ACIT Rg. 3, Lucknow V. Sri Sanjay Thapar, Lucknow

ITA 525/LKW/2011

• Counselvise Citation: 52523714 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-06-2014
• Assessment Year: misc
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: YOGESH AGARWAL
• Keywords: Depreciation
• Section: 54F; 32; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 525/LKW/2011 ASSESSMENT YEAR: 2005 - 06 ACIT RANGE 3, LUCKNOW V. SHRI. SANJAY THAPAR HOU SE NO.5, PARK ROAD LUCKNOW PAN: ABMPT5242N (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. R. K. RAM, D.R. RESPONDENT BY: SHRI. YOGESH AGARWAL, ADVOCATE DATE OF HEARING: 25 0 6 2014 DATE OF PRONOUNCEMENT: 10 0 7 2014 O R D E R PER SUNIL KUMAR YADAV : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: - 1 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS. 29,96,200 / - UNDER SECTION 54F WITHOUT APPRECIATING THE FINDING OF THE A.O. THAT THE ASSESSEE WAS HAVING MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSETS ON THE DATE OF TRANSFER OF ORIGINAL ASSET. 2 . THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACT IN DELETING THE ADDITION OF RS. 1,07,415/ - U/S 23(L)(A) OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING THE FINDING OF THE A.O. FOR THE YEAR. 2 . APROPOS GROUND NO.1, IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54F OF THE INCOME - TAX ACT, 1961 (HERE INAFTER CALLED PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : IN SHORT THE ACT') AT AN AMOUNT OF RS.26,96,200/ - BEING LONG TERM CAPITAL GAIN ON SALE OF SHARES ON 3.6.2004 INVESTED IN HOUSE PROPERTY AT D - 114, ICON PHASE V, DLF CITY, GURGAON. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE OBSERVING THAT ON THE DATE OF TRANSFER, ASSESSEE WAS CO - OWNER OF PROPERTIES AT 20 - 21, 5, PARK ROAD, LUCKNOW AND FL AT NO.7002 AND 7003 IN THE APAR T ME N T S AT PARK ROAD, LUCKNOW. 3 . ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A) AND ASSESSEE HAS FILED WRITTEN SUB MISSIONS STATING THEREIN THAT THE ASSESSING OFFICER INCORRECTLY MENTIONED THE FACT THAT ASSESSEE IS OWNER OF A PARTICULAR FLAT. ADMITTEDLY ASSESSEE WAS CO - OWNER AND CO - OWNERSHIP CANNOT BE CALLED TO BE EQU IVALENT TO THAT OF OWNERSHIP. 4 . THE LD. CIT(A) RE - EXA MINED THE ISSUE IN THE LIGHT OF THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND HE ACCORDINGLY OBSERVED THAT THE ASSESSING OFFICER WAS INCORRECTLY MENTIONED THAT PROPERTY NO. 20 - 21, 5, PARK ROAD, LUCKNOW AND FLAT NO.7002 AND 7003 IN THE APARTMENTS AT PAR K ROAD, LUCKNOW BUILT ON PLOTS 20 AND 21 ON 5, PARK ROAD, LUCKNOW ARE TWO DIFFERENT PROPERTIES, WHEREAS THE CORRECT FACT IS THAT THE ASSESSEE IS CO - OWNER OF FLAT NOS.7002 AND 7003 AT HERITAGE APARTMENTS BUILT ON PLOT NOS. 15 AND 16 (INCORRECTLY MENTIONED A S PLOT NOS.20 & 21) AT 5, PARK ROAD, LUCKNOW. THE LD. CIT(A) FURTHER OBSERVED THAT HERITAGE APARTMENTS BUILT ON PLOT NO.15 AND GARAGES AND SERVANT QUARTERS EXIST ON PLOT NO.16 AND FROM THE MAP THERE WAS NO PROPERTY AT PLOT NOS. 20 AND 21 AT THE TIME OF PA RTITION. THE LD. CIT(A) HAS ALSO EXAMINED THE ISSUE WHETHER DEDUCTION UNDER SECTION 54F OF THE ACT CAN BE ALLOWED WHEN THE ASSESSEE IS CO - OWNER IN PROPERTIES AT THE TIME OF INVESTMENT OF LONG TERM CAPITAL GAINS IN NEW HOUSE PROPERTY IN THE LIGHT OF VARIOU S JUDICIAL PRONOUNCEMENTS AND HAVING RELIED ON THEM, THE LD. CIT(A) HAS HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54F OF THE ACT AS CO - OWNERSHIP CANNOT BE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : EQU IVALENT TO THE OWNERSHIP. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EX TRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 5(2)(I) I HAVE EXAMINED THE ISSUE BEFORE ME. THE AO HAS INCORRECTLY MENTIONED THAT PROPERTY NUMBER 20 AND 21 AT 5, PARK ROAD, LUCKNOW AND FLATS NUMBERS 7002 AND 7003 BUILT ON PLOTS 20 AND 21 ON 5, PARK ROAD, LUCKNOW ARE TWO DIFFERENT PROPERTIES. THE CORRECT FACT IS THAT THE ASSESSEE IS A CO - OWNER OF FLAT NUMBERS 7002 AND 7003 AT HERITAGE APARTMENTS BUILT ON PLOT NUMBERS 15 AND 16 (INCORRECTLY MENTIONED AS PLOT NUMBERS 20 AND 21) AT 5, PARK ROAD, LUCKNOW. HERI TAGE APARTMENT HAS BEEN BUILT ON PLOT NUMBER 15 AND GARAGES AND SERVANT QUARTERS EXIST ON PLOT NUMBER 16. THE MAP EXISTING AT THE TIME OF PARTITION FILED SHOWS THAT THERE IS NO PROPERTY AT PLOT NUMBERS 20 AND 21 AT THE TIME OF PARTITION. THE PROPERTIES IN CO - OWNERSHIP OF THE APPELLANT WITH SMT. SHANTA THAPAR, MOTHER AND SMT. KIRAN TANDON, SISTER WERE ALSO SOLD ON 29.10.2004 AND 03.10.2004. THE FACTS OF CO - OWNERSHIP ARE NOT DISPUTED. THE ISSUE IS WHETHER DEDUCTION UNDER SECTION 54F OF THE ACT CAN BE ALLOWED IN WHEN THE ASSESSEE IS A CO - OWNER IN PROPERTIES AT THE TIME OF INVESTMENT OF LONG TERM CAPITAL GAINS IN NEW HOUSE PROPERTY. 5(2)(II)THE WORD 'RESIDENCE' MEANS A BUILDING OR PART OF THE BUILDING WHERE ONE CAN EAT DRINK AND SLEEP. HOUSE IS NOT EQUAL TO A BU ILDING SINCE A BUILDING MAY COMPRISE MANY HOUSES. THEREFORE HOUSE MEANS AN INDEPENDENT UNIT WHERE ONE CAN EAT DRINK AND SLEEP. THE LEGISLATURE HAS USED THE WORD 'A' BEFORE THE WORDS 'RESIDENTIAL HOUSE' IN SECTION 54F OF THE ACT. IT MUST MEAN A COMPLETE RES IDENTIAL HOUSE AND WOULD NOT INCLUDE A SHARED INTEREST IN A RESIDENTIAL HOUSE. WHERE THE PROPERTY IS OWNED BY MORE THAN ONE PERSON, IT CANNOT BE SAID THAT ANY ONE OF THEM IS THE OWNER OF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : PROPERTY. NO INDIVIDUAL PERSON, OF HIS OWN CAN SELL THE ENTIRE PR OPERTY. HE CAN SELL HIS SHARE OF INTEREST IN THE PROPERTY BUT AS FAR AS THE PROPERTY IS CONCERNED, IT WOULD CONTINUE TO BE OWNED BY CO - OWNERS. JOINT OWNERSHIP IS DIFFERENT FROM ABSOLUTE OWNERSHIP. IN THE CASE OF A RESIDENTIAL UNIT, NONE OF THE CO - OWNERS CA N CLAIM THAT HE IS THE OWNER OF THE RESIDENTIAL HOUSE. OWNERSHIP OF A RESIDENTIAL HOUSE MEANS OWNERSHIP TO THE EXCLUSION OF ALL OTHERS. 5(2)(IIII) THE ISSUE HAD COME UP BEFORE HON'BLE ITAT, MUMBAI BENCH IN THE CASE OF INCOME TAX OFFICER VS SHRI RASIKLAL N, SATRA (2006) 98 ITD 335 MUM, (2006) 280 ITR 243 MUM (AT), 100 TTJ 1039, THE HON'BIE COURT LAID DOWN AS UNDER IN PARAGRAPH 7 - 'THEREFORE, WHERE A HOUSE IS JOINTLY OWNED BY TWO OR MORE PERSONS, NONE OF THEM CAN BE SAID TO BE THE OWNER OF THAT HOUSE, THIS V IEW OF OURS IS FORTIFIED BY THE JUDGMENT OF THE HON'BIE SUPREME COURT IN THE CASE OF SETH BANARSI DASS GUPTA V. CIT, 166 ITR 783, WHEREIN IT WAS HELD THAT A FRACTIONAL OWNERSHIP WAS NOT SUFFICIENT FOR CLAIMING EVEN FRACTIONAL DEPRECIATION UNDER SECTION 32 OF THE ACT. BECAUSE OF THIS JUDGMENT, THE LEGISLATURE HAD TO AMEND THE PROVISIONS OF SECTION 32 WITH EFFECT FROM 1.4.1997 BY USING THE EXPRESSION 'OWNED WHOLLY OR PARTLY'. SO, THE WORD 'OWN' WOULD NOT INCLUDE A CASE WHERE A RESIDENTIAL HOUSE IS PARTLY OWNE D BY ONE PERSON OR PARTLY OWNED BY OTHER PERSON(S). AFTER THE JUDGMENT OF SUPREME COURT IN THE CASE OF SETH BANARSI DASS GUPTA (SUPRA), THE LEGISLATURE COULD ALSO AMEND THE PROVISIONS OF SECTION 54 - F SO AS TO INCLUDE PART OWNERSHIP. SINCE, THE K LEGISLATUR E HAS NOT AMENDED THE PROVISIONS OF SECTION 54F, IT HAS TO BE HELD THAT THE WORD 'OWN IN SECTION 54 - F WOULD INCLUDE ONLY THE CASE WHERE A RESIDENTIAL HOUSE IS FULLY AND WHOLLY OWNED BY ASSESSEE AND CONSEQUENTLY WOULD NOT INCLUDE A RESIDENTIAL HOUSE OWNED BY MORE THAN ONE PERSON. IN THE PRESENT CASE ADMITTEDLY THE HOUSE AT SIONF MUMBAI WAS PURCHASED JOINTLY BY ASSESSEE AND HIS WIFE. IT IS NOBODY'S CASE THAT WIFE IS BENAMI OF ASSESSEE. THEREFORE, THE SAID HOUSE WAS JOINTLY OWNED BY ASSESSEE AND HIS SPOUSE. I N VIEW OF THE DISCUSSIONS MADE ABOVE, IT HAS TO BE HELD THAT ASSESSEE WAS NOT THE OWNER OF A RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF ORIGINAL ASSET. CONSEQUENTLY, THE EXEMPTION UNDER SECTION 54 - PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : F COULD NOT BE DENIED TO ASSESSEE. THE ORDER OF THE LEARN ED CIT (APPEALS) IS, THEREFORE, UPHELD.' 5(2)(IV) RESPECTFULLY FOLLOWING THE CASE SUPRA, I AM OF THE VIEW THAT THE DEDUCTION UNDER SECTION 54F OF THE ACT IS ALLOWABLE TO THE ASSESSEE AS ON THE DATE OF TRANSFER HE WAS CO - OWNER AS OPPOSED TO OWNER OF THE RES IDENTIAL HOUSE. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW DEDUCTION UNDER SECTION 54F OF THE ACT TO THE APPELLANT ON THE AMOUNT OF RS. 26,96,200/ - . THE GROUND OF APPEAL IS ALLOWED. 5 . NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND HAS PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT UNDISPUTEDLY ASSESSEE IS CO - OWNER IN THE PROPERTY AT THE TIME OF AC CRUAL OF LONG TERM CAPITAL GAINS AND INVESTMENT IN HOUSE PROPERTY. HE PLACE D H EAVY RELIANCE UPON THE ORDER OF THE LD. CIT(A), BESIDES PLACING RELIANCE UPON THE FOLLOWING JUDGMENTS: - ( I ) INCOME TAX OFFICER VS. RASIKLAL N. SATRA, 98 ITD 335 ( II ) ACIT VS. SHRI. K. SURENDRA KUMAR IN I.T.A. NO.1342/MDS/2010 OF CHENNAI BENCH OF THE TRIBUNAL. 6 . HAVIN G GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, W E FIND THAT THIS ISSUE HAS BEEN EXAMINED REPEATEDLY BY THE TRIBUNAL AT DIFFERENT OCCASIONS AND WERE OF THE VIEW THAT CO - OWNERSHI P RIGHT CANNOT BE EQUIVALENT TO THE OWNERSHIP RIGHT. THEREFORE, IF THE ASSESSEE IS CO - OWNER AT THE TIME OF ACCRUAL OF CAPITAL GAIN AND ITS INVESTMENT IN NEW HOUSE PROPERTY CANNOT DEBAR THE ASSESSEE FROM CLAIMING DEDUCTION UNDER SECTION 54F OF THE ACT. WE ACCORDINGLY FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND WE CONFIRM THE SAME. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : 7 . APROP O S GROUND NO.2, IT IS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THIS GROUND IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF PREMSUDHA EXPO RTS PVT. LTD. VS. ACIT, 295 ITR (AT) 341 (MUMBAI). IT WAS ALSO CONTENDED THAT ON A SIMILAR ISSUE, THE APPEAL OF THE DEPARTMENT WAS DISMISSED BY THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO.286/LUC/2008 VIDE ORDER DATED 20.6.2008 AND FOLL OWING THIS ORDER OF THE TRIBUNAL, THE LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. SINCE THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE TRIBUNAL WHILE DISPOSING OF THE ISSUE, WE FIND NO INFIRMITY IN HIS ORDER AND ACCORDINGLY WE CONFIRM THE SAME. 8 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.7.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH JULY, 2014 JJ: 2706 COPY FORWARDED TO: 1 . APPELLANT 2 . R ESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )