TaxTMI 
TaxTMI 
2025 (12) TMI 265
X X X X Extracts X X X X
X X X X Extracts X X X X
....Term Capital Gain (LTCG) of Rs. 15,95,71,381/-. After claiming indexation cost of acquisition, assessee also claimed deduction u/s 54F of the Act to the extent of Rs. 3,68,14,462/- and in order to verify the same, assessee was asked to submit the relevant documents. In response, assessee has furnished Deed of Property of Apartment No. 1601, 16th Floor in Zeon at One North Condominium, Pune dated 19.11.2020 and the same was purchased for Rs. 3.37 crores. The AO observed after perusal of ITR for AY 2019-20 that assessee declared three house properties which are at House No. 75/4, Kurushetra, House No. 3114, Sector 10, Chandigarh and C-1, Lotus SRS City, Kurushetra. Since the conditions laid down in section 54F are not satisfied, the claim of the assessee was rejected and further the AO has also rejected the index cost of acquisition of Rs. 1,54,28,619/- for not furnishing evidence in respect of the above as unexplained and disallowed. 4. Aggrieved assessee preferred an appeal before the ld. CIT (A), Kanpur-4 and filed detailed submissions before us. For the sake of brevity, the portion of the same are reproduced below :- "16 The appellant before adverting the legal issues....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... As per the Family Settlement, the said property would remain in Joint ownership of the Brother Ashok Goyal and Alka Goyal (wife of Ashok Goyal). However the sale proceeds of the same would be distributed equally between the appellant and brother Ashok Goyal. iii. House No. 75, Sector 4 Urban Estate Kurukshetra - Residential Property owned by the appellant prior to family settlement (Here-in-after referred as "residential Property - 1, Kurukshetra") As per the family Settlement, the said property would be transferred to Aakash Goyal (son of the appellant) who is in the absolute possession of said property at the time of family settlement). iv. House No 3114 Sector 21D, Chandigarh - Residential Property Jointly owned by the appellant and Brother Ashok Goyal prior to Family Settlement (Here-in-after referred as "Residential Property - 2, Chandigarh"). As per the Family Settlement, the said property would be transferred to Brother Ashok Goyal who is in the absolute possession of said property at the time family settlement. v. Plot at Dara Kalan, Indira Colony, Thanesar, Kurukshetra -Plot Owned by the Brother Ashok Goyalprior to Family Settl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ea which in aggregate to 2,96,095 Shares at total cosideration of Rs.70 Crores which includes 74024 shares (1/4 of 2,96,095 Shares) of the appellant for a total consideration of 17.50 Crores (1/4 Rs. 70 Crores) 19. The appellant had duly disclosed the capital gain on transfer of the such shares in the return of income and had claimed the deduction under section 54F of the Act in respect of the investment made in purchase of the new property in Pune out of the above capital gain and the investment made in the Capital Gain Account Scheme. The computation of the capital gain as made in the return of income arising from the transfer of the above shares of Triupati Medicare Limited is as under for ready reference. S.NO. Date Particulars Amount (Rs.) 1 August 2, 2019 Total Sale Consideration for sale of 74,024 shares of Tirupati Medicare Limited 17,50,00,000 Less : Index Cost of Acquisition of 74,024 shares (Shares acquired in FY 2007-08, 2009- 10 & 2011-12) 1,54,28,619 2 Long Term Capital Gain on sale of shares 15,95,71,291 Less : Exemption under section 54F of the for investm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cuments are attached as Annexure -6 at pages 71 to 86 of the PB.) (ii) House No. 75, Sector -4, Urban Estate, Kurukshetra - Residential Property: ("Residential Property 1, Kurukshetra"): (i) Proof for transfer of property in the name Mr Aakash Goel submitted to Haryana Shahri Vikas Pradikaran. (ii) Re-allotment in the name of Mr Aakash Goel by Haryana Shahri Vikas Pradikaran (iii) Subsequent sale deed for sale of such property by Aakash Goel (iv) Copy of Ledger Account of House 75/4 in the books of Ajay Goel reflecting the transfer to Aakash Goel (Copy of the above documents are attached as Annexure- 7 at pages 87 to 98 of the PB.) (ii) House No. 3114, Sector 21D, Chandigarh - Residential Property ("Residential Property - 2, Chandigarh") (i) Photocopy of the original title deed of the property in the name of Mr Ajay Goel & his brother Mr Ashok Goyal (ii) Gift deed in favour of the Mr Ashok Goyal. (iii) Copy of Ledger Account of House 3114. Sector 21D, Chandigarh in the books of Ajay Goel reflecting the transfer to Ashok Goyal (Copy of the above documents are attached as Annexure- 8 at....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... changes would not be done immediately after entering into the memorandum of family settlement which evidence from the document wherein the transfer of property in the name Mr. Aakash Goel submitted to Haryana Shahri Vikas Pradikaran was rejected by the authority on earlier occasion as it was under mortgage (Please refer Annexure 7A at page 87 of the PB). 26. Your Honour would appreciate that the intention of the parties to give effect to memorandum of family settlement was evident that subsequently the t5ransfer was made in the form of registered documents and the substantial part of the delay was also attributed to COVID 19 pandemic which is matter of record in any case such delay in no manner affects the legal validity of memorandum of family settlement wherein the ownership of such properties was unconditionally transferred to the family members of the appellant. It is well recognised theory of constructive ownership as held in the case of CIT v. Podar Cement (P.) Ltd. (1997 (5) TMI 2 - Supreme Court), thus mere delay in registration of the properties in the name of family members would not be so fatal to held that the appellant is owner of such properties till the reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on us 133/6) or otherwise by verifying the assessment records of the Company which lies with the Ld AO. 62. In view of the above, it is submitted that the above disallowance being arbitrary and based upon mere surmises and conjectures including the complete violation of the principles of natural justice wherein the Ld AO failed confront any material or record which gives an impression that the cost of acquisition and/or index cost of acquisition claimed by the appellant is not correct. On the contrary it is an admitted fact that the appellant assessment under section 143(3) of the Act AY 2010- 11 & 2012-13 were done wherein the investments of the assessee have duly examined and accepted. Thus, it is incorrect to state that there is no material on record to suggest the ownership of such and its cost thereof. Copy of the assessment orders of the Appellant are attached as Annexure - 24 at pages 286 to 290 of the PB. 63. It is further submitted that the action of the Ld AO denying the entire cost of acquisition and indexation thereof is beyond imagination, as at the one hand the Ld. AO taxing the entire amount of sale consideration of such shares as capital gain meani....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal share in a property does not attract the proviso to section 54F of the Act. Therefore, even if it is assumed for the sake of argument, though not admitted that there is no effect is given to Memorandum of Family Settlement by way of registration of the properties alienated by appellant or such registration of properties were completed post transfer of shares on which capital gain arose. then in that case also the Appellant cannot be held to be absolute owner of jointly held properties and could only be held absolute owner of only one residential property. It is submitted that the concept of ownership under section 54F of the Act of residential house talks about absolute ownership and not co-ownership or joint ownership. it is settled position of the law for the purpose of section 54F of IT Act that the joint ownership of residential property does not bar or disentitle an assessee for deduction under section 54F of the Act In the case of joint ownership of residential unit, none of the co-owners can claim that they are the absolute owners of such residential house. 6.11 In this regard Ld. AR places reliance on various judicial pronouncements and submits that Hon....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... High Court on appeal The Hon'ble Madras High Court in Dr. Smt P.K. Vasanthi Rangarajan v. CIT [2012] 23 taxmann.com 299 (Mad.) Finally, reliance has been placed on the recent decision of the Hon'ble Income Tax Appellate Tribunal, Mumbai in the case of Ashok G. Chauhan v. ACIT [2019] 176 ITD 717 (Mumbai - Trib.) wherein both the decisions of Rasikial (Supra) and Seth Banarsi Das Gupta (Supra) have been considered and on the issue of whether a residential property was co-jointly owned in the name of the assessee and his wife, the assessee be treated as 'absolute owner of said property or not . it has been held that the legislature has used the word "a" before the words "residential house". In our opinion, it must mean a complete residential house and would not include shared interest in a residential house. Where the property owned by more than one person, it cannot be said that any one of them is the owner of the property. In such a case, no individual person of his own can sell the entire property No doubt, he can sell his share of interest in the property but as far as the property is considered.it would continue to be owned by co-owners Joint ownership is different from ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mited in respect of transfer of shares during the concerned years The details submitted by the appellant in the course of assessment clearly established the cost of acquisition of such shares in the hands of the appellant made in the earlier years. It has also been found that the appellant is regular assessee since 2007 and also that the jurisdiction of Company namely Tirupati Medicare Limited was also with the same AO Therefore there was no reason to the disallowance of the indexed cost of acquisition in the assessment order in the matter of computation of capital gains Therefore, it is held that the disallowance of Rs. 1,54,28,619/- on account of cost of acquisition for computation of capital gain in the matter of share of sales of M/s. Tirupati Medicare Ltd. was not as per law. Hence Ld. AO is directed to allow the indexed cost of acquisition while computing the capital gain on sale of shares of M/s. Tirupati Medicare Ltd. 6.19 In the light of above discussion, disallowance of Rs. 1,54,28.619/-, which was claimed on account of indexed cost of acquisition, is hereby deleted and relief is allowed to the appellant. All the grounds of appeal relating to this disallowance ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore than two properties, therefore, assessee is not eligible for claim u/s 54F and further he submitted that the assessee has not submitted any detailed sub-cost of acquisition of shares to the satisfaction of the AO and assessee has claimed huge indexation cost, therefore, he supported the findings of the AO. 10. On the other hand, ld. AR of the assessee brought to our notice a chart with the details of property holding of the family members. For the sake of brevity, it is reproduced below :- S. No. Particulars (Address of Property) Name in which originally held Name in which transferred pursuant to the family arrangement orally done on 25.03.2019 (notarized on 05.04.2019) 1 House No.C-01, Lotus Green City, Sector - 9, Kurushetra Jointly owned by Mr. Ajay Goel and his wife, Mrs. Rakhi Goel This property, post the family settlement, continued to be jointly owned. 2 House No.75, Sector 4, Urban Estate, Kurushetra. Owned by Mr. Ajay Goel This property, post the family settlement, was transferred to Mr. Akash Goel, and who at the time of family settlement was in absolute possession. 3 House No.3114, Sector 21-D, Chandigarh Jointly owned ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntial house which is fully and wholly owned by one person and not a residential house owned by more than one person. The above decision of Rasiklal N Satra (supra), also referred and relied upon other decisions i.e. i) CIT v. T.N Aravinda Reddy [1979] 120 ITR 46/2 Taxman 541 (SC), ii) Shiv Narayan Chaudhari v. CWT [1977] 108 ITR 104 (All.), iii) Smt. Kulwenti D. Alreja v. ITO (Born) and iv) Ahdul Rehman v. CIT [1944] 12 ITR 302 (Lahore), wherein it was held that shared interest in the property does not amount to ownership of the property. 8.3 Now the only question remains as to whether assessee can be said to be the owner of residential house/flat at Goa. The legislature has used the word "a" before the words "residential house". In our opinion, it must mean a complete residential house and would not include shared interest in a residential house. Where the property owned by more than one person, it cannot be said that anyone of them is the owner of the property. In such a case, no individual person of his own can sell the entire property. No doubt, he can sell his share of interest in the property but as far as the property is considered, it would continue to be owned by ....