TaxTMI 
TaxTMI 
2026 (7) TMI 1077
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....e to the wite, assessee included the name of the wife and that the assessee's funds from sale of flat have gone in to the purchase of the new property and therefore the claim of section 54 was allowable. 3. The CIT Appeal and Assessing officer erred in disallowing claim of section 54 of assessee of Rs. 55,48,955/- based on surmises and conjectures. 4. The assessee craves leave to add, alter amend or delete any of the above grounds of appeal. 2. All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of the Ld. CIT(A) in upholding the disallowance of the claim made by the AO under Section 54 of the Act. Therefore, we have decided to adjudicate these grounds through the present consolidated order. 3. Ld. AR reiterated the same arguments as were raised before the Revenue Authorities and also submitted that the facts put up before the Ld. CIT(A) may be treated as his arguments before us too. In this regard, reliance was placed upon Para No. 4 of the order of the Ld. CIT(A) and the relevant portion of the same is reproduced herein below: Background of the Case: The assessee filed his re....
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....he court held that joint ownership qualifies for full deduction if the investment is sourced from capital gains. Conclusion: The disallowance of Rs. 55,48,955 is untenable. The appellant is entitled to the full deduction of Rs. 1,10,48,955 u/s. 54. Legal Ownership and Clubbing Provisions (Section 64(1)(iv)): The AO failed to consider that the Rs. 73,00,000 gifted to the spouse (Mrs. Samina Amin Fazlani) is deemed the appellant's income under section 64(1)(iv). Consequently, the investment in the new flat by the spouse using these funds is constructively the appellant's investment. Judicial precedents (e.g., CIT v. Kamal Wahal [2013] 350 ITR 13 (Del)) affirm that clubbing provisions apply to investments made through transferred funds, satisfying the ownership requirement for deductions. CIT VS KAMAL WAHAL CASE -Capital gains--Deduction under section 54F-Purchase of residential house in the name of assessee's wife.-Assessing officer disallowed deduction under section 54F claimed by assessee holding that investment in the residential house should be made in assessee's name and not in the name of his wife. H....
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....er stage. Exemption can be claimed at adjudication stage even if not claimed at investigation stage, or erroneously claimed previously. 3 There is no res judicata or estoppel in taxation matters. Either taxable person or department can change its stand/views about taxability and exemption can be claimed. 4 Exemption can be claimed even at an appellate stage as it is a legal right. 5. 20.6-1 Strict interpretation at first stage but not at later stage In Mangalore Chemicals and Fertilisers Ltd. v. Dy. CCT 83 STC 234-55 ELT 437 = AIR 1992 SC 152 = 1992 Suppl (1) SCC 21, Hon. Supreme Court has held: "When the question is whether a subject falls in the notification or in the exemption clauses, the interpretation should be strict as it is in the nature of an exception. But once the ambiguity about applicability is lifted and it is held that the subject falls in the notification, then full play should be given to it and it calls for a wider and libera construction. It will be erroneous to attach equal importance to the non-observanc of all conditions irrespective of the purposes they were intended to serve." 6 Rule 46A Cannot Override Principle....
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.... conspicuously absent of the following facts under the Head Income from House Property: "(1) Co-owned" and also "(2) 50% share belonging to the assessee" Thus the information given at the time of original hearing was a procedural lapse on the part of the ITP who presented the case and a misrepresentation which cannot fasten liability for paying tax which is factually not payable. 9 Further as per the assessment order, the wife's case was selected under Cass for verifying the source of funds of Rs. 55 lakhs by the wife for investing in the flat costing Rs. 1,10,00,000/-. The said assessing officer agreed that u/s. 4(1) (a) (i) of the Wealth Tax Act, where the assessee transfers his assets to spouse without adequate consideration or without agreement to live apart, then such transferred asset shall be deemed to be the wealth of the transferor. Accordingly the investment of Rs. 1, 10, 00,000/-was made by the assessee and it was accepted by the AO assessing the wife of the assessee. The original AO accepted in his assessment order that the clubbing provisions for wealth tax purpose could be considered only for the purpose of computation of wealth tax payable and not for th....
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....cquiring a new residential house property jointly with his wife. However, the exemption claimed under Section 54 of the Act against the LTCG arising on the sale of the original property was denied to the extent of Rs. 55 lakhs on the ground that half of the share in the new property was in the name of the wife of the assessee. In this regard, reliance was placed on the decisions in the following cases: • CIT vs. Dr. Laxmichand Narpal Nagda [1995] 78 Taxman 219 (Bombay) • Prakash vs. ITO [2008] 173 Taxman 311 (Bombay) • CIT vs. V. Natarajan [2006] 154 TAXMAN 399 (MAD.) • CIT vs. Kamal Wahal [2013] 30 taxmann.com 34 (Delhi) • Balraj vs. CIT [2002] 123 Taxman 290 (Delhi) • CIT vs. Gurnam Singh [2008] 170 Taxman 160 (Punjab & Haryana) 5. The assessee had also submitted the following documents in support of his contentions: • Copy of Agreement of Sale dated 07.06.2012. • Copy of Purchase Agreement dated 23.08.2012. • Deed of Rectification dated 31.08.2012. • Gift Deed dated 19.05.2012 between the Appellant and the Appellant's wife. • Extracts ....
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....ecision of the Hon'ble Bombay High Court in the case of Prakash vs. ITO [2008] 173 Taxman 311 (Bombay) 10. Whereas, on the contrary, we notice that although the property agreement bears the name of the assessee's wife as co-owner, in our view, this by itself cannot disqualify the assessee from seeking deduction under Section 54 of the Act. In this regard, reliance is placed upon the decision of the Hon'ble Bombay High Court in the case of CIT vs. Dr. Laxmichand Narpal Nagda, relevant extract of the same is reproduced herein below: "6. Taking into consideration the letter as well as the spirit of section 54 and the word 'towards' used before the word 'purchase' in sub-section (2) of section 54, it seems to us that the said word is not used in the sense of legal transfer and, therefore, holding of a legal title within a period of one year is not a condition precedent for attracting section 54. In the instant case, the whole consideration was paid, possession of the flat was obtained and it was actually put to use for dwelling within 4 months, as a result exemption contemplated under section 54 was clearly attracted" 11. Reliance is also being placed upo....
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....case and hence cannot be relied upon. Moreover, in Para 11 of the above judgment, i.e., Prakash vs. ITO (supra), it has clearly been stated that: "11. The concepts of the 'assessee', 'own', 'owned', 'owner', 'ownership', 'co-owner', 'owner of house property' or 'ownership of property' as elaborated in sections 22 to 27 and 32 of the Income-tax Act, are very much inter-linked and connected for granting the benefit under the Income-tax Act.... An assessee must have valid title legally conveyed to him after complying with the requirement of law or at least entitled to receive income from the property in his own right and have control and domain over the said property for all legal purposes, which basically excludes a third person of any right over the said property. Therefore, all these concepts are inter-linked." 14. Therefore, drawing analogy from the above, we observe that for all practical purposes, Sections 27 and 64 of the Act also provide for assessment of income in the hands of the transferor spouse even when the asset/income is transferred to the transferee spouse. Thus, merely because the name of the wife is included in the property cannot debar the assessee from....
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....old the same. He also admits that he purchased a property at Madras in the name of his wife Smt. Meera out of the money obtained by him by sale of the property at Bangalore. 3.4 Section 54 of the Act clearly says that if the assessee is the owner of the property, he is not (sic) entitled for exemption. 3.5 In the instant case, the assessee purchased a house at Anna Nagar in the name of his wife Smt. Meera after selling the property at Bangalore. But the same was assessed in the hands of the assessee. Hence, as correctly held by the CIT(A) as well as by the Tribunal that the assessee is entitled for exemption under section 54 of the Act. 3.6 The assessee sold a property at Bangalore and purchased a property at Anna Nagar in the name of his wife is only a question of fact. It is a settled law that the factual findings of the Tribunal cannot be disturbed in exercise of the powers under section 260A of the Act vide M. Janardhana Rao v. Jt. CIT [2005] 273 ITR 501 (SC). Hence, we do not see any question of law much less, substantial question of law arises for consideration. Accordingly, the first question fails and the same is rejected." (b) CIT vs. Ka....