ITO, (Central)-3, Nashik, Nashik V. Shri Prakash C. Kankaria, Nashik

ITA 460/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2032 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-12-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Capital asset
• Section: 54F; 27; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 460/PN/2011 (ASSESSMENT YEAR 2003-04) INCOME TAX OFFICER (CENTRAL)-3, 3 RD FLOOR, KENDRIYA RAJASWA BHAVAN, RAM GANESH GADKARI CHOWK, OLD AGRA ROAD, NASHIK 422002. .. APPELLANT VS. PRAKASH C. KANKARIA, PROP. PRAKASH TRADERS, INGLE NAGAR, NASHIK ROAD, NASHIK. .. RESPONDENT PAN NO.AGSPK 3179M ASSESSEE BY : NONE RESPONDENT BY : SRI S.K. SINGH DATE OF HEARING : 14-02-2013 DATE OF PRONOUNCEMENT : 22-02-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 17-01- 2011 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEAR 2003-04. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND BELONGS TO THE KANKARIA GROUP OF NASHIK. A SEARCH ACTION U/ S.132(1) OF THE INCOME TAX ACT WAS CONDUCTED BY THE DEPARTMENT ON 30-08-2007 IN TH E GROUP WHEREIN THE RESIDENTIAL PREMISES OF THE ASSESSEE ALONG WITH BUS INESS PREMISES OF THE VARIOUS ASSESSEES OF THIS GROUP WERE COVERED. IN RESPONSE TO NOTICE U/S.153A THE ASSESSEE FURNISHED THE RETURN OF INCOME FOR A.Y. 2003-04 DEC LARING TOTAL INCOME AT ` 3,05,780. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED EXEMPTION U/S.5 4F OF THE INCOME TAX ACT. ON BEING QUESTIONED BY THE ASSESSING OFFICER TO PRODUC E THE DETAIL OF CONSTRUCTION 2 MADE IN RESIDENTIAL HOUSE WITH DOCUMENTARY EVIDENCE S THE ASSESSEE REPLIED AS UNDER : THE ASSESSEE LIVES IN A JOINT HINDU FAMILY. EVEN THOUGH THE PLOTS ON WHICH THE BUNGLOW IS CONSTRUCTED ARE IN THE NAMES OF THE YOUN GER GENERATION MEMBERS (MR. PIYUSH KANKARIA AND MR. MITHUN KANKARIA) YET, OTHER MEMBER S OF THE FAMILY NAMELY SHRI KANTILALJI KANKARIA AND SHRI PRAKASH KANKARIA HAS C ONTRIBUTED TOWARDS THE CONSTRUCTION OF THE RESIDENTIAL BUNGLOW. IT MAY BE NOTED THAT S INCE IT IS A JOINT FAMILY. THE MEMBERS LIVE TOGETHER IN THE SAME HOUSE AND AS SUCH HAVE WI TH-IN THEIR UNDIVIDED RIGHTS CONTRIBUTED TO THE CONSTRUCTION OF RESIDENTIAL HOUS E. IN FACT IT MAY BE NOTED THAT THIS IS A REGULAR AND PRUDENT PRACTICE IN THE MARWADI COMMUNI TY, WHICH PLACES A VERY HIGH REGARDS TO A JOINT FAMILY SYSTEM. IT MAY FURTHER B E NOTED THAT THE DETAILS IN RESPECT OF THE CONSTRUCTION OF RESIDENTIAL BUNGLOW HAS BEEN SUBMIT TED TO YOUR HONOUR VIDE OUR EARLIER SUBMISSION. 3. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THE ASSESSEE HAS NO T CONSTRUCTED OR PURCHASED ANY RESIDENTIAL HOUSE. THE RESIDENTIAL HOUSE CONSTRUCT ED AT SURVEY NO.392/1B IS IN THE NAME OF HIS SON SRI MITHUN P. KANKARIA. ACCORDING TO THE ASSESSING OFFICER ALTHOUGH THE ASSESSEE HAS CONTRIBUTED SOME MONEY FO R CONSTRUCTION OF RESIDENTIAL HOUSE OF HIS SON, HOWEVER, THE LAND DOES NOT BELONG TO THE ASSESSEE. HE, THEREFORE, DISALLOWED THE CLAIM OF EXEMPTION U/S.54F OF THE IN COME TAX ACT MADE BY THE ASSESSEE AMOUNTING TO ` 19,04,530. 4. IN APPEAL, THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE RIVAL SUBMISSIONS ON THIS ISSUE. I HAVE ALSO APPLIED MY M IND TO THE LEGAL POSITION WITH REGARD TO THE EXEMPTION U/S 54F. THERE IS NO DISPUT E WITH REGARD TO THE WORKING OF CAPITAL GAINS AND THE DEDUCTION U/S 54F. THE APPELL ANT IN THE RETURN OF INCOME HAS CLAIMED THE CAPITAL GAINS AT RS.8,70,017/- BEING 1/ 5 TH SHARE FROM THE SALE OF LAND, WHICH THE AO ENHANCED TO RS.19,04,530/-. THERE IS N O DISPUTE IN THIS REGARD WITH THIS CALCULATION. THE LIMITED ISSUE THEREFORE IS TO DECIDE WHETHER TH E APPELLANT IS ENTITLED FOR DEDUCTION U/S 54F. DURING THE ASSESSMENT PROCEEDINGS THE AR O F THE APPELLANT ON 14/12/2009 EXPRESSED HIS NO OBJECTION FOR DISALLOWANCE OF DEDUCTION CLAIMED U /S 54F, HOWEVER, SUCH 'NO OBJECTION' WHICH ARE NOT BASED ON CORRECT APPRECIATION OF THE POSITION OF LAW ON THE SUBJECT DO NOT HOLD GOOD IN THE APPELLATE PROCEEDINGS AND THE APPELLANT HAS A RIGHT TO DISAGR EE WITH SUCH NO OBJECTION EXPRESSED BY HIS A.R. BEFORE THE AO. FROM THE FACTS ON RECORD IT IS APPARENT THAT THE PLOT OF LAND ON WHICH THE APPELLANT CONSTRUCTED THE RESIDENTIAL HOU SE (BUNGALOW) WAS IN THE NAME OF THE APPELLANT'S SON SHRI MITHUN P. KANKARIYA. THE AO HA S ACCEPTED THE PROPOSITION THAT THE APPELLANT HAS CONTRIBUTED MONEY FOR THE CONSTRUCTIO N OF THE RESIDENTIAL HOUSE. PARA 17 OF THE IMPUGNED ASSESSMENT ORDER IS AS UNDER: 3 'AFTER VERIFICATION OF EARLIER SUBMISSION GIVEN BY THE ASSESSEE & DETAIL DISCUSSION WITH THE ASSESSEE IT IS CLEAR THAT THE A SSESSEE HAS NOT CONSTRUCTED OR PURCHASED ANY RESIDENTIAL HOUSE. A RESIDENTIAL HOUS E CONSTRUCTED ON SURVEY NO.392/B IS IN THE NAME OF HIS SON SHRI MITHUN P.. KANKARIA, NO DOUBT THE ASSESSEE HAS CONTRIBUTED SOME MONEY FOR CONSTRUCTIO N OF RESIDENTIAL HOUSE OF HIS SON'. FROM THE ABOVE OBSERVATIONS OF THE AO IT IS ESTABLI SHED THAT THE AO HAS DENIED THE EXEMPTION U/S 54F ONLY ON THE GROUND THAT THE PLOT OF LAND WAS NOT IN THE APPELLANT'S NAME BUT WAS IN THE NAME OF HIS SON. THE APPELLANT HAS D EMONSTRATED THAT THE COST OF CONSTRUCTION HAS NOT BEEN DISPUTED BY THE AO. THE A PPELLANT HAS CONTRIBUTED TOWARDS THE CONSTRUCTION OF THE RESIDENTIAL HOUSE, THEREFORE DE DUCTION U/S 54F CANNOT BE DENIED MERELY ON THE GROUND THAT THE LAND WAS NOT IN HIS N AME. THE RELIANCE PLACED BY THE APPELLANT ON THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE NAME OF CIT VS. P.R. SESHADRI REPORTED IN 228 CTR 334 AND 33 DTR 128 (20 10) SUPPORTS THE APPELLANT'S CASE. ON IDENTICAL FACTS, THE HON'BLE KARNATAKA HIGH COURT H AS RULED THAT THE ASSESSEE WAS ENTITLED FOR EXEMPTION U/S 54F WHERE HE HAD INVESTED IN THE CONSTRUCTION OF THE HOUSE ON THE LAND THAT BELONGED TO HIS WIFE. IN THE CASE OF THE APPEL LANT THE LAND BELONGED TO HIS SON AND THE AO HAS ACCEPTED THAT THE CONSTRUCTION COST WAS MET BY THE APPELLANT. IN VIEW OF THESE FACTS AND THE POSITION OF LAW, THE APPELLANT IS HELD TO B E ELIGIBLE FOR EXEMPTION U/S 54F. IN VIEW OF THESE FACTS AND THE POSITION OF LAW IT IS HELD THAT THE APPELLANT IS ENTITLED FOR EXEMPTION U/S 54F, THEREFORE THE IMPUGNED ADDITION OF RS.19,04,53 0/- IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSE SSING OFFICER AT ` 19,04,530 FOR A.Y. 2003-04, ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/ S.54 OF THE INCOME TAX ACT, 1961. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN APPRECIATING THE FACT THAT IN THE INSTANT CASE THE LAND BELONGS TO ASSESSEES SON AND THE SUPERSTRUCTURE ON THE LAND ALSO BELONGS TO ASSESSEE S SON. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN PLACING RELIANCE ON THE DECISION OF HO NBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. P.R. SESHADRI REPORTED IN 228 CTR 334 AN D 33 DTR 128 (2010), WHICH IS NOT SQUARELY APPLICABLE IN THE INSTANT CASE. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING. HOWEVER, A WRITTEN SUBMISSION ALONG WITH CERTAIN CASE DECISION S WERE RELIED ON BY THE ASSESSEE. THEREFORE, THE MATTER IS BEING DECIDED O N THE BASIS OF THE WRITTEN SUBMISSION AND THE MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT AS PER THE LANGUAGE OF SECTION 54F THE ASSESSEE HAS TO PURCHASE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE OR WITHIN A PERIOD OF THREE 4 YEARS CONSTRUCT A RESIDENTIAL HOUSE FOR CLAIMING TH E LONG TERM CAPITAL GAIN AS EXEMPT. HE SUBMITTED THAT AS PER THE SPIRIT OF THE SAID SECTION THE CONSTRUCTION HAS TO TAKE PLACE ON THE LAND OWNED BY THE ASSESSEE. S INCE IN THE INSTANT CASE THE LAND BELONGS TO THE SON OF THE ASSESSEE, THEREFORE, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM OF EXEMPTION U/S.54F. 8. THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS STATE D THAT HE STAYS IN A JOINT HINDU FAMILY AND BELONGS TO THE MARWADI COMMUNITY. HE IS THE SENIOR MEMBER OF HIS FAMILY CONSISTING OF HIMSELF, HIS SPO USE AND THEIR CHILDREN. IT IS MENTIONED IN THE WRITTEN SUBMISSION THAT IN THE GOV ERNING SECTION IT IS NO WHERE STATED THAT THE PLOT ON WHICH THE RESIDENTIAL HOUSE HAS BEEN CONSTRUCTED SHOULD BE IN THE NAME OF THE ASSESSEE. IT IS FURTHER MENTION ED THAT IN CASE OF FLATS CONSTRUCTED ON THE LAND/PLOTS THE AMOUNT OF EXEMPTION UNDER THE SAID SECTION IS AVAILABLE TO THE FLAT OWNERS DESPITE THE FACT THAT THE PLOT BELONGS EITHER TO THE SOCIETY OR TO THE DEVELOPERS. 8.1 IT HAS FURTHER BEEN MENTIONED THAT THE LOAN SAN CTIONED LETTER OF THE FINANCIAL INSTITUTION CLEARLY MENTIONED THAT THE PROPERTY IN QUESTION BELONGS TO THE CO-OWNER AND NOT TO THE INDIVIDUAL PERSON. THE DETAILS OF S UCH SANCTION LETTER FROM CITI FINANCIAL CONSUMER FINANCE INDIA LTD. IS PLACED AT ANNEXURE-1. IT HAS FURTHER BEEN MENTIONED IN THE WRITTEN SUBMISSION THAT THE C OPY OF THE SANCTION OF THE BUILDING PERMISSION AND COMMENCEMENT CERTIFICATE AS ISSUED BY NASHIK MUNICIPAL CORPORATION SHOWS THE GROUP OF PERSONS AND NOT TO A NY INDIVIDUAL PERSON. THE ABOVE IS AS PER ANNEXURE-2 OF THE PAPER BOOK. IT H AS FURTHER BEEN MENTIONED THAT SINCE THE CO-OWNERS COULD NOT SERVICE THE DEBT TAKE N FROM THE FINANCIAL INSTITUTIONS, THEY HAD PROCEEDED FOR LEGAL ACTION A GAINST ALL THE CO-OWNERS OF THE SAID PROPERTY INDICATING THEREBY THAT ALL OF THEM C OLLECTIVELY HAD RIGHT IN THE 5 PROPERTY UNDER NOTICE AND ALL OF THEM COLLECTIVELY WERE LIABLE TO THE DUES. THE SAME IS AS PER ANNEXURE-3. IT HAS FURTHER BEEN MEN TIONED THAT VARIOUS NOTICES FROM THE INCOME TAX DEPARTMENT THROUGHOUT THE ASSESSMENT PROCEEDINGS AND APPEAL PROCEEDINGS WERE ISSUED AND RECEIVED IN THE NAME OF THE ASSESSEE AT THE ADDRESS WHERE THE PROPERTY IS SITUATED. THIS INDICATES THA T THE ASSESSEE IS STAYING IN THE SAID PREMISES. 8.2 IT HAS FURTHER BEEN MENTIONED THAT THE PROVISIO NS OF SECTION 54F SHOULD BE CONSTRUED LIBERALLY. AS PER THE SAID SECTION THE A MOUNT OF CAPITAL GAIN WOULD BE EXEMPT TO THE EXTENT OF INVESTMENT IN RESIDENTIAL HOUSE. NO WHERE IT IS STATED THAT THE RESIDENTIAL HOUSE CANNOT BE THE ONE THAT IS CON STRUCTED ON THE PLOT BELONGING TO THE SON. THE DECISION OF THE HONBLE KARNATAKA HIG H COURT IN THE CASE OF CIT AND ANOTHER VS. P.R. SESHADRI REPORTED IN 228 CTR 334 I S ALSO RELIED UPON WHERE IT HAS BEEN HELD THAT DEDUCTION U/S.54F CAN BE ALLOWED IN RESPECT OF HOUSE CONSTRUCTED BY WIFE ON THE PLOT BELONGING TO HER HU SBAND. IT WAS ACCORDINGLY REQUESTED IN THE WRITTEN SUBMISSION THAT THE CLAIM OF DEDUCTION U/S.54F OF THE INCOME TAX ACT SHOULD BE ALLOWED. 9. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE AND THE WRITTEN SUBMISSION MADE BY T HE ASSESSEE. WE HAVE ALSO PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE FIND IN THE IN THE CASE OF SHRI KANTILAL C. KANKARIA, ONE OF TH E FAMILY MEMBER THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING A S UNDER: 5. WE HAVE ALSO ANXIOUSLY CONSIDERED THE WRITTEN S UBMISSION FILED BY THE ASSESSEE ON 5.7.2012. IN THE WRITTEN SUBMISSION, THE ASSESSEE TRIED TO DISTINGUISH THE FACTS IN THE CASE OF THE PRAKASH V/S. ITO (SUPRA). THE FIRST DISTINC TION MADE BY THE ASSESSEE IS THAT IN THE CASE OF PRAKASH V/S ITO (SUPRA), THE ENTIRE INVESTM ENT WAS MADE ON THE NAME OF THE ADOPTED SON BUT IN THE PRESENT CASE, IT IS THE JOIN T INVESTMENT. IT IS FURTHER STATED THAT THE ASSESSEE HAS NEVER RELINQUISHED HIS RIGHT IN THE SA ID RESIDENTIAL HOUSE AND ALL THE DOCUMENTS AND RECORDS SHOW THAT IT IS THE JOINT PRO PERTY. IT IS FURTHER STATED THAT ALL THE PAYMENTS TOWARDS INSTALLMENT OF THE LOAN ARE PAID E XCLUSIVELY FROM THE BANK A/C OF THE ASSESSEE AND FROM THE BANK A/C OF HIS SON. IT IS F URTHER STATED THAT OWNERSHIP INSTRUMENT HAS ALWAYS REMAINED WITH THE ASSESSEE. 6 6. IN THE CASE OF PRAKASH V/S. ITO (SUPRA), THE HO NBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: 12. 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 INTERLINKED AND CONNECTED FOR GRANTIN G THE BENEFIT UNDER THE INCOME-TAX ACT. THE WORD AND PHRASE OWNER IN THE CONTEXT OF SECTION 22 OF THE INCOME-TAX ACT HAS BEEN ELABORATED IN CIT V. PODAR CEMENT P. LTD. [1997] 226 ITR 625 (SC) AND MYSORE MINERALS LTD. V. CIT [1999] 239 ITR 775 (SC). AN ASSESSEE MUST HAVE VALID TITLE LEGALL Y 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 THE LEGAL PURPOSES, WHICH BASICALLY EXCLUDES A THIRD PERSON OF ANY RIGHT OVER THE SAID PROPERTY. THEREFORE, ALL THESE CONCEPTS ARE INTERLINKED. THE SCHEME AND PURPOSE OF SECTION 54F, WHICH WAS INSERTED BY THE FINANCE ACT, 1982, WITH EFFECT FROM APRIL 1, 1983, I.E., FROM THE ASSESSMENT YEAR 1983-84 IS WITH A VIEW TO ENCOURAGE HOUSE CONSTRUCTION. THE OBJECT, THEREFORE, IS TO GIVE AL L BENEFITS UNDER THIS SECTION TO THE ASSESSEE ON CONDITIONS AS ELABORATED IN THE SECTION. NO SUCH BENEFIT IS AVAILABLE TO A PERSON OTHER THAN THE AS SESSEE. IT ALSO MEANS THE ASSESSEE MUST COMPLY WITH THE CONDITIONS STRICTLY A S PER THIS PROVISION IN ALL RESPECTS. AS NOTED, THIS EXEMPTION WILL NOT B E AVAILABLE IN CASE WHERE THE ASSESSEE OWNS, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, ANY RESIDENTIAL HOUSE OR PURCHASED WITHIN THE PERIOD O F ONE YEAR, AFTER SUCH DATE OR CONSTRUCTS WITHIN A PERIOD OF THREE YEARS A FTER SUCH DATE ANY OTHER RESIDENTIAL HOUSE. WHERE AN ASSESSEE PURCHASES OR CONSTRUCTS ANY OTHER RESIDENTIAL HOUSE WITHIN THE PERIOD OF THE AFORESA ID EXEMPTION UNDER THE PROPOSED PROVISION, IF ALLOWED, SHALL STAND FORFEIT ED. THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSE T WHICH WAS NOT CHARGED TO TAXES SHALL BE ALLOWED TO BE INCOME CHARGEABLE U NDER THE HEAD CAPITAL GAIN RELATING TO LONG-TERM CAPITAL ASSETS OF THE P REVIOUS YEAR IN WHICH SUCH RESIDENTIAL HOUSE IS SO PURCHASED OR CONSTRUC TED. FURTHERMORE, IF AN ASSESSEE TRANSFERS NEWLY ACQUIRED RESIDENTIAL HOUSE WITHIN THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, THEN THE AMOUNT OF CA PITAL GAIN ARISING FROM THE TRANSFER OF ORIGINAL ASSET, WHICH WAS NOT CHAR GED TO TAX, SHALL BE DEEMED TO BE THE INCOME OF THE YEAR IN WHICH THE NE W ASSET IS TRANSFERRED AND THE SAID INCOME SHALL BE CHARGED TO TAX UNDER T HE HEAD OF CAPITAL GAINS RELATING TO THE LONG-TERM CAPITAL ASSETS. [(1 982) 138 ITR (ST.) 10] (DEPARTMENTAL CIRCULAR NO. 346, DATED JUNE 30, 1982 ). 13. IT IS, THEREFORE, CLEAR THAT THE PURPOSE IS TO GIVE THIS BENEFIT ON THE OWNERSHIP OF ONE RESIDENTIAL HOUSE ONLY BY THE ASSE SSEE AND TO ENCOURAGE TO HAVE ONE RESIDENTIAL HOUSE OF THE ASSESSEE. THE REFORE, RIGHT FROM THE SALE OF ORIGINAL ASSET TILL THE PURCHASE AND/OR CO NSTRUCTION OF THE RESIDENTIAL HOUSE, I.E., THE NEW ASSET, THE OWNER SHIP AND DOMAIN OVER THE NEW ASSET IS A MUST. THE NEW PROPERTY MUST BE OWNED BY THE ASSESSEE AND/OR HAVING LEGAL TITLE OVER THE SAME. THE OTHERS MAY USE AND OCCUPY THE SAME ALONG WITH THE ASSESSEE BUT THE OWNERSHIP SHOULD BE OF THE ASSESSEE OF THE RESIDENTIAL HOUSE SO PURCHA SED FROM THE NET CONSIDERATION/SALE PROCEEDS OF THE SALE OF ORIGINAL ASSET BY THE ASSESSEE. 14. HAVING OBSERVED ABOVE AND IN VIEW OF THE UNDISP UTED POSITION ON THE RECORD THAT THE DECEASED ASSESSEE, ADMITTEDLY, THOUGH SOLD THE PROPERTY OWNED BY HIM YET PURCHASED THE NEW PROPERT Y IN THE NAME OF ADOPTED SON AND PAID CONSIDERATION OUT OF THE SALE PROCEEDS IN QUESTION, WITH CLEAR INTENTION TO TRANSFER THE PROPERTY TO TH E ADOPTED SON. HE, THEREFORE, UTILIZED THE SALE PROCEEDS TO CONSTRUCT A HOUSE BY TRANSFERRING THE PROPERTY AND SUBMITTING PLAN IN THE NAME OF THE SON ONLY. THE INTENTION WAS VERY CLEAR FROM THE DAY ONE TO TRAN SFER THE PROPERTY EVEN BEFORE THE CONSTRUCTION OF RESIDENTIAL HOUSE TO TH E ADOPTED SON. HE TRANSFERRED THE PROPERTY BEFORE THE PRESCRIBED PERI OD, AS PER THE SCHEME OF SECTION, AND THE SON BECOMES THE OWNER OF THE PROPE RTY FOR ALL THE PURPOSES. THE DECEASED/ASSESSEE, ADMITTEDLY, HAD N O DOMAIN AND/OR RIGHT WHATSOEVER ON THE SAID PROPERTY. THIS FACT IT SELF, THEREFORE, DISENTITLED 7 HIM TO CLAIM ANY EXEMPTION AS THERE WERE VARIOUS NON-COMPLIANCES WITH THE CONDITIONS AS PER THE SCHEME OF SECTION 54 AND 54F OF THE INCOME-TAX ACT AS MENTIONED ABOVE. 7. IN THE CASE OF PRAKASH V/S. ITO (SUPRA), THE HON BLE HIGH COURT HAS CONSIDERED SEC. 54F AND IT IS HELD THAT THE NEW PROPERTY MUS T BE OWNED BY THE ASSESSEE AND/ OR HAVING LEGAL TITLE OVER THE SAME. THE OTHERS MAY U SE AND OCCUPY THE SAME ALONG WITH THE ASSESSEE BUT THE OWNERSHIP SHOULD BE OF THE ASSESSE E OF THE RESIDENTIAL HOUSE SO PURCHASED FROM THE NET CONSIDERATION/SALE PROCEEDS OF THE SALE OF THE ORIGINAL ASSET BY THE ASSESSEE . IN THE PRESENT CASE THOUGH IT IS ARGUED THAT THE ASSESSEE HAS DOMAIN AND OWNERSHIP OF THE SAID PROPERTY BUT NOTHING HAS BEEN PRODUCED BEFORE US TO SHOW THAT ASSESSEE HAS THE TITLE IN THE SAID PROPERTY. SO FA R AS THE BANK DOCUMENTS ARE CONCERNED, THAT CANNOT BE THE DECISIVE AS ADMITTEDLY THE SON O F THE ASSESSEE HAS BEEN SHOWN AS THE MAIN BORROWER AND THE ASSESSEE IS SHOWN AS THE CO-B ORROWER BUT IT IS NOTHING BUT AS A GUARANTOR. IN OUR OPINION, ASSESSEES CASE IS SQUA RELY COVERED BY LEGAL PRINCIPLES LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY IN THE CAS E OF PRAKASH V/S. ITO (SUPRA) AS ASSESSEE FAILED TO DEMONSTRATE THAT HE HAS TITLE OR OWNERSHIP IN THE PROPERTY OF THE SON. WE, THEREFORE, ALLOW THE GROUND TAKEN BY THE REVENU E AND REVERSE THE ORDER OF THE CIT(A), NASIK. 8. IN THE RESULT, REVENUES APPEAL IS ALLOWED. 10. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIB UNAL (WHERE ONE OF US IS A PARTY) WE SET-ASIDE THE ORDER OF THE CIT(A) AND RE STORE THE ORDER OF THE ASSESSING OFFICER. GROUNDS RAISED BY THE REVENUE ARE ACCORDI NGLY ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS, THE 22 ND DAY OF FEBRUARY 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED THE 22 ND FEBRUARY 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. CIT CENTRAL, NAGPUR 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENI OR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE