Shri Ravinder Kumar Arora, New Delhi V. ACIT, New Delhi

ITA 4998/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0220 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-01-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: S C VASUDEVA
• Keywords: Capital asset; Depreciation
• Section: 143(3); 54B; 54F; 142(1); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI C.L.SETHI, JUDICIAL MEMBER. I.T. A. NO.4998/DEL/2010 ASSESSMENT YEAR: 2007-08 RAVINDER KUMAR ARORA, ASSTT. COMMISSIONER OF INCO ME-TAX, B-7/8, SAFDERJUNG ENCLAVE, VS. CIRCLE 24(1), NEW DE LHI. NEW DELHI. PAN: AAGPA5631D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.C. VASUDEVA, CA. RESPONDENT BY: SHRI H.K. LAL, SR. DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 2 4.08.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SEC. 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2007- 08. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASS ESSEE IS AS UNDER:- 2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXIII, NEW DEL HI ERODE IN CONFIRMING A CHIN OF THE ASSESSING OFFICER IN RESTR ICTING THE DEDUCTION OF RS.3,18,59,216/- CLAIMED U/S 54F OF THE INCOME T AX ACT, 1961 TO RS.1,59,29,368/- ONLY. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HIS RETURN OF INCOME ON 30.10.2007 SHOWING TOTAL INCOME AT RS. 64,32,220/- FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. THE RETURN WAS INITIALLY PROCESSED UNDER SEC. 143(1) OF THE ACT. THEREAFTER , THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SEC. 143(2) DATED 23.07.2 008 WAS ISSUED AND SERVED UPON THE ASSESSEE. FURTHER, NOTICE UNDER SE C. 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WAS ISSUED BY THE AO ON 25.09.20 09, IN RESPONSE TO WHICH, THE ASSESSEES AUTHORIZED REPRESENTATIVE APP EARED BEFORE THE AO AND FILED REPLIES FROM TIME TO TIME. BOOKS OF ACCO UNT OF THE ASSESSEE WERE PRODUCED, WHICH WERE PUT TO TEST-CHECK. 4. IN THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT THE ASSESSEE IS PROPRIETOR OF M/S. ARORA SERVICE STATIO N AND IS RUNNING A PETROL PUMP. DURING THE RELEVANT YEAR THE ASSESSEE HAS SH OWN LONG TERM CAPITAL GAIN OF RS.45,49,045/- ON SALE OF PLOT OF LAND BEAR ING KHASRA NO.526/1, MIN AND OLD NO.526, MIN KHATA NO.552 AND OLD KHATA NO.3 7 SITUATED AT MOHUDDINPUR KANWANI, TEHSIL DADRAI, DISTRICT GAUTAM BUDH NAGAR, U.P. THIS PLOT OF LAND WAS PURCHASED BY THE ASSESSEE IN HIS NAME ON 27.01.1989. 3 AS PER THE DETAILS FILED BY THE ASSESSEE, IT WAS NO TICED BY THE AO THAT THIS LAND WAS SOLD FOR A SALE CONSIDERATION OF RS.4,33,0 0,000/- TO M/S. NIRALA DEVELOPERS PVT. LTD. VIDE SALE DEED DATED 01-07-200 6. OUT OF THE TOTAL GAIN ARISING FROM SALE OF LAND, THE ASSESSEE CLAIMED EXE MPTION OF CAPITAL GAIN TO THE EXTENT OF RS.3,18,59,276/- UNDER SEC.54F OF THE ACT ON ACCOUNT OF PURCHASE OF A NEW HOUSE PROPERTY. THE ASSESSEE VID E REPLY DATED 19.11.2009 FILED A COPY OF THE PURCHASE DEED THROUGH WHICH A R ESIDENTIAL HOUSE BEARING NO.8, BLOCK NO.7, SITUATED IN LAYOUT PLAN OF SAFDAR JUNG ENCLAVE, NEW DELHI WAS PURCHASED ON 01-03-2007 FOR A TOTAL CONSIDERATI ON OF RS.3,28,15,000/- AND CLAIMED EXEMPTION UNDER SEC. 54F OF THE ACT FOR RS.3,18,59,276/-. 5. ON GOING THROUGH THE PURCHASE DEED OF THE ABOVE RESIDENTIAL HOUSE, IT WAS NOTICED BY THE AO THAT THE PURCHASE DEED WAS MA DE JOINTLY IN THE NAMES OF THE ASSESSEE AND HIS WIFE SMT. MANJU ARORA. THE ASSESSEE HAD CLAIMED EXEMPTION UNDER SEC. 54F OF THE ACT WITH REFERENCE TO THE WHOLE AMOUNT INVESTED IN THE WHOLE HOUSE. THE AO VIDE QUESTIONN AIRE DATED 04.12.2009 ASKED THE ASSESSEE TO EXPLAIN AND JUSTIFY HIS CLAIM OF EXEMPTION UNDER SEC. 54F WITH REFERENCE TO THE WHOLE AMOUNT INVESTED IN THE SAID HOUSE INASMUCH AS THE PROPERTY WAS PURCHASED JOINTLY WITH HIS WIFE . THE ASSESSEE VIDE REPLY DATED 15.12.2009 SUBMITTED THAT WIFES NAME WAS ONL Y INCLUDED IN THE SALE DEED JUST TO AVOID ANY LITIGATION AFTER HIS DEATH T HOUGH ALL THE FUNDS INVESTED 4 IN THE SAID HOUSE WAS PROVIDED BY THE ASSESSEE HIMS ELF AS WAS CLEAR AND EVIDENT FROM THE BANK STATEMENT. THE ASSESSEE THER EFORE, SUBMITTED BEFORE THE AO THAT THE EXEMPTION UNDER SEC. 54F OF THE ACT IS TO BE ALLOWED WITH REFERENCE TO THE FULL AMOUNT OF PURCHASE CONSIDERAT ION PAID BY HIM FOR THE AFORESAID RESIDENTIAL HOUSE. 6. THE ASSESSEES SUBMISSION WAS CONSIDERED BY THE AO. THE AO NOTED THAT THOUGH ALL THE PAYMENTS WERE MADE BY THE ASSES SEE, THE RESIDENTIAL HOUSE WAS PURCHASED JOINTLY IN THE NAMES OF THE ASS ESSEE AND HIS WIFE. THE AO THEN REFERRED TO SEC. 54F OF THE ACT AND STATED THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SEC.54F OF THE ACT ONLY TO THE E XTENT OF HIS RIGHT IN THE NEW RESIDENTIAL HOUSE PURCHASED JOINTLY WITH HIS WI FE. THE AO THEREFORE, ALLOWED 50% OF THE EXEMPTION CLAIMED UNDER SEC. 54F OF THE ACT AS AGAINST TOTAL CLAIM OF RS.3,18,59,276- MADE BY THE ASSESSE E. THE AO ALLOWED CLAIM ONLY TO THE EXTENT OF RS.1,59,29,638/- AND THE BALA NCE 50% BEING RS.1,59,29,638/- WAS DISALLOWED. 7. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 8. BEFORE THE LEARNED CIT(A), THE ASSESSEE PLACED R ELIANCE UPON THE DECISION OF ITAT MADRAS D-BENCH IN THE CASE OF THIR D ITO VS. S. VARDARAJAN, 33 TTJ (MAD.) 466, WHERE IT HAS BEEN HE LD THAT THE WIFE OF THE 5 APPELLANT WAS HOLDING THE PROPERTY ONLY IN TRUST OF THE ASSESSEE AND THE ASSESSEE MUST BE ACCEPTED AS THE REAL OWNER THOUGH THE NAME OF THE WIFE WAS ALSO INCLUDED IN THE PURCHASE DEED. HOWEVER, THE L EARNED CIT(A) HAS NOT FOLLOWED THIS DECISION BUT FOLLOWED THE DECISION OF ITAT NAGPUR BENCH IN THE CASE OF ITO VS. PRAKASH TIMAJI DHANJODE (2003) 81 TTJ (NAG) 694. THE CIT(A) ALSO RELIED UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAI NARAYAN VS. ITO REPOR TED IN 306 ITR 335 (P&H). THE DECISION OF HONBLE BOMBAY HIGH COURT I N THE CASE OF PRAKASH TIMAJI DHANJODE VS. ITO REPORTED IN 312 ITR 40 WAS ALSO RELIED UPON BY THE LEARNED CIT(A). THE LEARNED CIT(A) STATED THAT THE DECISION OF ITAT MADRAS D-BENCH IN THE CASE OF ITO VS. S. VARDARAJAN (SUPRA) IS NOT APPLICABLE TO THE PRESENT CASE BEING DISTINGUISHABL E ON FACTS. 9. HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMIT TED THAT THE NAME OF THE ASSESSEES WIFE WAS ADDED IN THE PURCHASE DEED JUST TO AVOID ANY LITIGATION AFTER THE DEATH OF THE ASSESSEE THOUGH T HE FULL CONSIDERATION FOR PURCHASE OF NEW RESIDENTIAL HOUSE WAS PROVIDED BY T HE ASSESSEE OUT OF HIS OWN FUNDS. HE FURTHER POINTED OUT THAT THE FUNDS F OR THE NEW RESIDENTIAL HOUSE WERE INVESTED BY THE ASSESSEE AND NOT A SINGL E AMOUNT OF MONEY WAS GIVEN BY THE WIFE OF THE ASSESSEE TO PURCHASE THE P ROPERTY. HE, THEREFORE, 6 STATED THAT THE WIFE IS TO BE TREATED ONLY THE NAME LENDER WITH REGARD TO THE PROPERTY PURCHASED HAVING NO LEGAL INTEREST OR TITL E OR CLAIM IN THE PROPERTY. IN SUPPORT OF THIS STATEMENT, THE ASSESSEE HAS INVI TED OUR ATTENTION TO AN AFFIDAVIT SWORN BY HIS WIFE WHERE SHE STATED THAT S HE HAD NO INTEREST OR CLAIM OR TITLE IN THE PROPERTY. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THAT ALL THE INCOME ARISING FROM THIS PROPERTY HAS BEEN ASSESSED IN THE ASSESSEES HAND. HE FURTHER POINTED OUT THAT THE P ROPERTY WAS STANDING IN THE NAME OF THE ASSESSEE IN MUNICIPAL RECORDS AND IN SU PPORT THEREOF, A COPY OF PROPERTY TAX RETURN WAS ALSO FILED BEFORE THE CIT(A ). HE THEREFORE, STATED THAT THE DECISION OF ITAT MADRAS BENCH IN THE CASE OF THIRD ITO VS. S. VARDARAJAN (SUPRA) IS SQUARELY APPLICABLE TO THE PR ESENT CASE. 11. THE LEARNED DR ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. BESIDES THE DECISIONS RELIED UP ON BY THE LEARNED CIT(A), THE LEARNED DR ALSO PLACED RELIANCE UPON THE DECISI ON OF HONBLE DELHI HIGH COURT IN THE CASE OF VIPIN MALIK (HUF) VS. CIT REPO RTED IN (2009) CTR (DEL) 66 : (2009) 183 TAXMAN 296. 12. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO DELI BERATED UPON THE VARIOUS DECISIONS CITED AT THE BAR. 13. IN THIS CASE, THE ASSESSEE HAS SOLD HIS LAND FO R A SALE CONSIDERATION OF RS.4,33,00,000/- TO M/S. NIRALA DEVELOPERS PVT. LTD . VIDE SALE DEED DATED 7 01.07.2006 WHICH GAVE RISE TO A CAPITAL GAIN. THE ASSESSEE THEN INVESTED A SUM OF RS.3,28,15,000/- ON 01.03.2007 TOWARDS THE P URCHASE OF A NEW RESIDENTIAL HOUSE BEARING NO.8, BLOCK NO.7 SITUATED IN LAYOUT PLAN OF SAFDARJUNG ENCLAVE, NEW DELHI AND ON THAT ACCOUNT, HE CLAIMED EXEMPTION UNDER SEC. 54F OF THE ACT AMOUNTING TO RS.3,18,59,2 76/-. THIS NEW RESIDENTIAL HOUSE WAS PURCHASED BY THE ASSESSEE IN HIS OWN NAME ALONG WITH HIS WIFE. THE AO ALLOWED THE ASSESSEES CLAIM OF E XEMPTION UNDER SEC. 54F ONLY TO THE EXTENT OF 50% THEREOF INASMUCH AS THE A O WAS OF THE VIEW THAT THE NEW RESIDENTIAL HOUSE WAS PURCHASED BY TWO PERS ONS I.E. THE ASSESSEE AND HIS WIFE AND EXEMPTION UNDER SEC. 54F IS AVAILABLE ONLY WITH REFERENCE TO THE ASSESSEES SHARE. THE AO, THEREFORE, RESTRICTED TH E DEDUCTION OF RS.3,18,59,260/- CLAIMED U/S 54F OF THE ACT BY THE ASSESSEE TO RS.1,59,29,368/- ONLY. THE CONTROVERSY BETWEEN TH E ASSESSEE AND THE DEPARTMENT IS WITH REGARD TO THE QUESTION WHETHER T HE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SEC. 54F WITH REFERENCE TO THE TOTA L AMOUNT INVESTED BY THE ASSESSEE IN THE NEW RESIDENTIAL HOUSE OR ONLY TO TH E EXTENT OF 50% THEREOF BECAUSE OF THE REASON THAT NAME OF THE ASSESSEES W IFE IS ALSO INCLUDED IN THE PURCHASE DEED. TO DECIDE THIS QUESTION, WE WOULD L IKE TO REFER TO THE PROVISIONS OF SEC. 54F OF THE ACT. SECTION 54F PRO VIDES THAT SUBJECT TO THE CONDITIONS LAID DOWN IN THE SECTION ITSELF, IN THE CASE OF AN ASSESSEE BEING AN 8 INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE, AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HO USE, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING MANNER I.E. TO SAY: (A) IF THE COST OF THE NEW RESIDENTIAL HOUSE PURCHASED BY THE ASSESSEE IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF T HE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UND ER SEC. 45; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET C ONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGE D UNDER SEC. 45. 14. IN THE PRESENT CASE, WE ARE CONCERNED ABOUT THE QUESTION WHETHER THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEAR AFTER THE DATE ON WHICH A TRANSFER OF LAND TOOK PLACE, PURCHASED A NEW RESIDENTIAL HOUSE. THE FACT THAT ALL OTHER CONDITIONS OF SEC. 54F ARE SATISFIED IS NOT IN DISP UTE. THE DISPUTE IS ONLY WITH REGARD TO THE EXTENT OF ASSESSEES SHARE IN TH E NEW RESIDENTIAL HOUSE PURCHASED WITHIN THE TIME SPECIFIED. WE HAVE PERUS ED THE RELEVANT PURCHASE DEED AND FIND THAT THE NEW RESIDENTIAL HOUSE HAS BE EN PURCHASED ON 1 ST DAY OF MARCH, 2007 IN THE NAME OF THE ASSESSEE AND HIS WIF E BY PAYING TOTAL CONSIDERATION OF RS.3 CRORE TO THE SELLER. THE ASS ESSEE ALSO PAID A SUM OF RS.21 LAKH TOWARDS STAMP DUTY AND CORPORATION TAX A T THE TIME OF REGISTRATION 9 OF THE SALE DEED. THEREFORE, THE TOTAL CONSIDERATI ON OF THE NEW RESIDENTIAL HOSUE PURCHASED BY THE ASSESSEE IN HIS NAME AND IN THE NAME OF HIS WIFE COMES TO RS.3,21,00,000/-. THE ASSESSEE HAS FURTHE R CLAIMED THE SUM OF RS.7,15,000/- TOWARDS COMMISSION AND LEGAL EXPENSES INCURRED IN THE COURSE OF PURCHASING THE PROPERTY AND, THEREFORE, THE TOTA L INVESTMENT IN THE PROPERTY WAS SHOWN AT RS.3,28,15,000/- WHICH HAS BE EN CLAIMED AS EXEMPT UNDER SEC. 54F OF THE ACT. THE FACT THAT THE WHOLE OF THE CONSIDERATION OF RS.3,28,15,000/- HAS BEEN PAID BY THE ASSESSEE HIMS ELF IS NOT IN DISPUTE. THE ASSESSEES WIFE HAS NOT CONTRIBUTED A SINGLE PENNY TOWARDS THE PURCHASE OF THE NEW RESIDENTIAL HOUSE. AN AFFIDAVIT BY THE ASS ESSEES WIFE HAS ALSO BEEN FILED DECLARING AND STATING THAT THE ASSESSEES WIF E HAS NOT CONTRIBUTED A SINGLE PENNY IN THE PURCHASE OF THE HOUSE AND SHE H AD NO INTEREST OR TITLE IN THE SAID PROPERTY. IT HAS ALSO BEEN STATED IN THE AFFIDAVIT THAT THE ASSESSEES WIFES NAME WAS STATED IN THE PURCHASE DEED ONLY FO R `SHAGUN PURPOSES AND BECAUSE OF THE ASSESSEE BEING PHYSICALLY HANDICAP. IN THE CASE OF THIRD ITO VS. S. VARADARAJAN (SUPRA), THE ASSESSEE, AN INDIVI DUAL, CLAIMED EXEMPTION UNDER SEC.54 OF THE ACT ON ACCOUNT OF PURCHASE OF A FLAT. IN THAT CASE, THE DOCUMENT FOR THE PURCHASE OF THE FLAT WAS EXECUTED IN THE NAME OF ASSESSEES WIFE. THE AO REJECTED THE ASSESSEES CLAIM FOR THE REASON THAT THE ASSESSEE HAD NOT SATISFIED THE CONDITIONS OF SEC. 54 OF THE ACT BECAUSE HE HAD HIMSELF 10 NOT PURCHASED THE PROPERTY IN HIS NAME AND THAT HIS WIFE HAS NOT CONFIRMED THAT SHE WAS HOLDING BENAMI FOR HIM. THE CLAIM OF THE ASSESSEE UNDER SEC. 54 WAS ALLOWED BY THE TRIBUNAL AFTER OBSERVING THAT THE TOTAL AMOUNT INVESTED IN THE PROPERTY WAS PROVIDED BY THE ASSESS EE AND THE PROPERTY PURCHASED IN THE NAME OF THE WIFE WAS ONLY IN TRUST FOR THE ASSESSEE AND THE ASSESSEE MUST BE ACCEPTED TO BE THE REAL OWNER. TH IS CASE IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN TH E PRESENT CASE, THE PROPERTY HAS BEEN PURCHASED IN THE NAME OF THE ASSESSEE HIMS ELF AND HIS WIFES NAME HAS ALSO BEEN INCLUDED, WHOLE OF THE CONSIDERATION HAS BEEN PAID BY THE ASSESSEE. THE WIFE HAS GIVEN A DECLARATION THAT HE R NAME WAS INCLUDED IN THE SALE-DEED IN TRUST FOR THE ASSESSEE. THEREFORE, IN THE PRESENT CASE, THE ASSESSEE IS TO BE TREATED AS A REAL OWNER OF WHOLE OF THE PROPERTY PURCHASED ON 01.03.2007 FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SEC. 54F OF THE ACT. 15. THE AFORESAID DECISION OF ITAT IN THE CASE OF T HIRD ITO VS. S. VARADARAJAN (SUPRA) HAS NOT BEEN FOLLOWED IN A SUBS EQUENT DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. PRAKASH TIMAJI DHAN JODE (SUPRA) FOR THE REASON THAT THE ASSESSEE IN THE CASE OF PRAKASH TIM AJI DHANJODE (SUPRA) HAS NOT MADE ANY CLAIM THAT THE PURCHASE IN THE NAME OF HIS WIFE WAS BENAMI AND THAT HE WAS THE REAL OWNER OF THE PROPERTY RATH ER, THE ASSESSEE IN THE 11 AFFIDAVIT ADMITTED THAT HIS SON WAS THE BENEFICIAL OWNER OF THE PROPERTY AND THE INVESTMENT WAS MADE IN HIS NAME IN VIEW OF THE FACT THAT HE WAS 86 YEARS OLD AND THAT HE WAS COUNSELED TO DO SO. THE RELEVA NT PARA 11 OF THE DECISION IS AS UNDER:- 11. ONE MORE CASE OF THE MADRAS TRIBUNAL REPORTED IN ITO VS. VARADARAJ (1989) 33 TTJ (MAD) 466 ON WHICH THE COUNSEL FOR THE ASSESSEE RELIED ON REMAINS TO BE CONSIDERED . THE FACTS IN THE SAID CASE ARE IDENTICAL TO THE FACTS OF THE PRESENT CASE. THE DISTINGUISHING FEATURE IN THE SAID CASE WAS THA T THE ASSESSEE IN THE SAID CASE HAD PURCHASED THE NEW ASSET IN THE NAME OF HIS WIFE BENAMI FOR HIMSELF. THE ASSESSEE IN THE SAID CASE HAD AFTER PURCHASE IN THE NAME OF HIS WIFE DECLARED INC OME FROM THE SAID PROPERTY IN HIS NAME. THE ASSESSEE CLAIMED TH AT THE PURCHASE IN THE NAME OF HIS WIFE WAS BENAMI AND THA T HE WAS THE REAL OWNER OF THE PROPERTY. IN SUCH CIRCUMSTAN CES, THE TRIBUNAL CAME TO THE CONCLUSION THAT THERE WAS COMP LIANCE WITH THE REQUIREMENT OF S. 54 AND ALLOWED EXEMPTION. IN THE PRESENT CASE, THE ASSESSEE HAS NOT MADE ANY SUCH CLAIM. IN THE AFFIDAVIT FILED BEFORE THE AO HE HAD ADMITTED THAT HIS SON IS THE BENEFICIAL OWNER OF THE PROPERTY AND THE INVESTMENT WAS MADE IN HIS NAME IN VIEW OF THE FACT THAT HE IS 86 YEARS OLD AND THAT HE WAS COUNSELED TO DO SO. THUS, ON FACTS AND CIRC UMSTANCES OF THIS CASE, WE ARE OF THE VIEW THAT THE DECISION OF THE MADRAS TRIBUNAL IS ALSO DISTINGUISHABLE. 16. THE DISTINGUISHING FEATURE BETWEEN THE DECISION IN THE CASE OF THIRD ITO VS. VARADARAJAN (SUPRA) AND IN THE CASE OF ITO VS. PRAKASH TIMAJI DHANJODE (SUPRA) AS POINTED OUT BY THE TRIBUNAL IN THE LATER DECISION IN THE CASE OF PRAKASH TIMAJI DHANJODE (SUPRA) HAS BEEN LO OKED INTO BY US, AND WE FIND THAT THE DISTINGUISHING FEATURE POINTED OUT BY THE TRIBUNAL IN THE CASE OF ITO VS. PRAKASH TIMAJI DHANJODE (SUPRA) IS NOT PRES ENT IN THE PRESENT CASE. 12 THE FACTS OF THE PRESENT CASE ARE MORE IDENTICAL TO THE CASE OF ITO VS. VARADARAJAN (SUPRA) INASMUCH AS, IN THE PRESENT CAS E, THE ASSESSEE HAS CATEGORICALLY STATED THAT HIS WIFES NAME WAS INCLU DED IN THE PURCHASE DEED IN TRUST FOR THE ASSESSEE AND THAT HE WAS THE REAL OWNER OF THE PROPERTY AND ALL THE CONSIDERATION FOR PURCHASE OF THE PROPERTY HAS BEEN PROVIDED BY HIM. THEREFORE, FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASE OF ITO VS. VARADARAJAN (SUPRA) AND NOT TO THE CASE OF ITO VS. PRAKASH TIMAJI DHANJODE (SUPRA) WHERE THE PROPERTY WAS PURCHASED I N THE NAME OF ASSESSEES SON ONLY. IN THAT CASE, THE ASSESSEES NAME WAS NOT EVEN INCLUDED IN THE PURCHASE DEED AND THE PROPERTY WAS PURCHASED IN THE NAME OF SON AND THAT WAS THE REASON THAT ITAT NAGPUR BENCH IN THE C ASE OF PRAKASH TIMAJI DHANJODE (SUPRA) HAS NOT FOLLOWED THE DECISION OF I TAT MADRAS BENCH IN THE CASE OF ITO VS. VARADARAJAN (SUPRA). WE, THERE FORE, HOLD THAT THE DECISION OF ITAT NAGPUR IN THE CASE OF PRAKASH TIMA JI DHANJODE (SUPRA) IS OF NO HELP TO THE REVENUE RATHER IT SUPPORTS THE AS SESSEES CASE IN THE LIGHT OF THE DISTINGUISHING FEATURE POINTED OUT BY THE BENCH IN PARA 11 OF THE ORDER, WHICH HAS ALREADY BEEN REPRODUCED ABOVE. 17. IN THE CASE OF CIT VS. P.R. SESHADRI (2010) 228 CTR (KAR) 334, THE HONBLE KARNATAKA HIGH COURT HAS HELD THAT THOUGH T HE LAND MAY BE IN THE OWNERSHIP OF ASSESSEES SPOUSE, NEVERTHELESS THE TR IBUNAL HAS RECORDED A 13 CATEGORICAL FINDING THAT CONSTRUCTION WORK WAS IN P ROGRESS DURING 21 ST APRIL, 1995 TILL 31 ST AUG., 1996 AND THE WIFE OF THE ASSESSEE COULD HAVE INCLUDED THE VALUE OF CONSTRUCTION FOR MORTGAGE PURPOSES AND THIS ALONE DOES NOT MEAN THAT CONSTRUCTION WAS CARRIED OUT BY THE WIFE OF THE ASSESSEE OUT OF HER OWN FUNDS SO AS TO DENY THE ASSESSEE THE BENEFIT OF DEDUCTION UNDER SEC. 54F. IF THAT IS TO BE ACCEPTED AS FINDING OF FACT THEN T HERE IS NO IMPEDIMENT IN THE ASSESSEES CLAIM FOR RELIEF UNDER SEC. 54F, AS THE ASSESSEE HAD CLAIMED RELIEF TO THE EXTENT OF RS.20,96,008/- AS HIS CONTRIBUTION TOWARDS THE COST OF CONSTRUCTION OF THE BUILDING AND THIS AMOUNT WILL F ALL WITHIN THE COST OF THE BUILDING. IN THE PRESENT CASE BEFORE US, THE WHOLE OF THE CONSIDERATION OF RS.3,28,15,000/- HAS BEEN CONTRIBUTED BY THE ASSESS EE AND THE ASSESSEES NAME HAS ALSO BEEN INCLUDED IN THE PURCHASE DEED. THEREFORE, THIS AMOUNT WOULD FALL WITHIN THE COST OF THE NEW HOUSE INCURRE D BY THE ASSESSEE. THE WIFES SHARE IN THE COST IS NIL. SINCE THE COST TO THE EXTENT OF RS.3,28,15,000/- HAS BEEN CONTRIBUTED BY THE ASSESS EE TOWARDS NEW RESIDENTIAL HOUSE PURCHASED IN ASSESSEES NAME AS W ELL WIFES NAME, THE ASSESSEE IS ENTITLED TO A RELIEF UNDER SEC. 54F TO THAT EXTENT. 18. IN THE CASE OF VIPIN MALIK (HUF) (2009) 227 CTR 66, THE HONBLE DELHI HIGH COURT HAS HELD THAT THE AMOUNT WHICH WAS AVAILABLE TO BE TAXED AS CAPITAL GAIN WAS NOT UTILIZED FOR THE PURCHASE O F THE FLAT EITHER ONE YEAR 14 BEFORE THE SALE OF THE AGRICULTURAL LAND OR TWO YEA S AFTER THE SALE OF THE AGRICULTURAL LAND INASMUCH AS MOST OF THE AMOUNT HA D ALREADY BEEN PAID TO THE COOPERATIVE SOCIETY BEFORE ONE YEAR OF THE SALE OF THE AGRICULTURAL LAND. THE ASSESSEE ALSO CANNOT BE SAID TO HAVE CONSTRUCTE D A RESIDENTIAL HOUSE WITHIN THREE YEARS OF THE SALE OF THE AGRICULTURAL LAND AS THE AMOUNT RECEIVED FROM THE SALE OF THE AGRICULTURAL LAND WAS NOT UTIL IZED FOR THE PURCHASE OF THE FLAT. THE ASSESSEES CLAIM THUS UNDER SEC. 54F WAS REJECTED. INDEPENDENT OF THIS VIEW, THE HONBLE HIGH COURT HAS ALSO CONSIDER ED ANOTHER ASPECT OF THE MATTER THAT THE AGRICULTURAL LAND WHICH WAS SOLD WA S OF THE ASSESSEE HUF AND THE FLAT PURCHASED IN THE COOPERATIVE SOCIETY W AS NOT IN THE NAME OF THE ASSESSEE HUF BUT IN THE INDIVIDUAL NAME OF THE KART A ALONG WITH HIS MOTHER. IT WAS THEREFORE, HELD THAT THE ASSESSEE WAS NOT EN TITLED TO CLAIM THE BENEFIT OF SEC. 54F OF THE ACT. IN THE PRESENT CASE, THE A MOUNT RECEIVED FROM THE SALE OF LAND HAS BEEN UTILIZED BY THE ASSESSEE FOR THE PURCHASE OF A FLAT THOUGH IT WAS REGISTERED IN THE ASSESSEES NAME ALO NG WITH HIS WIFE. THE LAND WAS SOLD BY THE ASSESSEE AND THE HOUSE HAS ALS O BEEN PURCHASED BY THE ASSESSEE AND THE ASSESSEE HAS CONTRIBUTED THE COST OF THE HOUSE TO THE EXTENT OF RS.3,28,15,000/-. THEREFORE, THE ASSESSEE IS EN TITLED TO A BENEFIT OF SEC. 54F TO THE EXTENT OF THE COST INCURRED BY HIM. 15 19. IN THE CASE OF JAI NARAYAN VS. ITO, 306 ITR 335 (P&H), THE ASSESSEE CLAIMED DEDUCTION UNDER SEC. 54B IN RESPECT OF THE INVESTMENT MADE IN THE PROPERTY IN THE NAME OF SON OR GRANDSON. THE HONB LE PUNJAB & HARYANA HIGH COURT THEREFORE, HELD THAT READING OF SEC. 54B OF THE ACT NOWHERE SUGGESTS THAT THE LEGISLATURE INTENDED TO ADVANCE T HE BENEFIT OF THE SECTION TO THE ASSESSEE WHO PURCHASED THE AGRICULTURAL LAND EV EN IN THE NAME OF THE THIRD PERSON. IN THE PRESENT CASE BEFORE US, THE A SSESSEE HAS PURCHASED PROPERTY IN HIS OWN NAME ALONG WITH HIS WIFE. IT I S NOT IN DISPUTE THAT THE WHOLE OF THE CONSIDERATION HAS BEEN PROVIDED BY THE ASSESSEE. IT IS NOT THE CASE WHERE THE PROPERTY HAS NOT BEEN PURCHASED IN T HE NAME OF THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAS MERELY INCLUD ED THE NAME OF HIS WIFE ALONG WITH HIS OWN NAME THOUGH IN THE CASE OF JAI N ARAYAN (SUPRA) BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, THE NEW AS SET WAS NOT PURCHASED IN THE NAME OF THE ASSESSEE BUT WAS PURCHASED IN TH E NAME OF SON AND GRANDSON. IN THIS CASE, THE HONBLE PUNJAB & HARYA NA HIGH COURT HAD DISSENTED FROM THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. V. NATARAJAN (2007) 287 ITR 271, WHERE IT W AS HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SEC. 54F WH EN THE ASSESSEE, WHO AFTER SELLING HIS RESIDENTIAL HOUSE, HAD PURCHASED ANOTHE R HOUSE IN HIS WIFES NAME. BE THAT AS IT MAY, THE FACTS OF THE PRESENT CASE ARE DIFFERENT WHERE THE 16 NEW HOUSE HAS BEEN PURCHASED BY THE ASSESSEE IN HIS OWN NAME ALONG WITH HIS WIFES NAME AND WHOLE OF THE CONSIDERATION HAS BEEN PAID BY THE ASSESSEE OUT OF THE SALE CONSIDERATION OF THE LAND SOLD. THEREFORE, THIS DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAI NARAYAN VS. ITO (SUPRA) DOES NOT APPLY TO THE PRESE NT CASE. 20. IN THE CASE OF PRAKASH & CO. VS. CIT, 312 ITR 4 0, THE SALE PROCEEDS OF THE CAPITAL ASSETS SOLD WERE INVESTED IN THE RES IDENTIAL HOUSE IN THE NAME OF ADOPTED SON OF THE ASSESSEE AND IN THAT BACKGRO UND OF THE FACT, IT WAS HELD THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION. I N THAT CASE, THE NEW PROPERTY WAS PURCHASED IN THE NAME OF ADOPTED SON A ND THE ASSESSEES NAME WAS NOT INCLUDED IN THE SALE DEED. HOWEVER, IN THE PRESENT CASE, THE PROPERTY HAS BEEN PURCHASED IN THE NAME OF THE ASSESSEE HIMS ELF ALONG WITH HIS WIFE AND THEREFORE, IT CANNOT BE SAID THAT THE PROPERTY HAS BEEN EXCLUSIVELY PURCHASED IN THE NAME OF THE THIRD PARTY. 21. A USEFUL REFERENCE MAY BE MADE TO A RECENT DECI SION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GURNAM SINGH (2010) 327 ITR 278 (P&H), WHERE THE TRIBUNAL HAD RECORDED A PURE FINDING OF FACT THAT THE LAND IN QUESTION WAS PURCHASED OUT OF THE SALE PROCEEDS OF THE AGRICULTURAL LAND, WHICH WAS USED ONLY FOR AGRICULT URAL PURPOSES AND MERELY BECAUSE THE ASSESSEES SON WAS SHOWN IN THE SALE DE ED AS CO-OWNER, IT DID 17 NOT MAKE ANY DIFFERENCE. IN THAT CASE, IT WAS NOT THE CASE OF THE REVENUE THAT THE LAND IN QUESTION WAS EXCLUSIVELY USED BY HIS SO N. THEREFORE, THE HONBLE HIGH COURT HELD THAT THE ASSESSEE WAS ENTITLED TO D EDUCTION UNDER SEC. 54B OF THE ACT. IN THE PRESENT CASE, THE NEW RESIDENTIA L HOUSE HAS BEEN PURCHASED OUT OF THE SALE PROCEEDS OF THE LAND SOLD BY THE AS SESSEE. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE HOUSE PURCHASED WAS EX CLUSIVELY USED BY HIS WIFE. THEREFORE, MERELY BECAUSE THE WIFES NAME WA S INCLUDED IN THE SALE DEED AS CO-OWNER, IT WOULD NOT MAKE ANY DIFFERENCE. 22. FURTHER, IN THE CASE OF JT. CIT VS. SMT. ARMEDA K. BHAYA (2006) 99 TTJ 358, ITAT, MUMBAI BENCH HAS ALLOWED THE BENEFIT OF SECTION 54, WHERE THE HOUSE WAS PURCHASED JOINTLY IN THE NAMES OF THE ASSESSEE, HIS MOTHER AND FATHER, AND, MOTHER AND FATHER DID NOT HAVE ANY RIG HT, TITLE OR INTEREST IN THE PROPERTY AND PURCHASE CONSIDERATION WAS BORNE BY TH E ASSESSEE HIMSELF. THIS DECISION OF ITAT, MUMBAI IS SQUARELY APPLICABL E TO THE FACTS OF THE PRESENT CASE BEFORE US. THE RELEVANT PORTION OF TH E DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF JT. CIT VS. SMT. ARMEDA K. BHAYA (SUPRA) IS AS UNDER:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE CAS E HAVE BEEN ELABORATELY DISCUSSED ABOVE. THE TERM `PURCHASE I S NOT DEFINED IN THE IT ACT. THEREFORE, THE SAME IS TO B E UNDERSTOOD AS IN COMMON PARLANCE. IT IS EVIDENT THAT THE ASSES SEE PAID THE ENTIRE PURCHASE CONSIDERATION TOGETHER WITH ALL THE EXPENSES. 18 THE MOTHER AND FATHER HAVE DEPOSED THAT THEY HAVE N O RIGHT, TITLE OR INTEREST IN THE IMPUGNED FLAT AND THAT THE IR NAMES HAVE BEEN ADDED FOR VARIOUS LEGAL CONVENIENCES MENTIONED ABOVE. SEC. 45 OF THE TRANSFER OF PROPERTY ACT IS DISCUSSE D ABOVE, WHICH GIVES IMPORTANCE TO THE RATIO OF PAYMENT MADE BY RESPECTIVE OWNERS AND REFERS TO ANY CONTRACT TO THE CONTRARY, WHICH MAY BE IN EXISTENCE. AS THE FACTS EMERGE, IT IS IMPLICITLY CLEAR FROM THE CONDUCT OF THE PARTIES THAT THERE WA S AN AGREEMENT IN EXISTENCE THAT THE FLAT WILL BE THE PR OPERTY OF THE ASSESSEE AND MOTHER AND FATHER WILL HAVE NO RIGHT, TITLE OR INTEREST THEREIN AND THE PURCHASE CONSIDERATION WIT H EXPENSES WILL BE BORNE BY THE ASSESSEE. UNDER THESE CIRCUMS TANCES, WE ARE OF THE VIEW THAT THE ASSESSEE CAN BE TREATED AS PURCHASER OF THE PROPERTY IN TERMS OF S. 54. OUR VIEW IS FURTHE R FORTIFIED BY THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF P ODAR CEMENT (P) LTD. (SUPRA) FOR THE PROPOSITION THAT TH E CONCEPT OF CONSTRUCTIVE OWNERSHIP IS TO BE APPLIED TO IT PRO CEEDINGS. THE ISSUE BEFORE THE HONBLE SUPREME COURT WAS OF DEPRECIATION. NEVERTHELESS, IT LAYS DOWN A GENERAL PROPOSITION OF LAW, THAT IN INCOME-TAX PROCEEDINGS THE CONCEPT OF CONSTRUCTIVE OWNERSHIP CAN BE APPLIED CONSIDERING THE FACTS OF THE CASE. WE ARE OF THE VIEW THAT THE FACTS OF THE PRESENT CASE CONFORM TO BE SEEN FROM THE GLOSS OF THE HONBLE SU PREME COURT JUDGMENT IN THE CASE OF PODAR CEMENT (P) LTD. (SUPRA), WHICH ALSO HELPS THE CASE OF THE ASSESSEE. IN CONS IDERATION OF ALL THE ABOVE FACTS, OBSERVATIONS AND CASE LAWS, WE HOLD THAT THE ASSESSEE IS PURCHASER OF THE FLAT AND THE ENTIRE AM OUNT SPENT BY HER HAS TO BE CONSIDERED TOWARDS THE PURCHASE PRICE PAID BY HER FOR THE NEW FLAT ENTITLED TO BE COMPUTED WHILE ALLOWING DEDUCTION UNDER S. 54. 23. IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE AND REASONS GIVEN WE THEREFORE, HOLD THAT THE ASSESSEE IS ENTITLED TO BE NEFIT OF SEC. 54F WITH REFERENCE TO THE TOTAL INVESTMENT OF RS.3,28,15,000 /- INVESTED BY HIM TOWARDS PURCHASE OF NEW RESIDENTIAL HOUSE PROPERTY PURCHASED IN HIS OWN NAME ALONG WITH HIS WIFE. THE ASSESSING OFFICER SH ALL MODIFY THE 19 COMPUTATION OF CAPITAL GAIN ACCORDINGLY AND MODIFY THE ASSESSMENT ORDER. WE ORDER ACCORDINGLY. 24. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 25. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 11 TH MARCH, 2011. SD/- SD/- (G.E. VEERABHADRAPPA) (C.L. SETHI) VICE PRESIDENT JUDICIAL MEMBER DATED: 11 TH MARCH, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.