TaxTMI 
TaxTMI 
2026 (3) TMI 60
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....ion u/s 54F of the Act to the tune of Rs. 9,65,05,033/-. Statutory notices were issued and Assessing Officer examined the claim of deduction u/s 54F of the Act, with regard to eligibility and concluded that as on the date of transfer of capital asset, shares of unlisted companies, assessee was in possession/occupation of more than one residential house, thus the assessee is not eligible for deduction u/s 54F of the Act. 2.1 Further, Assessing Officer observed that assessee had invested/purchased in an apartment No. CM7184 DLF 5 and Sector 42 Gurugram worth Rs. 32,95,29,561/- and has claimed deduction u/s 54F. Assessing Officer found that assessee has received a rebate of Rs. 9,81,39,230/- from the developer and considering the same to be income u/s 56(1) of the Act, as income from other sources, added this amount of rebate in the income. 2.2 Assessee approached by way of first appeal before Ld. CIT(A) but failed to get any relief. The relevant findings of Ld. CIT(A) with regard to rejection of benefit of Section 54F of the Act and the addition qua rebate income are as follows: First Issue "10. This Appellate authority has also noted that, the appellant asses....
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....avit within the meaning of section 250(4) of the Income Tax Act, 1961 with regards to the said claim of exemption u/s. 54F of the Income Tax Act and its Registration value before the sub-registrar. The appellant filed an affidavit dated 17.03.2025 reiterating his right to claim the said exemption u/s. 54F of the Act and the Collectors circle rate, but has not submitted any copy of the purchase deed/registered purchase deed to show ownerhisop of the said Flat bearing number CM 718A 'The Camellias' at Gurugram or showing any registration value so paid before the sub-registrar concerned. The appellant also mentions that, he had filed a similar affidavit before the AO too dated 13.12.2022. Thus, apparently the AO had provided an opportunity to the appellant to file such proper details and to come clean, but the appellant failed to file such proper details then too. 13. The appellant assessee in its statement of facts states that, "in respect of long term capital gain on sale of shares of a private limited company." But the appellant assessee has not provided any details or submissions regarding the sale of shares to even show as to the shares were of, which private limited com....
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....he residential house property at Road No. 47, Plot no. 946, Jubilee Hills, Hyderabad. The Assessing Officer had brought on record that the assessee had two residential properties before purchasing the residential house property at Road No.47, Plot no.946, Jubilee Hills, Hyderabad. From the conduct of the assessee and in view of the circumstances prevailing at the time of the agreement of sale, more particularly giving gift to his father just before the date of agreement, it is clear that the act of the assessee to gift the house is nothing but a concerted effort to avoid the due payment of taxes to the Government. With a view to avoid the payment of taxes, the assessee surreptitiously gifted the house at Door No.3- 6-305/43,43/1, Avanthi Nagar, Basheerbagh, Hyderabad to his father just before entering into agreement of sale and received the consideration of Rs. 2,28,38,880/- on 03.11.2014 and Rs. 2,11,41,120/- on 03.11.2014. Though, gift deed, on a standalone basis seems to be a natural act on the part of son to gift home to his father, but when the gift deed is to be examined in the light of the prior and subsequent acts and prevailing circumstances, then it is clear that....
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....to gift a home to his father, but when the gift deed is to be examined in the light of the prior and subsequent acts and prevailing circumstances, then it is clear that, the real intention of the assessee, was to claim the deduction u/s. 54F of the Act. Further, the assessee before and subsequent to gifting the property, continued to live with his father in the same property, which clearly shows that the gift deed executed by the assessee was merely a camouflage to claim the deduction uls. 54F of the Act as held in Rachit v. Shah and to avoid due payment of taxes to the Government. 16. In the present case also the appellant assessee has similarly or schematically transferred his two residential units le. Plot No 8,Block F, Geetanjali Enclave, New Delhi and at MG-905-B,5thFloor, The Magnolias, Gurugram, Haryana, in name of his wife through a gift deed before buying the house/flat at The Camellias, against which assessee has claimed exemption u/s 54F of the Act. 17. The Assessee has also not provided any details/explanation, valuation regarding the unlisted shares he has sold, this also points out that, the appellant assessee is not coming out clean and has used the....
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....s at such huge rebate to other buyers as a practice. Whereas, it is recently heard via the news in December, 2024 across Delhi/CR that, a penthouse (flat) in DLF- the Camellias, Gurgaon (now known as Gurugram) was sold at a record breaking price of Rs. 190 croresie: approx.. 1,08,000per square feet and purchased by Mr Rishi Parthi the Director of Info-x Software Tech. P. Ltd. Thus, in a colony of flats where the flats/ residences are being sold at such a ultra-high premium then such kind of rebates ie: @ Rs. 9,81,39,230/- is not only absurd but is beyond preponderance of probabilities as to why the builder/ seller would sell its prime property at such rebates and thus an arrangement cannot be denied between the buyer and builder to make such adjustment of cash or value in kind. The appellant fails to discharge the doubt and produce such valid registration papers till date to dispel the contentions of the AO. v. The properties owned by the appellant and his spouse due to the said transfer of property discussed above at addition no.-A) at both the Camellias (ie.: CM 718A 'The Camellias' at Gurugram ) and the Magnolia's (i.e: The MAGNOLIAS no.-905 B, Wazirabad, Gu....
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....action of Ld. AO in making addition of deemed income of Rs. 9,81,39,230/- in the hands of assessee under the head Income from Other Sources' u/s 56 and that too by recording incorrect facts and findings and without observing the principles of natural justice and by disregarding the submissions and evidences placed on record by the assessee. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of deemed income of Rs. 9,81,39,230/- in the hands of assessee under the head Income from Other Sources' u/s 56, is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the exemption of Rs. 9,65,05,033/- claimed by the assessee u/s 54F, more so when all the conditions therein have been complied with by the assessee and the said exemption has been denied by recording incorrect facts and findings and without observing the principles of natural justice and by disregarding the submissions and evidences placed on record by the assessee....
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....ion is sham.Ld. DR has relied the impugned orders and contended that huge rebate of 28% of total agreed value of the property cannot be considered reasonable as it defies normal profits declared by the builder and whether builder has given such rebate to other buyer is not known and such huge rebate indicates the arrangement to adjust cash and value in kind. 5. We have considered the material on record and it comes up that assessee has filed some relevant evidences. At PB 206-213 (relevant page 211) is the copy of assessee's reply dated 15.12.2022 before AO stating that as per the list of collector rates applicable for AY 2021-22 in Tehsil Wazirabad, the rate mentioned at Page 6, Serial No. 3, for the disputed property is Rs. 20,000/- per square ft. Therefore, the stamp duty value of the subject property computed in accordance with Section 56(2)(x) of the Act amounts to Rs. 14,68,00,000/- (i.e. Rs. 20,000x 7,340 square ft, being the total flat area. 5.1 Then at PB 248 is the copy of list of collector rates applicable for the AY 2021-22 in Tehsil Wazirabad which has been placed on record, wherein the rate for the residential project 'The Camellias' is specified at ....
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....of any act beyond the terms and conditions of the apartment buyer's agreement so as to be even considered as income 'earned' rather it was very much a contractual concession given by the builder for complying with the payments schedule. 7.2 As for instance, the move in rebate @ 3000 per sq. ft. was allowable for finishing in time as per the terms and conditions of the apartment buyer's agreement which appears to be a very prudent approach of the builder to ensure that such high price properties are not left idle or become investment subjects but rather the actual users occupy the properties. 7.3 The nature of rebates are not uncommon or unprecedented, to look pretentious, but are usually granted by builders to encourage timely repayments or early repayments and to consider it as an income u/s 56(1) of the Act is not sustainable. Ld. CIT(A) has approached the issue on the basis of common man's perspective of such high pitched real estate transaction without acknowledging and appreciating that such high pitched real estate transactions are on high premium more because of the rich amenities and facilities provided to the occupants. Rather, questioning business prudence of the bu....
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....] 226 ITR 625/92 Taxman 541 (SC). It was submitted that assessee could claim exemption even on the basis of the agreement to sell only without it being registered for which reliance was placed on ITO v. Smt. Swati Oberoi, ITA No. 4150/Del./2018. It was then submitted that benefit of deduction u/s 54F of the Act cannot be denied to the assessee merely on the ground that conveyance deed has not yet been got registered particularly when the assessee is proved to be in possession of the property in question. As for this reliance was placed on ACIT v. Siva JyothiPalam, [2024] 167 taxmann.com 686(Visakhapatnam - Trib.); Shri BasheerNoorullah Khan v. CIT, ITA No. 575/Bang/2019 and NandlalPritamdasKishnani v. ITO, [2024] 166 taxmann.com 220(Delhi - Trib.) 10. Adverting to the allegation that the appellant is owner of more than one house on the date of transfer of original capital asset, it comes up that revenue alleges that the assessee was the owner of following three houses: - i. C-101, Palaspally, Bhubaneshwar, Odisha ii. MG-905B, 5th Floor, The Magnolias iii. Geetanjali Enclave, New Delhi 10.1 Now with regarding house at Sr. no(i), above, being situated....
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....e had purchased and were joint co-owner, seized and in possession of ½ undivided share apartment each. It was submitted that even the AO issued at notice, copy of which is at PB 204, dated 09.12.2022 stating that other than the Odisha residential house assessee is the joint owner in property no. 905B, The Magnolias, DLF Golf Links, DLF 5, Guragaon. It was contended that assessee was not the absolute owner of the residential properties i.e. Magnolias and Geetanjali Enclave and held only a partial interest specifically, an undivided one-half share therein-the said properties ought not to be considered for the purposes of determining the assessee's ineligibility for exemption under Section 54F of the Act. Reliance was placed on P.K. VasanthiRangarajan v/s CIT, [2012] 23 taxmann.com 299 (Mad.) to contend that co-ownership in a residential property does not disentitle an assessee from claiming exemption under Section 54F of the Act. It was contended that joint ownership of a second property is no bar to exemption on transfer of individual property and reliance was placed on Rajeev Vasudeva v/s DCIT, [2024] 169 taxmann.com 336 (Delhi - Trib.); Shweta Singh v/s ITO, [2024] 161 ....
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....s of share purchase and shareholder's agreement dated 18.04.2018 of V5 Global Services Pvt. Ltd. He pointed out that at PB 105- 106 is the copy of assessee's reply dated 01.11.2022 before Ld. AO stating that 64,473 equity shares of M/s V5 Global Services Private Limited were sold to M/s First Meridian Services Private Limited on 22.05.2020 for a total consideration of Rs. 9,53,90,418/- and received Rs. 100/- on 03.12.2020 and Rs. 9,53,90,318/- on 04.12.2020 in Kotak Mahindra Bank (PB 314A). 15. Ld. DR has countered it all by relying the findings of ld. Tax authorities. 16. We have considered the rival contentions and it comes up from the impugned order the Ld. CIT(A) has heavily relied decision of Hyderabad Bench in case of Rachit V. Shah (supra) but when the facts of that case are considered in context to the issue before us we find that in that case the assessee just three days prior to entering into an agreement of sale had gifted property to his father and had also comes up as an admitted fact that after the gift assessee continue to stay in the same house with his father. Thus it was considered to be a colourable device and camouflage to claim u/s 54F of the Act.....
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....ed to be an embargo for claim of benefit of Section 54F of the Act. Thus, this discussion leads us to a conclusion that ld. tax authorities below have fallen in error to consider assessee not eligible for exemption u/s 54F of the Act for owning more than one residential house other than the 'new asset' on the date of transfer of original asset. 19. At the same time, the contention of ld. First Appellate authority that sale deed has not been executed in favour of the assessee of the new asset is also not sustainable to deny benefit u/s 54F of the Act as per 'purchase' of new asset is not an incident of execution of sale deed alone. The 'purchase' for the purpose of Section 54F of the Act has to be considered on a broader perspective and what is material is to understand if the assessee as the vendee of property has acquired right and interest in a new asset which is superior to the rights of the seller thereby giving assessee right of possession, enjoyment and even right to transfer superior to that of the seller. On payment, there is no dispute that assessee had made the complete payment of the new asset rather the addition made u/s 56(1) of the Act by the Assessing Officer as s....