ld. Assessing Officer relied on the decision of the Hon'ble Karnataka High Court in the case of M..J. Siwani (supra). The relevant facts of the case and the finding reproduced by the Assessing Officer is extracted as under: "Further, the above issue is already a settled law in view of decision of Hon'ble Supreme Court of India in the case of M.J. Stwani v. Commissioner of Income-tax [2015] 53 taxmann.com 318 wherein upholding the order of Hon'ble Karnataka High Court, Hon'ble Supreme Court of India held that: "Where assessee on date of sale of long-term capital asset owns more than one residential house even jointly with another person, benefit under section 54F in respect of capital gain arising....
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....der passed by revenue authorities rejecting assessee's claim was to be restored. Thus, High Court held that in terms of provisions of section 54F, where assessee on date of sale of long term capital asset owns a residential house even jointly with another person, his claim for deduction of capital gain arising from sale of asset has to be rejected." 5. Before us, the Ld. Counsel of the assessee has relied on the following three decisions of the Tribunal, Mumbai Benches to support that even if the assessee co-owner is more than one house, since the fractional ownership in a property does not amounts to violating the conditions laid down u/s 54 of the Act, the assessee is entitled for deduction u/s 54 of the Act.: 1. Ashok G. Chauhan v. Asstt. CIT [2019] 105 taxmann.com 204/176 ITD 717 (ITAT Mumbai A Bench) [ITA No 1309/Mum/2016]; 2. Dy. CIT v. Dawood Abdulhussain Gandhi [IT Appeal No 3788 (Mum) of 2016, dated 31-1-2018] (ITAT "F" Bench Mumbai) 3. ITO v. Rasiklal N Satra [2006] 98 ITD 335 [ITAT 'A' Bench Mumbai] 5.1 Further, the assessee also relied on the decision of the Hon'ble Madras High Court in the case of Dr. Smt. P.....
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....us, it is clear that as on the date of the transfer, the assessee did not own a residential house in her name only, the income from which was chargeable under the head "income from house property", to bring into operation, the proviso to section 54F. The rejection of the claim for exemption would arise if only the property stands in the name of the assessee, namely, individual or HUF. Given the fact that the assessee had not owned the property in her name only to the exclusion of anybody else including the husband, but in joint name with her husband, we agree with the submission of the learned senior counsel appearing for the assessee herein that unless and until there are materials to show that the assessee is the exclusive owner of the residential property, the harshness of the proviso cannot be applied to the facts herein. Apart from that, 50% ownership is with reference to the clinic situated in the ground floor. As such, the entire property is not an exclusive residential property. Hence, we are inclined to agree with the assessee's contention that the joint ownership of the property would not stand in the way of claiming exemption under section 54F." 5.2 Before u....
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....on 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability to tax. In the opinion of the Hon'ble Karnataka High Court, when a deeming fiction is brought under the statute, it is to be carried to its logical conclusions but without creating further deeming fiction so as to include other provisions of the Act which are not made specifically applicable. It is thus evident that views of these two High Courts are in direct conflict with each other. Clearly, therefore, there is no meeting ground between these two judgments and we are also usable to accept the suggestion that we can follow earlier decisions of this Tribunal, or such views, whichever seem more reasonable of one of these High Courts. 7. It may be mentioned that some Benches of the Tribunal have either taken independent view on the issue in this appeal or have later on followed Hon'ble Gauhati High Court, referred to above. However, with the latest judgment of Hon'ble Karnataka High Court in Kwality Biscuits Ltd.'s case (supra) the situation is materially different. In the hierarchical judicial system that we have, better wisdom of the this Tribunal has expressed a....
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....ia Lad. v. CCE & C 1994 (73) ELT 769 (SC), has been summed up in the words of Lord Lohen, "in case of ambiguity, a taxing statute should be construed in favour of a tax payer does not apply to a provision giving tax payer relied in certain cases from a section clearly imposing liability". This exception, in the present case, has no application. The rule of resolving ambiguity in favour of the assessee does not also apply where the interpretation in favour of assessee will have to treat the provisions unconstitutional, as held in the matter of State of M.P. v. Dadabhoy's New ChirmiryPonri Hill Colliery Co. Ltd. AIR 1972 (SC) 614. Therefore, what follows is that in the peculiar circumstances of the case and looking to the nature of the provisions with which we are presently concerned, the view expressed by the Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd, case (supra), which is in favour of assessee, deserves to be followed by us. We, therefore, order the deletion of interest under sections 234B and 234C in this case. 5. In view of the above discussion, quite clearly, even when the decision of Hon'ble non-jurisdictional High Courts are in conf....