Shri Rutul M. Dave, Vadodara V. The Dy. CIT, Int. Taxn., Vadodara

ITA 2722/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1926 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA
• Keywords: Benefit of exemption; Set aside
• Section: 143(3); 54F; 54

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER . / I.T.A. NO. 2722/AHD/2017 ( ASSESSMENT YEAR : 2013-14) SHRI RUTUL M DAVE 11, SHAAN, NANDANVAN SOCIETY, ALKAPURI, VADODARA / VS. DCIT, INTERNATIONAL TAXATION, VADODARA ./ ./ PAN/GIR NO. : BKEPD3880J ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : URVASHI SHODHAN, A.R. / RESPONDENT BY : SHRI RAJESH MEENA, SR.D.R. DATE OF HEARING 27/06/2019 !'# / DATE OF PRONOUNCEMENT 28/06/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-13, AHMEDABAD, (CIT(A) IN SHORT), DATED 11.09.2017 ARISING IN THE ASSESSMENT ORDER DATED 22.03.2016 PA SSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOM E TAX ACT, 1961 (THE ACT) CONCERNING AY 2013-14 . ITA NO. 2722/AHD/17 [SHRI RUTUL M DAVE VS. DCIT] A.Y. 2013-14 - 2 - 2. AS PER ITS GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE ACTION OF THE REVENUE IN WRONGLY RESTRICTING THE DE DUCTION OF CLAIM UNDER S.54 AND 54EC OF THE ACT BY 50%. 3. THE ASSESSEE, A NON-RESIDENT INDIAN, SOLD RESIDE NTIAL HOUSE FOR A CONSIDERATION OF RS.2.75 CRORE VIDE AGREEMENT DATED 18 TH OCTOBER, 2012. THE CONSIDERATION WAS SPLIT BETWEEN CO-OWNER S NAMELY; (I) BAKUL N. DAVE, (II) NIKUL N. DAVE, (III) CHITRANG D AVE & (IV) ASSESSEE-RUTUL DAVE IN SUITABLE PROPORTIONS. THE A SSESSEE RECEIVED HIS SHARE OF RS.69,24,250/- OUT OF AFORESTATED TOTA L SALE CONSIDERATION OF RS.2.75 CRORE. THE CAPITAL GAIN WAS COMPUTED AT RS.63,02,290/- THEREON. THE ASSESSEE CLAIMED TO HAVE INVESTED THE CAPITAL GAINS IN RESIDENTIAL HOUSE TO THE TUNE OF RS.42,36,000/- AND CLAIMED DEDUCTION UNDER S.54 OF THE ACT THEREON AND BALANCE AMOUNT OF RS.25,80,000/- WAS INVESTED IN SPECIFIED BONDS FOR WHICH DEDUCTION WAS CLAIMED UNDER S.54EC OF THE ACT. IT WAS OBSERVED BY THE AO THAT THE PROPERTY WAS JOINTLY PURCHASED WITH ANJANABEN MUKULBHAI DAVE AND THEREFORE THE BENEFIT OF EXEMPTION UNDER S.54 OF THE ACT CANN OT BE GIVEN SOLELY TO THE ASSESSEE. LIKEWISE REC BOND CERTIFICATES HA VE ALSO BEEN ALLOTTED IN THE JOINT NAME ALONGWITH ONE MUKUL N. D AVE. THE AO ACCORDINGLY RESTRICTED THE EXEMPTION UNDER S.54EC O F THE ACT BY 50% OF THE CLAIM OF THE ASSESSEE ON ACCOUNT OF JOINT HO LDING. THE CLAIM OF DEDUCTION WAS ACCORDINGLY SCALED DOWN THE 50% UNDER BOTH THE PROVISIONS. 4. AGGRIEVED BY THE REDUCTION IN THE QUANTUM OF DED UCTION, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WITHOUT ANY SUCCESS. 5. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. ITA NO. 2722/AHD/17 [SHRI RUTUL M DAVE VS. DCIT] A.Y. 2013-14 - 3 - 6. THE LEARNED AR FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT IDENTICAL ISSUE HAS COME UP IN THE CASE OF OTHER JO INT SELLERS OF THE PROPERTY NAMELY CHITRANG M DAVE ITA NO. 2627/AHD/20 17 ORDER DATED13.08.2018. THE LEARNED AR ALSO POINTED OUT T HAT THE INVESTMENT HAS BEEN MADE OUT OF THE BANK ACCOUNT OF THE ASSESS EE AND THEREFORE MERELY BECAUSE THE INVESTMENT HAS BEEN MADE IN THE JOINT NAME, THE FULL DEDUCTION TO THE ASSESSEE CANNOT BE DENIED IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH. THE LEARNED AR FURTHER INFORMED THE BENCH THAT THE OTHER JOINT OWNER/HOLDER HAS NOT CLAIMED ANY BENEFIT OF EXEMPTION UNDER S. 54/54EC OF THE ACT IN RESPECT OF SUCH INVESTMENT. 7. THE LEARNED DR RELIED UPON THE ORDER OF THE LOWE R AUTHORITIES. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE RELEVANT OPERATIVE PART OF THE ORDER OF THE ITAT IN CHITRANG M DAVE (SUPRA) RELIED UPON BY THE ASSESSEE READS AS UNDER: 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE RE SPECTIVE PARTIES. WE HAVE PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND SUBSTANCE IN THE ARGUMENT ADVANCED BY THE LD. AR. W E HAVE ALSO PERUSED THE JUDGMENT PASSED BY THE HON'BLE JURISDIC TIONAL HIGH COURT AS RELIED UPON BY THE AR , THE RELEVANT PORTI ON WHEREOF IS AS FOLLOWS:- '9. ON THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE CONDITIONS STIPULATED IN S. 54F STAND FULFILLED. IT WOULD BE T REATED AS THE PROPERTY PURCHASED BY THE ASSESSEE IN HIS NAME AND MERELY BE CAUSE HE HAS INCLUDED THE NAME OF HIS WIFE AND THE PROPERTY PURC HASED IN THE JOINT NAMES WOULD NOT MAKE ANY DIFFERENCE. SUCH A CONDUCT HAS TO BE, RATHER, ENCOURAGED WHICH GIVES EMPOWERMENT TO WOMEN. THERE ARE VARIOUS SCHEMES FLOATED BY THE GOVERNMENT ITSELF PERMITTING JOINT OWNERSHIP WITH WIFE. IF THE VIEW OF THE AO OR THE CONTENTION OF THE REVENUE IS ACCEPTED, IT WOULD BE A DEROGATORY STEP. 10. EVEN WHEN WE LOOK INTO THE MATTER FROM ANOTHER ANGLE, FACTS REMAIN THAT THE ASSESSEE IS THE ACTUAL AND CONSTRUCTIVE OW NER OF THE HOUSE. IN CIT VS. PODAR CEMENTS (P) LTD. & ETC. (1997) 141 CT R (SC) 67 : (1997) 226 ITR 625 (SC), THE SUPREME COURT HAS ALSO ACCEPTED THE THEORY OF CONSTRUCTIVE OWNERSHIP. MOREOVER, S. 54F MANDATES THAT THE HOUSE SHOULD BE PURCHASED BY THE ASSESSEE AND IT DO ES NOT STIPULATE ITA NO. 2722/AHD/17 [SHRI RUTUL M DAVE VS. DCIT] A.Y. 2013-14 - 4 - THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF T HE ASSESSEE ONLY. HERE IS A CASE WHERE THE HOUSE WAS PURCHASED BY THE ASSESSEE AND THAT TOO IN HIS NAME AND WIFE'S NAME WAS ALSO INCLUDED A DDITIONALLY. SUCH INCLUSION OF THE NAME OF THE WIFE FOR THE ABOVESTAT ED PECULIAR FACTUAL REASON SHOULD NOT STAND IN THE WAY OF THE DEDUCTION LEGITIMATELY ACCRUING TO THE ASSESSEE. OBJECTIVE OF S. 54F AND THE LIKE PROVISION SUCH AS S. 54 IS TO PROVIDE IMPETUS TO THE HOUSE CONSTRUCTION AND SO LONG AS TH E PURPOSE OF HOUSE CONSTRUCTION IS ACHIEVED, SUCH HYPER TECHNICALITY S HOULD NOT IMPEDE THE WAY OF DEDUCTION WHICH THE LEGISLATURE HAS ALLOWED. PURPOSIVE CONSTRUCTION IS TO BE PREFERRED AS AGAINST THE LITE RAL CONSTRUCTION, MORE SO WHEN EVEN LITERAL CONSTRUCTION ALSO DOES NOT SAY THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONL Y. SEC. 54F OF THE ACT IS THE BENEFICIAL PROVISION WHICH SHOULD BE INT ERPRETED LIBERALLY IN FAVOUR OF THE EXEMPTION/DEDUCTION TO THE TAXPAYER A ND DEDUCTION SHOULD NOT BE DENIED ON HYPER TECHNICAL GROUND. ANDHRA PRA DESH HIGH COURT IN THE CASE OF LATE MIR GULAM ALI KHAN VS. CIT (198 6) 56 CTR (AP) 144 : (1987) 165 ITR 228 (AP) HAS HELD THAT THE OBJ ECT OF GRANTING EXEMPTION UNDER S. 54 OF THE ACT IS THAT AN ASSESSE E WHO SELLS A RESIDENTIAL HOUSE FOR PURCHASING ANOTHER HOUSE MUST BE GIVEN EXEMPTION SO FAR AS CAPITAL GAINS ARE CONCERNED. TH E WORD 'ASSESSEE' MUST BE GIVEN WIDE AND LIBERAL INTERPRETATION SO AS TO INCLUDE HIS LEGAL HEIRS ALSO. THERE IS NO WARRANT FOR GIVING TOO STRI CT AN INTERPRETATION TO THE WORD 'ASSESSEE' AS THAT WOULD FRUSTRATE THE OBJ ECT OF GRANTING EXEMPTION. 11. WE ALSO FIND JUDGMENTS OF OTHER HIGH COURTS GIV ING BENEFIT OF S. 54F(1) OF THE ACT WHEN THE HOUSE OF THE ASSESSEE IS PURCHASED JOINTLY WITH HIS WIFE. IN THE CASE OF CIT VS. V. NATARAJAN (2006) 203 CTR (MAD) 37 : (2007) 287 ITR 271 (MAD) THOUGH THIS CAS E WAS DECIDED IN RELATION TO S. 54 OF THE ACT, THE ITA NO.2627/AHD/2 017 SHRI CHITRANG M. DAVE VS. DCIT ASST.YEAR - 2013-14 SAID SECTION IS P ARI MATERIA OF S. 54F(1) OF THE ACT. LIKEWISE, THE PUNJAB & HARYANA H IGH COURT IN THE CASE OF CIT VS. GURNAM SINGH (2008) 218 CTR (P&H) 6 74 : (2008) 6 DTR (P&H) 83 : (2010) 327 ITR 278 (P&H) TOOK THE SA ME VIEW WHILE DISCUSSING THE PROVISIONS OF S. 54 OF THE ACT WHICH IS AGAIN PARI MATERIA OF S. 54F(1) OF THE ACT. 12. WE, THUS, ANSWER THE QUESTION IN FAVOUR OF THE ASSESSEE AND DISMISS THIS APPEAL WITH COST QUANTIFIED @ RS. 10,000.' 5.1. WE FIND THAT THE CASE OF THE ASSESSEE IS COVER ED IN FAVOUR OF ASSESSEE BY THE JUDGMENT DISCUSSED ABOVE. RESPECTFU LLY FOLLOWING THE SAME, WE ALLOW THE APPEAL PREFERRED BY THE ASSESSEE HOLDING THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION OF RS.64,52,290/- UNDER SECTION 54 OF THE ACT TOWARDS CAPITAL GAIN ON THE PREMISE THAT THE ENTIRE AMOUNT TOWARDS CONSIDERATION OF PURCHASE OF FLAT AT NANDNAVAN HOUSING CO-OPERATIVE SOCIETY HAS BEEN PAI D BY THE ASSESSEE AND MERELY BECAUSE HIS FATHER'S NAME HAS B EEN INDUCTED AS ITA NO. 2722/AHD/17 [SHRI RUTUL M DAVE VS. DCIT] A.Y. 2013-14 - 5 - JOINT- OWNER, THE SAID CLAIM CANNOT BE DENIED. ACCO RDINGLY, WE DELETE THE IMPUGNED DISALLOWANCE. 9. IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH IN THE IDENTICAL SET OF CIRCUMSTANCES, THE ASSESSEE IS ENT ITLED TO WHOLE AMOUNT OF DEDUCTION DESPITE JOINT INVESTMENT OF THE SALE C ONSIDERATION RECEIVED ON SALE OF PROPERTY IN THE NEW RESIDENTIAL HOUSE PROPERTY AND IN BONDS. WE THUS SET ASIDE THE ORDER OF THE CIT(A ) AND DIRECT THE AO TO GRANT THE DEDUCTION OF FULL AMOUNT AS CLAIMED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 28/06/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 28/06/201 9