Shri Dr. Maheshbhai S.Bhavsar, Kheda V. The Income tax Officer,Ward-3, Nadiad

ITA 2170/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5801 (ITAT-AHMEDABAD)
• Duration Of Justice: 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH
• Assessee Lawyers: S N DIVATIA
• Keywords: Share purchase agreement; Principle of natural justice

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DR. S. BHAVSAR, HOLI CHAKLA, NR. PARABDI, AT- THASRA, DIST. KHEDA. PAN ALCPB 9539N VS. INCOME-TAX OFFICER, WD-3, NADIAD. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S. N. DIVATIA, AR REVENUE BY:- SHRI P. R. GHOSH, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . 1.1 THE ORDER PASSED U/S,250 ON 5.4..2010 FOR AS ST. YEAR 2006-07 BY C1T(A)-IV, BARODA, IS WHOLLY ILLEGAL UNLAWFUL AND A GAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN PASSING THE IMPUGNED ORDER WITHOUT CONSIDERING FU LLY THE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN UPH OLDING DISALLOWING INTEREST OF RS.96,925.. 2.3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD, CIT(A) OUGHT NOT TO HAVE UPHELD THE HO USING LOAN OF RS,96,925 DISALLOWED BY THE AQ. 3.1 THAT BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE HOUSE PROPERTY WAS BENEFICIALLY OWNED BY THE APPELLANT IN VIEW OF THE INVESTMENT MADE BY HIM AND THE APPELLANT'S WIFE WAS MERELY O NAME- LENDER SO THAI INTEREST WAS ADMISSIBLE TO THE APPEL LANT. ITA NO.2170/AHD/2010 ASST. YEAR :2006-07 2 3.2 THAT BOTH THE LOWER AUTHORITIES HAVE FAILED T O APPRECIATE THAT THE APPELLANT WAS THE BENEFICIAL OWNER OF THE HOUSE PRO PERLT. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT DISALLOWANCE OF INTEREST OF RS.96,925/-. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS GENER AL PRACTIONER IN MEDICAL SEGMENT AT VILLAGE THASRA. HE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,63,020/- WHICH INCLUDED BUSINE SS INCOME OF RS.4,10,982/- AND LOSS FROM HOUSE PROPERTY AT RS.9 6,925/-. DURING THE YEAR UNDER CONSIDERATION ASSESSEE PURCHASED A HOUSE AT AHMEDABAD IN THE NAME OF HIS WIFE SMT. DAMINIBEN M. BHAVSAR FOR RS.1 5,68,000/-. FOR THIS PURPOSE HE TOOK A LOAN OF RS.14,48,000/- FROM ICICI BANK ON WHICH THE BANK CHARGED HOUSING LOAN INTEREST AT RS.96,925/- W HICH WAS CLAIMED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROP ERTY. HOWEVER, THE AO HELD THAT THE HOUSE PROPERTY KNOWN AS ISHAAN 02, SATELLITE IS IN THE NAME OF HIS WIFE. THE SHARE CERTIFICATE HAS BEEN IS SUED IN HER FAVOUR AND, THEREFORE, DEDUCTION UNDER SECTION 24/80C COULD BE CLAIMED BY HIS WIFE SMT. DAMINI M. BHAVSAR ONLY. THE ASSESSEE IS NOT TH E ACTUAL OWNER OF THIS HOUSE PROPERTY. HIS WIFE IS ALSO ASSESSED AND SHE IS SHOWING INCOME FROM HOUSE PROPERTY IN RESPECT OF OTHER PROPERTY. H E ACCORDINGLY DISALLOWED THE CLAIM OF HOUSING LOAN INTEREST FROM THE COMPUTATION OF INCOME OF THE ASSESSEE. THE LD. CIT(A) ALSO CONFIRM ED THE ORDER OF THE AO BY OBSERVING AS UNDER :- 2.2. I HAVE CAREFULLY CONSIDERED FACTS OF THE CASE AND APPELLANT'S SUBMISSIONS. PROVISIONS OF SECTION 27(1) REGARDING DEEMED OWNERSHIP ARE APPLICABLE, WHERE AN INDIVIDUAL TRANSFERS HOUSE PROPERTY TO THE SPOUSE WITHOUT ADEQUATE CONSIDERATION, IN THE PRESE NT CASE, THE PROPERLY WAS, SINCE BEGINNING, IN THE NAME OF WIFE AND WAS N EVER TRANSFERRED BY APPELLANT TO HIS WIFE. APPELLANT IS THEREFORE, NOT A DEEMED OWNER U/S.27(1). THIS VIEW IS AFFIRMED BY GUJARAT HIGH CO URT IN THE CASE OF K. 3 D. THAKAR (1979) 120 ITR 190 (GUJ). FURTHER IN THE CASE OF AJITKUMAR ROY, THE HON'BLE CALCUTTA HIGH COURT FOLLOWED THE D ECISION OF SUPREME COURT IN THE CASE OF PODAR CEMENT PET. LTD, 226 ITR 625. IN THE CASE OF PODAR CEMENT PVT. LTD., THE SUPREME COURT HELD THAT IN THE CONTEXT OF SECTION 22, OWNER IS A PERSON WHO IS ENTITLED TO RE CEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. IN APPELLANT'S CASE, THE RE IS NOTHING ON RECORD TO COME TO A CONCLUSION THAT APPELLANT WAS ENTITLED TO RECEIVE INCOME FROM THE PROPERTY BY WAY OF RIGHT. LEGAL OWNER OF T HE PROPERTY WAS APPELLANT'S WIFE AND THE INCOME RECEIVED FROM THE P ROPERTY WOULD RIGHTFULLY BELONG TO HER. APPELLANT CANNOT BE CONSI DERED TO BE THE OWNER OF THE PROPERTY, WHEN IT IS NOT ESTABLISHED THAT HE WAS ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. EVEN APP ELLANT'S CLAIM THAT HE ONLY MADE THE ENTIRE INVESTMENT IN THE PROPERTY IS NOT SUBSTANTIATED R SINCE THE LOAN WAS TAKEN JOINTLY BY THE WIFE AND HIM. DIS ALLOWANCE OF INTEREST OF RS.96,925/- IN THE CASE OF APPELLANT IS UPHELD. 4. THE ARGUMENT OF THE LD. AR IS THAT INVESTMENT IS MADE BY THE ASSESSEE AND, THEREFORE, ASSESSEE IS THE REAL OWNER AND WIFE IS ONLY BENAMI. EVEN THOUGH LOAN HAS BEEN GIVEN BY THE BANK IN THE JOINT NAMES BUT INITIAL INVESTMENT IN THE PROPERTY HAS BEEN MAD E BY THE ASSESSEE AND, THEREFORE, HE IS THE REAL OWNER. HE REFERRED TO SEC TION 45 OF TRANSFER OF PROPERTY ACT WHICH SHOWS THAT INTEREST IN THE PROPE RTY, WOULD BE DECIDED IN ACCORDANCE WITH CONSIDERATION PAID BY THE PARTIE S WHO HAVE COMMON INTEREST IN THE PROPERTY. SINCE IN THIS PROPERTY, A CCORDING TO THE LD. AR, ENTIRE INVESTMENT HAS BEEN MADE BY THE ASSESSEE AND NOT A SINGLE PAISE HAS BEEN INVESTED BY ASSESSEES WIFE THEN INCOME FR OM THE HOUSE PROPERTY WOULD BE ASSESSED IN THE HANDS OF ASSESSEE AND ACCORDINGLY ASSESSEE IS ENTITLED TO CLAIM DEDUCTION FOR HOUSE L OAN INTEREST. 5. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. I HAVE HEARD THE PARTIES AND CAREFULLY PERUSED T HE MATERIAL ON RECORD. IN MY CONSIDERED VIEW THE AUTHORITIES WERE NOT JUSTIFIED IN 4 DENYING THE CLAIM OF ASSESSEE. THE REASONS ARE THAT ENTIRE INVESTMENT AMOUNTING TO RS.65,300/- WAS INVESTED BY THE ASSESS EE WHICH IS NOT DISPUTED. THE LOAN WAS GIVEN IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE AND THE PROPERTY IS ACQUIRED IN THE NAME OF TH E WIFE BUT OWNERSHIP IS TO BE VIEWED FROM THE POINT OF INVESTMENT MADE. THE AUTHORITIES BELOW HAVE NOT EXAMINED MRS. DAMINI BHAVSAR SO AS TO FIND OUT WHETHER SHE IS THE ACTUAL OWNER OR SHE IS HOLDING THE PROPERTY ON BEHALF OF HER HUSBAND. THE CONCEPT OF BENAMI IN THE INDIAN CONTEXT IS ROUT INE AFFAIR AND PROPERTY ARE HELD IN THE NAME OF WIFE AND CHILDREN THOUGH TH E REAL OWNER IS THE ONE WHO HAS INVESTED IN THE PROPERTY. THE OWNERSHIP OF THE PROPERTY IS DETERMINED FROM THREE CRUCIAL FACTORS FIRST IS WHO HAS INVESTED IN THE PROPERTY, SECOND, WHO IS IN CUSTODY OF DOCUMENTS AN D THE THIRD IS WHO IS ENJOYING THE USUFRUCT. AGAINST THE CLAIM MADE BY TH E ASSESSEE THERE IS NO MATERIAL TO SHOW THAT DOCUMENTS ARE IN CUSTODY OF M RS. DAMINI BHAVSAR OR SHE HAS CLAIMED THAT SHE IS THE ACTUAL OWNER OR THAT SHE IS ALONE ENJOYING THE PROPERTY OR USUFRUCT. THE CLAIM MADE B Y THE ASSESSEE THAT HE IS THE REAL OWNER ON THE BASIS OF INVESTMENT BY HIM CANNOT BE BRUSHED ASIDE WITHOUT THERE BEING MATERIAL TO THE CONTRARY. ACCORDINGLY, I UPHOLD THE CLAIM OF ASSESSEE. 7. IN THE RESULT, THE APPEAL FILE BY THE ASSESSEE I S ACCORDINGLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 7/7/2010 SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD, DATED : 7/7/2010 MAHATA/- 5 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD