V.R.Usha, CHENNAI V. ITO, CHENNAI

ITA 2288/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9300 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 21-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Gift
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2288/MDS/2015 ( )( / ASSESSMENT YEAR : 2011-12 MRS. V.R. USHA, OLD NO.7, NEW NO.15, DUTCH VILLAGE 2A, MAHARAJA SURYA ROAD, ALWARPET, CHENNAI - 600 018. PAN : ABLPU 7306 H V. THE INCOME TAX OFFICER, BUSINESS WARD - XV (1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI V.S. JAYAKUMAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. A.B. KOLI, JCIT 1 / 2% / DATE OF HEARING : 02.03.2016 3') / 2% / DATE OF PRONOUNCEMENT : 12.05.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, CHENNAI , DATED 29.10.2015 AND PERTAINS TO ASSESSMENT YEAR 2011-12. 2. SHRI V.S. JAYAKUMAR, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD 2 I.T.A. NO.2288/MDS/15 TO DENIAL OF EXEMPTION UNDER SECTION 54F OF THE INC OME-TAX ACT, 1961 (IN SHORT 'THE ACT'). HE FURTHER SUBMITTED TH AT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 54F OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS OWNER O F TWO HOUSES ON THE DATE OF SALE OF THE LAND AT PALLIKARANAI. R EFERRING TO THE COPY OF THE SETTLEMENT DEED AS EXTRACTED BY THE CIT(APPE ALS), THE LD.COUNSEL SUBMITTED THAT THE SETTLEMENT DEED WAS E XECUTED SUBJECT TO THE LIFE INTEREST RETAINED BY THE SETTLO R, THE ASSESSEES MOTHER. WHEN THE ASSESSEES MOTHER RETAINED THE LI FE INTEREST OVER THE PROPERTY, ACCORDING TO THE LD. COUNSEL, NO INTE REST ON THE PROPERTY WILL PASS ON TO THE ASSESSEE SO LONG AS TH E ASSESSEES MOTHER IS ALIVE. ACCORDING TO THE LD. COUNSEL, ON THE DATE OF EXECUTION OF SALE DEED, THE ASSESSEES MOTHER WAS V ERY MUCH ALIVE, THEREFORE, THE ASSESSEE IS NOT THE OWNER OF THE PRO PERTY WHICH WAS SAID TO BE CONVEYED TO HER BY MEANS OF THE SETTLEME NT DEED. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF TH IS TRIBUNAL IN ITO V. RASIKLAL N. SATRA (2006) 98 ITD 335, THE LD. COUNSEL SUBMITTED THAT ON IDENTICAL CIRCUMSTANCES, WHEN THE ASSESSEE OWNED INTEREST IN THE PROPERTY ALONG WITH OTHERS, I T WAS FOUND BY THE MUMBAI BENCH THAT JOINT OWNERSHIP IS DIFFERENT FROM ABSOLUTE OWNERSHIP. OWNERSHIP OF A RESIDENTIAL HOUSE MEANS OWNERSHIP TO 3 I.T.A. NO.2288/MDS/15 THE EXCLUSION OF ALL OTHERS. THEREFORE, THE TRIBUN AL FOUND THAT THE JOINT OWNERSHIP OF A RESIDENTIAL HOUSE CANNOT BE A REASON TO DENY EXEMPTION UNDER SECTION 54F OF THE ACT. THE LD.COU NSEL HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF MADRAS HIGH COUR T IN CIT V. K. RAMACHANDRA CHETTIAR (1983) 141 ITR 771, JUDGMENT O F MADRAS HIGH COURT IN R. JANARDHANAN V. CWT (1987) 165 ITR 144 AND ON THE DECISION OF DELHI BENCH OF THIS TRIBUNAL IN WTO V. SMT. KAUSHALYA RANI (1989) 28 ITD 435. 3. ON THE CONTRARY, SH. A.B. KOLI, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT EVEN THOUGH THE LIFE INTEREST WAS RETAINED BY THE SETTLOR IN THE SETTLEMENT DEED, THE SETTLEMENT DEED AT PAGE 8 CLEARLY SAYS THAT THE SETTLEE, NAMELY, THE A SSESSEE SHALL ENJOY THE PROPERTY SETTLED ABSOLUTELY AND THE SETTL EMENT IS IRREVOCABLE. SIMILARLY, THE SETTLEMENT DEED FURTHE R SAYS THAT THE SETTLEE, NAMELY, THE ASSESSEE SHALL HENCEFORTH BE E NTITLED TO DEAL WITH THE SAME AS FULL OWNER OF THE PROPERTY WITHOUT ANY OBSTRUCTION OR HINDRANCE FROM THE SETTLOR OR ANYONE CLAIMING UN DER THEM. THEREFORE, ACCORDING TO THE LD. D.R., EVEN THOUGH T HERE WAS A REFERENCE IN THE PREAMBLE OF THE SETTLEMENT DEED AB OUT THE RESERVATION OF LIFE INTEREST RETAINED BY THE SETTLO R, IN THE BODY OF 4 I.T.A. NO.2288/MDS/15 SETTLEMENT DEED, THE ABSOLUTE PROPERTY WAS TRANSFER RED TO THE ASSESSEE BY MEANS OF GIFT / SETTLEMENT DEED AND THE PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE A SSESSEE AS A TOKEN OF ACCEPTANCE OF THE GIFT. THEREFORE, ACCORD ING TO THE LD. COUNSEL, THE ASSESSEE IS THE ABSOLUTE AND FULL OWNE R OF THE PROPERTY WHICH WAS CONVEYED TO HER BY MEANS OF SETTLEMENT DE ED. HENCE, THE ASSESSEE CANNOT CLAIM THAT THE PROPERTY CONVEYE D BY MEANS OF SETTLEMENT DEED IS NOT HER PROPERTY. THEREFORE, TH E CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OF FICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT WAS DISALLOW ED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE O WNS MORE THAN ONE HOUSE ON THE DATE OF SALE OF THE LAND AT PALLIK ARANAI. THE ASSESSEE CLAIMS THAT THE PROPERTY CONVEYED BY HER M OTHER BY MEANS OF SETTLEMENT DEED IS ONLY A PARTIAL INTEREST ON THE PROPERTY AND SUCH PARTIAL INTEREST CANNOT BE CONSIDERED TO B E FULL OWNERSHIP FOR THE PURPOSE OF DENYING THE EXEMPTION UNDER SECT ION 54F OF THE ACT. 5 I.T.A. NO.2288/MDS/15 5. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 122 OF THE TRANSFER OF PROPERTY ACT, 1882. SECTION 122 OF THAT ACT DEFINES GIFT AS FOLLOWS:- 'GIFT' IS THE TRANSFER OF CERTAIN EXISTING MOVABLE O R IMMOVABLE PROPERTY MADE VOLUNTARILY AND WITHOUT CONSIDERATION, BY ONE PERSON, CALLED THE DONOR, TO ANOTHER, CALLED THE DONEE, AND ACCEPTED BY OR ON BEHALF OF T HE DONEE. IN VIEW OF THE ABOVE DEFINITION, THE GIFT SHALL BE VOLUNTARY AND WITHOUT CONSIDERATION. IN THE CASE BEFORE US, THE SETTLOR, NAMELY, THE ASSESSEES MOTHER RETAINED THE LIFE INTEREST OVER T HE PROPERTY. SUBJECT TO LIFE INTEREST RETAINED BY THE ASSESSEES MOTHER, THE PROPERTY WAS CONVEYED TO THE ASSESSEE BY MEANS OF A REGISTERED SETTLEMENT DEED. ON THE DATE OF THE SALE OF THE LA ND AT PALLIKARANAI, ADMITTEDLY, THE ASSESSEES MOTHER, WHO SETTLED THE PROPERTY, WAS ALIVE. THEREFORE, THE LIFE INTEREST RETAINED BY TH E ASSESSEES MOTHER OVER THE PROPERTY WAS VERY MUCH AVAILABLE AND THE A SSESSEE COULD ENJOY THE PROPERTY ONLY SUBJECT TO LIFE INTEREST OF HER MOTHER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE PROPERTY WHICH WAS CONVEYED BY HER MOTHER BY WAY OF SETTLEMENT DEED CANNOT CONVEY FULL OWNERSHIP. IN OTHER WORDS, THE ASSESSEE HAS OWNERSHIP SUBJECT TO THE LIFE INTEREST RETAINED BY THE ASSESSEES 6 I.T.A. NO.2288/MDS/15 MOTHER. THE QUESTION ARISES FOR CONSIDERATION IS W HETHER SUCH PROPERTY CAN BE CONSIDERED AS ONE OF THE RESIDENTIA L HOUSES FOR THE PURPOSE OF DENYING EXEMPTION UNDER SECTION 54F OF T HE ACT? THE MUMBAI BENCH OF THIS TRIBUNAL IN RASKILAL N. SATRA (SUPRA) EXAMINED THE ISSUE AND FOUND THAT THE WORD OWN IN SECTION 54F OF THE ACT WOULD INCLUDE ONLY A RESIDENTIAL HOUSE WHIC H IS FULLY AND WHOLLY OWNED BY THE ASSESSEE. IN THE CASE BEFORE U S, THE ASSESSEE OWNS THE HOUSE SUBJECT TO LIFE INTEREST RETAINED BY THE ASSESSEES MOTHER, NAMELY, SETTLOR. THEREFORE, IT CANNOT BE S AID THAT THE ASSESSEE OWNS A HOUSE FULLY AND WHOLLY. THE OWNERS HIP OF THE ASSESSEE OVER THE PROPERTY IS SUBJECT TO LIFE INTER EST RETAINED BY THE ASSESSEES MOTHER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE HOUSE PROPERTY CONVEYED TO THE ASS ESSEE BY MEANS OF SETTLEMENT DEED SUBJECT TO LIFE INTEREST O VER THE PROPERTY CANNOT BE A REASON FOR DENYING DEDUCTION UNDER SECT ION 54F OF THE ACT. BY FOLLOWING THE DECISION OF MUMBAI BENCH OF THIS TRIBUNAL AND FOR THE REASON STATED THEREIN, THIS TRIBUNAL IS UNA BLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. THE ASSESSING OFFICER I S DIRECTED TO GRANT EXEMPTION UNDER SECTION 54F OF THE ACT. 7 I.T.A. NO.2288/MDS/15 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 12 TH MAY, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 12 TH MAY, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-4, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.