DCIT, New Delhi V. Sh. Niranjan Koirala, New Delhi

ITA 2253/DEL/2010

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6900 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 07-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPALI CHANDRA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.2253/DEL/2010 ASSESSMENT YEAR: 2006-07 DCIT, CIRCLE-13(1), NEW DELHI. V. NIRANJAN KOIRALA, 27, AKBAR ROAD, NEW DELHI. TAN/PAN: AAUPK 0483B (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. DEEPALI CHANDRA, CIT-DR RESPONDENT BY: SHRI ASHWANI TANEJA & SHRI SHANTANU JAIN, SR.D.R. DATE OF HEARING: 24 04 2018 DATE OF PRONOUNCEMENT: 20 07 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 18.02.2010, PASSED BY LD. CIT(APPEALS)-XXX, NEW DELHI FOR THE QUANTUM OF ASSE SSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2006-07. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS:- A. THE LD. CIT(A) HAS IGNORED THAT BY VIRTUE OF ASSES SEE HOLDING SHARES OF M/S EDWARD KEVENTER (SUCCESSOR) PVT. LTD. (EKPL), THE CAPITAL ASSET TRANSFERRED WAS IN FACT THE PROPERTY FOR WHICH THE SALE CONSIDERATION OF RS. 26,90,82,126/- WAS RECEIVED. B. THE LD. CIT(A) HAS ALSO IGNORED THAT THE ASSESSEE WAS THE 51% I.T.A. NO.2253/DEL/2010 2 SHAREHOLDER OF THE COMPANY OF M/S. EDWARD KEVENTER (SUCCESSOR) PVT. LTD.(EKPL) AND IN SUCH CAPACITY, THE ASSESSEE WAS O WNER OF PROPORTIONATE SHARE OF THE SAID PROPERTY. C. THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF ASS ESSEE IGNORING THE FACTS OF THE CASE ACCORDING TO WHICH THE ASSESS EE DOES NOT FULFILL THE REQUISITE CONDITIONS OF SEC.54F OF THE INCOME T AX ACT, 1961. 2. THE FACTS IN BRIEF QUA THE ISSUE RAISED BY THE REVENUE ARE THAT, THE ASSESSEE IS AN INDIVIDUAL WHO HAD SOL D 60,168 UNQUOTED EQUITY SHARES OF M/S. EDWARD KEVENTER (SUC CESSORS) PVT. LTD. (HEREINAFTER REFERRED TO AS EKWL) IN MA Y, 2015. THESE SHARES WERE ACQUIRED ON DEATH OF HIS WIFE ON 12.09.2003. THE SHARES WERE SOLD TO M/S. DLF UNIVER SAL LTD. THROUGH ESCROW AGREEMENT DATED 7.5.2005 FOR A NET CONSIDERATION OF RS.26,81,67,501/-. AFTER ADJUSTING THE INDEXATION COST OF EQUITY SHARES AMOUNTING TO RS.12 ,25,553/- ASSESSEE DECLARED LONG TERM CAPITAL GAIN OF RS.26,69,41,948/- IN THE RETURN OF INCOME. OUT OF T HE SAID CAPITAL GAIN, ASSESSEE MADE FOLLOWING INVESTMENTS F OR CLAIMING EXEMPTION/DEDUCTION U/S.54EC AND 54F:- I. IN PRESCRIBED BONDS U/S 54EC FOR AN AGGREGATE AM OUNT OF RS. 14,00,00,000 -- COMPRISING OF RS.7,30,00,000 WITH N ATIONAL HOUSING BANK AND RS.6,70,00,000 WITH NAB ARE) FOR CLAIMING DEDUCTION U/S 54EC. II. PURCHASE OF RESIDENTIAL HOUSE PROPERTY MEASURIN G 2715 SQ. YDS, AT BLOCK NO.48. KEVENTER LANE. SARDAR PATEL MARG, CHAN AKYAPURI, NEW DELHI FOR RS.10,51,01,820 FROM M/S. EDWARD KEVENTER (SUCCESSORS) PVT. LTD. VIDE AGREEMENT FOR SALE DATED 27 TH MAY, 2005 (PHOTOCOPY ATTACHED - MARKED PAGES 28 TO 58) AND CLAIMED DEDUC TION U/S.54F FOR RS.10,51,01,820/-. I.T.A. NO.2253/DEL/2010 3 THUS, BALANCE AMOUNT OF RS.2,18,40,128/- WAS SHOWN AS INCOME CHARGEABLE UNDER THE HEAD LONG TERM CAPITAL GAIN. IN SO FAR AS DEDUCTION ALLOWABLE U/S.54EC EQUIVALEN T TO 100% OF THE INVESTMENT AMOUNTING TO RS.14 CRORES IS CONC ERNED, THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HO WEVER, WITH REGARD TO THE CLAIM OF DEDUCTION U/S.54F, THE LEARNED ASSESSING OFFICER ON THE PERUSAL OF THE FACTS AND M ATERIAL ON RECORD HAD NOTED THE FOLLOWING FACTS, WHICH HAS BEE N HIGHLIGHTED BY HIM IN THE IMPUGNED ASSESSMENT ORDER :- I.) THE EXEMPTION/DEDUCTION HAS BEEN CLAIMED IN RES PECT OF AN OLD HOUSE AT KEVENTER LANE, SARDAR PATEL MARG, NEW DELH I, II.) THE PROPERTY IN QUESTION ON WHICH CAPITAL GAIN S HAVE BEEN SHOWN IS A PLOT MEASURING 22.95 ACRE (OWNED BY M/S EDWARD KE VENTER (SUCCESSORS ) PVT. LTD., AS PERPETUAL LEASE HOLDER) AND THE OLD HOUSE IN RESPECT OF WHICH 54F HAS BEEN CLAIMED IS LOCATED ON THIS VERY PROPERTY. III) AS PER THE WILL OF WIFE OF ASSESSEE, MRS. ILA DALMIA KOIRALA DATED 7.11.2001, THE ASSESSEE HAS BECOME 51% SHARE HOLDER IN RESPECT OF THE STAKE OF HIS WIFE IN M/S EDWERD KEVENTER (SUCCE SSORS ) PVT. LTD. THEREFORE, IN HIS CAPACITY AS SHARE HOLDER IN M/S E DWERD KEVENTER (SUCCESSORS ) PVT. LTD., THE ASSESSEE'WAS THE OWNER OF PROPORTIONATE SHARE IN THE ABOVE PROPERTY OF 22.95 ACRES AT KEVEN TER LANE, SARDAR PATEL MARG, NEW DELHI, WHICH WAS SOLD TO M/S DLF UN IVERSAL LTD.. IV) CONSIDERING THE ASSESSEES SHARE HOLDING OF 60 ,168 SHARES OUT OF 9,61,500 SHARES OF M/S M/S EDWERD KEVENTER (SUCCESS ORS ) PVT. LTD, THE PROPORTIONATE OWNERSHIP OF THE ASSESSEE IN THE PROPERTY COMES TO 1.4361 ACRES (APPROX. 7180 SQ. MTRS.) V) AS PER THE AGREEMENT FOR SALE OF 2715 SQ. YARDS HOUSE ALONGWITH THE CONSTRUCTION ON THIS PLOT, DATED 27.5.2005 (THE HOUSE FO CLAIM HAS I.T.A. NO.2253/DEL/2010 4 BEEN MADE) THE ASSESSEE HAS BEEN STATED AS _ IE BUN GALOW LYING TOWARDS THE NORTH BORNER OF THE PROPERTY (22.95 IS) SITUATED AT BLOCK NO. 48, SARDAR PATEL MARG, CHANAKAYA PURI, / DELHI (FIRST PARA ON PAGE 2 OF THE AGREEMENT). FURTHER, IT HAS BEEN STAT ED THAT AN AREA OF APPROXIMATELY 271.5 SQ. YARDS ALONGWITH A RESIDENTI AL BUNGALOW AND OUT-HOUSE BUILT THEREON HAS BEEN IN UNINTERRUPTED O CCUPATION AND POSSESSION OF ASSESSEES WIFE MRS. ILA DALMIA KOIRA LA AND AFTER HER DEATH IT HAS BEEN IN CONTINUOUS POSSESSION OF ASSES SEE. 4. LEARNED ASSESSING OFFICER HELD THAT HERE THE O RIGINAL ASSET WAS A RESIDENTIAL HOUSE ONLY, BECAUSE THE SHA RES WHICH WAS SOLD WERE NOTHING BUT RESIDENTIAL PROPERTY OWNE D BY THE SAID COMPANY. HE DISALLOWED THE CLAIM OF THE ASSESS EE FOR DEDUCTION U/S.54F IN RESPECT OF PURCHASE OF HOUSE P ROPERTY SITUATED AT BLOCK NO.48, SARDAR PATEL MARG, CHANAKY APURI, DELHI IS NOT A VALID CLAIM, BECAUSE HE DOES NOT FUL FILL THE CONDITION LAID DOWN U/S.54F; AND ACCORDINGLY, HE AD DED THE AMOUNT OF ENTIRE CLAIM AT RS.10,51,01,820/- WITH TH E INCOME OF THE ASSESSEE CHARGEABLE UNDER THE HEAD LONG TER M CAPITAL GAIN. 5. THE LD. CIT (A) HAS CAPTURED THE OBSERVATION AND THE CONCLUSION OF THE ASSESSING OFFICER AND THE FACTS I NCORPORATED BY HIM IN THE FOLLOWING MANNER:- A) THE LTCG HAS ARISEN TO THE APPELLANT ON THE SALE O F 60168 UNQUOTED EQUITY SHARES OF EKW - WHICH COMPANY IS THE. PERPETUAL LEASE HOLD OWNER OF A PLOT MEASURING 22.9 5 ACRES SITUATED AT BLOCK UP.48, SARDAR PATEL MARG, CHANAKV APURI, DELHI. THEREFORE IN HIS CAPACITY AS SHARE HOLDER IN M/S. E DWARD KEVENTER (SUCCESSORS) PVT. LTD., THE ASSESSEE WAS THE OWNER OF PROPORTIONATE I.T.A. NO.2253/DEL/2010 5 SHARE IN THE ABOVE PROPERTY OF 22.95 ACRES AT KEVEN TER LANE, SARDAR PATEL MARG, NEW DELHI, WHICH WAS SOLD TO M/S . DLF UNIVERSAL LTD.. B) CONSIDERING THE ASSESSEES SHARE HOLDING OF 60,168 SHARES OUT OF 9,61,500 SHARES OF M/S. EDWARD KEVENT ER (SUCCESSORS) PVT. LTD. THE PROPORTIONATE OWNERSHIP OF THE ASSESSEE IN THE PROPERTY COMES TO 1.4361 ACRES (APPROX. 7180 SQ. MTS.) C) AS PER THE AGREEMENT FOR SALE OF 2715 SQ. YDS HOUSE ALONG WITH THE OLD CONSTRUCTION ON THIS PLOT, DATED 27.5.2005 (THE HOUSE FOR WHICH 54F CLAIM HAS BEEN MADE) THE ASSESSEE HAS BEEN STAT ED AS RESIDENT OF THE BUNGLOW LYING TOWARDS THE NORTH COMER OF THE PROPERTY (22.95 ACRES) SITUATED AT BIOCK NO.48, SARDAR PATEL 'MARG, CHANAKYA PURI, NEW DELHI (FIRST PARA ON PAGE 2 OF THE AGREEMENT). FURTHER, IT HAS ALSO BEEN STATED THAT AN AREA OF APPROXIMATELY 2715 SQ.Y DS ALONG WITH A RESIDENTIAL BUNGLOW AND OUT-HOUSE BUILT THEREON HAS BEEN IN UNINTERRUPTED OCCUPATION AND POSSESSION OF ASSESSEE S WIFE MRS. ILA DALMIA KOIRALA AND AFTER HER DEATH IT HAS BEEN IN C ONTINUOUS POSSESSION OF ASSESSEE. D) THE EXEMPTION / DEDUCTION HAS BEEN CLAIMED IN RESP ECT OF AN OLD HOUSE IN KEVENTER LANE, SARDAR PATEL MARG, NEW DELH I. E) THE PROPERTY IN QUESTION ON WHICH CAPITAL GAINS HA VE BEEN SHOWN IS A PLOT MEASURING 22.95 ACRE (OWNED BY M/S. EDWAR D KEVENTER (SUCCESSORS) PVT. LTD. AS PERPETUAL LEASE HOLDER) A ND THE OLD HOUSE IN RESPECT OF WHICH 54F HAS BEEN CLAIMED IS LOCATED ON THIS VERY PROPERTY. F) AS PER THE ESCROW AGREEMENT DATED 7.5.2005 BETWEEN M/S. UNIVERSAL LTD. MS/ EKPL AND OTHER PARTIES, THE MAIN TRANSACTION INVOLVED IN THE SALE IS IN FACT THE SALE OF 22.95 A CRES OF LAND AT BLOCK NO.48, SARDAR PATEL MA -G, CHANAKYA PURI, NEW DELHI . IN FACT THERE IS NO OTHER ASSET IN THE NAME OF M/S.EKPL. PARA2.1(A), 2.1(B) MAKE IT VERY CLEAR THAT THE AMOUNT OF RS.430 CRORES PAID BY M/S DLF UNIVERSAL LTD. TO THE SHARE HOLDERS OF , M/S.EKPL IS IN FACT THE PAYMENT I.T.A. NO.2253/DEL/2010 6 FOR THE REAL ESTATE VALUE OF THE PLOT OF 22.95 ACRE S LOCATED AT THE ADDRESS MENTIONED ABOVE. SCHEDULE-ILL, PARA 1 TO 6 FURTHER MAKE IT CLEAR. THE VALUE HOWEVER IS NOWHERE CLOSE TO THE AC TUAL MARKET VALUE ON DATE IN VIEW OF THE FACT THAT THE PROPERTY IS UN DER LOT OF LITIGATION. G) AS PER THE BANK ACCOUNT STATEMENT OF HSBC BANK, TH E SO CALLED CONSIDERATION OF RS.10,50,01,820, FOR PURCHASE OF N EW HOUSE ( FOR WHICH SECTION 54F CLAIM HAS BEEN MADE) HAS BEEN PAI D ON 30.5.2005, WHICH IS THE SAME DATE ON WHICH THE 'ASSESSEE HAS R ECEIVED THE CONSIDERATION (FOR HIS SHARE IN THE PLOT OF 22.93 A CRE) FROM M/S. DLF UNIVERSAL LTD. AMOUNTING TO RS.26,90,82,126. H) BENEFITS OF SECTION 54F ARE AVAILABLE ON THE LONG T ERM CAPITAL GAINS ARISING ON THE SALE OF ORIGINAL ASSET WHICH SHOULD NOT BE RESIDENTIAL HOUSE. I) SINCE THE ASSESSEE WAS RESIDING IN AN OLD HOUSE ON A PART OF THE PROFIT OF 22.95 ACRES, THE SALE OF THIS ASSET IS IN FACT THE SALE OF A RESIDENTIAL PROPERTY. J) FROM THE ABOVE FACTS, IT IS OBVIOUS THAT THE ASS ESSEE HAS SOLD AN OLD RESIDENTIAL PROPERTY CUM PLOT (IN WHICH HE WAS A PA RT 'OWNER) AND AT THE TIME OF SALE OF THE ORIGINAL ASSET, THE ASSESSE E HAS CONTRIVED THE FACTS IN SUCH A WAY THAT HE HAS ENTERED INTO ANOTHE R AGREEMENT FOR RE- PURCHASE OF A PART OF THE OLD RESIDENTIAL PROPERTY. THIS FACT IS ALSO CLEAR FROM THE AGREEMENT FOR SALE DATED 27.5.2005 W HEREIN THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH M/S. EK PL THROUGH ITS MANAGING DIRECTOR SH. GUNNIDHI DALMIA. HAD IT BEEN A GENUINE PURCHASE OF HOUSE PROPERTY (ELIGIBLE FOR DEDUCTION CLAIMED U/S 54F), THE ASSESSEE SHOULD HAVE ENTERED INTO AN AGREEMENT WITH M/S. DLF UNIVERSAL LTD., WHO HAD TAKEN OVER ALL THE OWNERSHI P RIGHTS OF THE PROPERTY THROUGH ESCROW AGREEMENT DATED 7.5.2005. T HE FACT THAT THE ASSESSEE DID NOT ENTER INTO PURCHASE AGREEMENT WITH M/S. DLF UNIVERSAL LTD. CLEARLY SHOWS THAT THIS IS A CONTRIV ED TRANSACTION. 6. BEFORE THE LD. CIT (A), THE ASSESSEE HAS STRONGL Y I.T.A. NO.2253/DEL/2010 7 CONTENDED THAT THE LEARNED ASSESSING OFFICER HAD NO T ONLY MISUNDERSTOOD THE FACTS AND ALSO THE LAW, BECAUSE T HE ASSESSEE HAD ONLY SOLD EQUITY SHARES OF EKWL AND NO T ANY RESIDENTIAL PROPERTY. THE PROPERTY WAS OWNED BY THE COMPANY WHOSE SHARES WERE HELD BY THE ASSESSEE AND IT DOES NOT MEAN THAT THE ASSESSEE HELD THE PROPERTY INDIRECTLY. IN SUPPORT, STRONG RELIANCE WAS PLACED UPON THE JUDGMENT OF HON' BLE SUPREME COURT IN THE CASE OF MRS. BACHA F. GUZDAR VS. CIT AS REPORTED IN (1955) 27 ITR 1 . IT WAS FURTHER EXPLAINED THAT THE RESIDENTIAL HOUSE PROPERTY PURCHASED BY THE ASS ESSEE FROM EKWL IN MAY, 2005 FOR RS.10,5101,820/- FOR CLA IMING DEDUCTION U/S.54F WAS EARLIER BEING UTILIZED BY EKW L FOR ITS NORMAL OFFICIAL WORK. IT HAS ALSO BEEN EXPLAINED TH AT MRS. ILA DALMIA KOIRALA (WIFE OF THE ASSESSEE), RESIDENT OF 27 AKBAR ROAD, NEW DELHI WAS LOOKING AFTER THE SAID PREMISES AS A CARETAKER ON BEHALF OF EKWL. ON ACCOUNT OF THESE FA CTS, THE SAID PREMISES WERE IN OCCUPATION AND POSSESSION OF THE ASSESSEE AND HIS WIFE BUT THIS WAS IN THE CAPACITY OF A CARETAKER FOR AND ON BEHALF OF EKWL, WHICH COMPANY CONTINUED TO REMAIN THE OWNER OF THE SUBJECT PREMIS ES TILL IT WAS SOLD TO THE ASSESSEE BY EKWL FOR RS.10,51,01,82 0/- AS PER AGREEMENT FOR SALE DATED 27 TH MAY, 2005. THE LEARNED JCIT HAS ERRONEOUSLY MISINTERPRETED THESE FACTS OF THE CASE AND CONSIDERED THAT THE ASSESSEE WAS THE OWNER OF T HE PROPERTY EVEN WHEN THE SAME WAS OCCUPIED BY THE CAR ETAKER FOR AND ON BEHALF OF EKWL. I.T.A. NO.2253/DEL/2010 8 7. LD. CIT (A) AGREED WITH THE CONTENTION OF THE AS SESSEE AND HELD THAT ASSESSING OFFICER IS NOT LEGALLY CORR ECT IN SAYING THAT BY VIRTUE OF SOME EQUITY SHARE OF THE COMPANY EKWL, THE ASSESSEE OWNED THE PROPORTIONATE PART OF THE COMPAN YS ASSET. THE COMPANY BEING A DISTINCT JURISTIC ENTITY AND THE SHAREHOLDERS DO NOT OWN ANY PART OF THE COMPANYS A SSET EXCEPT AT THE TIME OF LIQUIDATION, WHICH IS NOT THE CASE HERE; AND MOREOVER THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL TO ESTABLISH THAT TRANSACTION WAS NOT GENU INE. ACCORDINGLY, HE ALLOWED THE CLAIM OF DEDUCTION U/S. 54F. 8. BEFORE US, LD. CIT-DR SUBMITTED THAT COMPANY M/ S. EKWL WAS PART OWNER OF THE PROPERTY AND SHARE OF EK WL WHICH HAS BEEN SOLD BY THE ASSESSEE, DEVOLVED UPON HIM AFTER THE DEATH OF HIS WIFE IS NOTHING BUT THE SALE OF RE SIDENTIAL PROPERTY ONLY AND THEREFORE, THE CLAIM OF DEDUCTION U/S.54F HAS RIGHTLY BEEN DENIED. THUS, SHE STRONGLY RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 9. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE, SHRI ASHWANI TANEJA AFTER NARRATING THE ENTIRE FACTS AND BACKGROUND OF THE CASE SUBMITTED THAT IT IS NOT IN DISPUTE THAT ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN ON SALE OF EQUITY SHARES IN THE COMPANY M/S. EKWL TO DLF UNIVE RSAL LTD. FOR A CONSIDERATION OF RS.26,81,67,501/-. IT I S ALSO NOT DISPUTED THAT PART OF THE SALE CONSIDERATION, I.E., RS.10,51,01,820/- HAS BEEN UTILIZED FOR THE PURCHAS E OF THE HOUSE FROM THE EKWL ON WHICH CLAIM OF EXEMPTION U/S .54F I.T.A. NO.2253/DEL/2010 9 HAS BEEN MADE. THE ASSESSING OFFICER HAS MISCONCEIV ED HIMSELF BY HOLDING THAT SINCE THE ORIGINAL ASSET WA S RESIDENTIAL HOUSE OWNED BY M/S. EKWL HENCE, THE SAL E OF SHARES AMOUNTS TO SALE OF RESIDENTIAL HOUSE. SUCH A CONCLUSION IS UNTENABLE IN LAW IN VIEW OF CATEGORIC AL PRONOUNCEMENT OF LAW BY THE HON'BLE SUPREME COURT I N THE CASE OF M/S. BACHA F. GUZDAR VS. CIT (SUPRA) WHICH HAS BEEN REITERATED BY THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT HARI SINGHANIA & ORS. VS. CWT & ORS. , AS REPORTED IN (1994) 207 ITR 1 . BESIDES THIS, HE ALSO RELIED UPON THE DECISION OF ITAT CHENNAI IN THE CASE OF DY.CIT VS. MAYA APPLIANCES P. LTD. , AS REPORTED IN (2017) 165 ITD 340 (CHENNAI) . THUS, HE SUBMITTED THAT THE ORDER OF THE LD. CIT (A) IS LEGALLY CORRECT ON FACTS. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATER REFERRED TO BEFORE US. IN SO FAR AS ACQUISITI ON OF ASSETS IN THE FORM OF SHARES IN EKWL IS CONCERNED AND ALSO THE SALE OF SHARES TO M/S. DLF, THE COMPANY EKWL WAS THE OWN ER OF A PLOT ADMEASURING 22.95 ACRES SITUATED AT BLOCK NO.4 8, SARDAR PATEL MARG, CHANAKYAPURI. THE SAID SHARES WERE SOLD FOR SUM OF RS.26,81,67,501/- AND OUT OF THE SAID SALE PROCE ED, THE PART OF THE AMOUNT WAS INVESTED IN PURCHASE OF HOUS E WHICH WAS LYING TOWARDS THE NORTH CORNER OF THE PROPERTY OWNED BY THE EKWL. THE SAID PROPERTY WAS A RESIDENTIAL BUNGA LOW AND OUTHOUSE BUILDING WHICH WAS IN POSSESSION OF ASSESS EES WIFE, MRS. ILA DALMIA KOIRALA. LEARNED ASSESSING OFFICER HAS I.T.A. NO.2253/DEL/2010 10 DISALLOWED THE BENEFIT OF CLAIM OF SECTION 54F TO T HE ASSESSEE HOLDING THAT, FIRSTLY , BENEFIT OF SECTION 54F IS AVAILABLE ON LONG TERM CAPITAL GAIN ARISING ON SALE OF ORIGINAL ASSET WHICH SHOULD NOT BE A RESIDENTIAL HOUSE; AND SECONDLY , SINCE THE ASSESSEE WAS RESIDING IN AN OUTHOUSE BUNGALOW WHICH WAS ON THE PART OF THE PLOT OF 22.95 ACRES, THE SALE OF TH IS ASSET IS NOTHING BUT SALE OF RESIDENTIAL PROPERTY. THUS, ASS ESSING OFFICER HELD THAT BY VIRTUE OF HOLDING EQUITY SHARE S OF THE COMPANY THE ASSESSEE HAS OWNED THE PROPORTIONATE PA RT OF THE COMPANY ASSET. IT IS A TRITE LAW THAT SHAREHOLD ER INVESTING MONEY IN PURCHASE OF SHARES OF A COMPANY DOES NOT G ET ENTITLED TO THE ASSETS OF THE COMPANY, BECAUSE HE H AS NO INTEREST IN THE PROPERTY OF THE COMPANY THOUGH HE H AS A RIGHT TO PARTICIPATE IN THE PROFITS WHEN COMPANY DECIDES TO DIVIDE/DISTRIBUTE THEM. THE INTEREST OF THE SHAREHO LDERS DOES NOT EXCEED MORE THAN TO PARTICIPATE IN THE PROFITS OF THE COMPANY AND THE COMPANY BEING A JURISTIC ENTITY WHIC H IS DISTINCT FROM THE SHAREHOLDERS. IT IS THE COMPANY W HICH OWNS THE PROPERTY AND NOT THE SHAREHOLDERS. THIS PROPOSI TION HAS BEEN WELL SETTLED BY THE HON'BLE SUPREME COURT IN T HE CASE OF MRS. BACHA F. GUZDAR (SUPRA) WHICH HAS BEEN AGAIN REITERATED BY THE HON'BLE THREE JUDGES BENCH OF HO N'BLE APEX COURT IN THE CASE OF BHARAT HARI SINGHANIA & ORS. (SUPRA) WHEREIN THE HON'BLE APEX COURT HAS OBSERVED AND HOL DING AS UNDER:- THE COMPANY MAY OWN AGRICULTURAL ASSETS AND IF COM PANY WERE TO BE LIABLE TO WEALTH TAX THE SAID ASSETS MAY BE EXCL UDIBLE IN ITS HANDS. BUT THAT HAS NO RELEVANCE TO THE CASE OF A S HAREHOLDER. THE I.T.A. NO.2253/DEL/2010 11 SHAREHOLDER DOES NOT OWN AND CANNOT CLAIM ANY PORTI ON OF THE PROPERTY HELD BY THE COMPANY OF WHICH HE IS A SHARE HOLDER. THE COMPANY IS AN INDEPENDENT JURISTIC ENTITY. THIS ASP ECT HAS BEEN PUT BEYOND ANY DOUBT BY THE DECISION OF THIS COURT IN B ACHA F. GUZDAR VS. CIT (1955) 27 ITR 1 (SC) : 1955 (1) SCR 876. IT IS HELD THEREIN THAT EVEN THOUGH A TEA COMPANY GROWING AND MANUFACT URING TEA GETS AN EXEMPTION OF 60% OF THE PROFITS AS AGRICULT URAL INCOME IN ACCORDANCE WITH R. 24 FRAMED UNDER S. 59 OF THE IND IAN IT ACT, 1922 THE DIVIDEND INCOME RECEIVED BY THE SHAREHOLDER OF SUCH COMPANY IS NOT 'AGRICULTURAL INCOME' WITHIN THE MEANING OF S. 1 OF THE SAID ACT, NOR IS IT EXEMPT FROM INCOME-TAX UNDER S. 4(3) (VIII) OF THE ACT. IT WAS HELD FURTHER THAT THE DIVIDEND OF SHAREHOLDER I S THE OUTCOME OF HIS RIGHT TO PARTICIPATE IN THE PROFITS OF THE COMP ANY ARISING OUT OF THE CONTRACTUAL RELATION BETWEEN THE COMPANY AND TH E SHAREHOLDER AND THAT THE SHAREHOLDER DOES NOT ACQUIRE ANY INTER EST IN THE ASSETS OF THE COMPANY TILL AFTER THE COMPANY IS WOUND UP. THE POSITION OF A SHAREHOLDER OF A COMPANY, IT WAS EXPLAINED, IS ALTO GETHER DIFFERENT FROM THAT OF A PARTNER OF A FIRM. IN OUR OPINION, T HE SAID DECISION OF THE CONSTITUTION BENCH FULLY ANSWERS THE SAID QUEST ION. 11. THUS, THE LEARNED ASSESSING OFFICER WAS LEGALL Y NOT JUSTIFIED IN DENYING THE CLAIM OF THE BENEFIT OF SEC TION 54F ON THE GROUND THAT THE SALE OF EQUITY SHARES OF THE CO MPANY OWNING THE RESIDENTIAL PROPERTY/PLOT WAS SALE OF RE SIDENTIAL HOUSE. ACCORDINGLY, THE DECISION OF THE LD. CIT (A) IS IN ACCORDANCE WITH LAW AND HENCE THE SAME IS AFFIRMED. 12. IN THE RESULT, THE APPEAL THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018. I.T.A. NO.2253/DEL/2010 12 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH JULY, 2018 PKK: