Income Tax Officer, Ward-6(3), Hyderabad V. Ms. Apsara Bhavanasai, Hyderabad

ITA 557/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69777 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C DEVADAS
• Assessee Lawyers: G S PHANI KISHORE
• Keywords: Gift; Depreciation
• Section: 54F; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 557/HYD/2012 ASSESSMENT YEAR 2008-09 THE ITO WARD-6(3) HYDERABAD VS. MS. APSARA BHAVANA SAI HYDERABAD PAN: AHCPB3872H APPELLANT RESPONDENT ASSESSEE BY: SRI G.S. PHANI KISHORE REVENUE BY: SRI K.C. DEVADAS DATE OF HEARING: 08 .0 8 .2013 DATE OF PRONOUNCEMENT: 13.09.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE C IT(A)-IV, HYDERABAD DATED 31.01.2012 FOR ASSESSMENT YEAR 2008 -09. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) ERRED ON BOTH FACTS AND LAW. 2. THE CIT(A) ERRED IN ALLOWING EXEMPTION U/S. 54F TO THE ASSESSEE THOUGH THE OWNED MORE THAN ONE RESIDENTIAL HOUSES AS ON THE DATE OF TRANSFER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS HO USEWIFE, HAVING INCOME FROM 'HOUSE PROPERTY'. IN HER RETURN OF INCOME, FILED FOR THE A.Y. 2008-09 ON 26.3.2009, SHE HAD DE CLARED AN INCOME OF RS. 24,325/ -. HOWEVER, IT WAS OBSERVED T HAT IN THE COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAD SHOWN HAVING RECEIVED LONG TERM CAPITAL GAINS OF RS. 1,37,02,475 /- ON SALE OF SHARES. OUT OF THE SAME, RS. 1,12,28,000/- WERE CLA IMED AS EXEMPT U/S. 54F (CGS), WHILE RS. 25,00,000/- U/S. 5 4EC (REC). ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 2 EVIDENCE AND DETAILS IN RESPECT OF THE SAID INVESTM ENTS WERE FILED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, IT WAS OBSERVED THAT THE ASSESSEE HAD SHOWN INCOME FRO M 'HOUSE PROPERTY' IN HER E-RETURN, IN RESPECT OF THE FOLLOW ING PROPERTIES: (I) PROPERTY AT 204, MEENAKSHI ROYAL COURT, ROAD NO. 11 , BANJARA HILLS, HYDERABAD. (II) PROPERTY AT 301, MY HOME NAVADEEP, MADHAPUR, HYDERABAD. 4. FROM THE ABOVE, THE ASSESSING OFFICER NOTED THAT TH E ASSESSEE OWNED MORE THAN 2 HOUSES. HE NOTED THAT AS PER THE PROVISIONS OF SEC. 54F, EXEMPTION IS NOT AVAILABLE WHERE THE ASSESSEE OWNS MORE THAN 1 RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF ORIGINAL ASSET. I T WAS NOTED THAT THE DATE OF TRANSFER OF SHARES IN THE CASE OF THE A SSESSEE WAS BETWEEN APRIL, 2007 TO NOVEMBER, 2007. AS ON THE D ATE OF TRANSFER OF SHARES, HOWEVER, THE ASSESSEE OWNED MORE THAN ON E HOUSE. THE ASSESSING OFFICER, THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY HER CLAIM OF EXEMPTION U/S. 54F SHOULD NOT BE D ISALLOWED. 5. IN RESPONSE, THE ASSESSEE FURNISHED A COPY OF THE G IFT DEED DATED 2.4.2007 IN RESPECT OF THE PROPERTY AT 204, M EENAKSHI ROYAL COURT, ROAD NO. 11, BANJARA HILLS, HYDERABAD, STATI NG THAT THE SAME HAD BEEN GIFTED TO SRI B. SIDDHARDH, AGED 11 Y EARS, A MINOR REPRESENTED BY SRI B. JAYA KUMAR. THE ASSESSING OFF ICER NOTED THAT AS PER THE PROVISIONS OF SEC. 27, ANY PERSON, WHO TRANSFERS, OTHERWISE THAN FOR ADEQUATE CONSIDERATION, ANY HOUS E TO A MINOR CHILD, SHALL BE DEEMED TO BE THE OWNER OF THE HOUSE PROPERTY SO TRANSFERRED. HE FURTHER NOTED THAT THE GIFT DEED W AS NOT REGISTERED AND THE GIFT HAD BEEN CLAIMED AS GIVEN T O THE ASSESSEE'S SON ONLY, WHO WAS A MINOR. ACCORDINGLY, THE ASSESSI NG OFFICER CONCLUDED THAT SUCH GIFT DEED WAS FURNISHED ONLY WI TH AN INTENTION TO SHOW THAT SHE HAD TRANSFERRED THE IMPU GNED PROPERTY TO HER MINOR SON BEFORE THE TRANSFER OF SHARES. ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 3 6. IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFICER R EQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE CLAIM OF EXEMPTIO N SHOULD NOT BE DISALLOWED, AS THE ASSESSEE WAS OWNING MORE THAN ON E HOUSE AS ON THE DATE OF TRANSFER. VIDE LETTER DATED 16.12.20 10 IT WAS SUBMITTED BY THE ASSESSEE THAT SEC. 27 DEFINES A OW NER OF A HOUSE IN THE CONTEXT OF COMPUTING INCOME FROM HOUSE PROPE RTY UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', WITHIN THE PROVI SIONS OF SEC. 22 TO 26. IT WAS AVERRED THAT THE ASSESSEE HAD GOT THE GIFT DEED NOTARIZED, WHICH DULY CONVEYED THE TRANSFER AND IS THEREFORE A LEGAL TRANSFER. 7. ALTERNATIVELY, THE ASSESSEE CLAIMED THAT THE HOUSE AT 'MY HOME NAVADEEP' IS A JOINT PROPERTY, HELD BY THE ASS ESSEE JOINTLY WITH HER HUSBAND. THE ASSESSEE RELIED ON THE DECIS ION IN THE CASE OF ITO VS. RASIKLAL N. SATRA (100 TTJ 1039), HOLDIN G THAT SHARE IN A HOUSE PER SE IS NOT A SINGLE OWNERSHIP. ACCORDINGLY, IT WAS CLAIMED THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTIO N U/S. 54. ON A CONSIDERATION OF THE CONTENTIONS OF THE ASSESSEE, T HE ASSESSING OFFICER OPINED THAT AS PER SEC. 123 OF THE TRANSFER OF PROPERTY ACT, UNLESS A GIFT OF PROPERTY IS REGISTERED AND STAMPED , AND FURTHER ATTESTED BY TWO WITNESSES, IT IS INVALID. HE NOTED THAT A GIFT DEED WHICH IS NOT REGISTERED DOES NOT PASS ON ANY TITLE OF OWNERSHIP IN FAVOUR OF THE 'DONEE'. THEREFORE, IN THE PROCESS OF A VALID GIFT, THE FOLLOWING STEPS ARE INVOLVED: (I) EXECUTION OF THE GIFT DEED (II) DONEE'S ACCEPTANCE OF THE GIFT (III) PAYMENT OF ADEQUATE STAMP DUTY AND REGISTRA TION OF THE PROPERTY (IV) HANDING OVER OF POSSESSION OF THE PROPERTY (V) MUTATION OF THE PROPERTY IN MUNICIPAL RECORDS BY THE DONEE ID HIS NAME. ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 4 8. THE ASSESSING OFFICER NOTED THAT IN THE ASSESSEE'S CASE THERE WAS NO EXECUTION OF THE GIFT DEED, PAYMENT OF STAMP DUTY AND REGISTRATION OF THE PROPERTY. BESIDES, POSSESSION O F THE PROPERTY HAD ALSO NOT BEEN HANDED OVER TO THE MINOR SON. IN ADDITION TO THIS, THE COMPUTATION OF TOTAL INCOME SHOWED THAT T HE PROPERTY WAS SELF OCCUPIED AND WAS IN POSSESSION OF THE ASSE SSEE ONLY. THE ASSESSING OFFICER VERIFIED FROM THE WEB SITE OF THE GREATER HYDERABAD MUNICIPALITY CORPORATION ALSO AND FOUND T HAT THE ASSESSEE HAD BEEN SHOWN AS OWNER THEREOF, HAVING TA X DUES OF RS. 8358/- AS ON APRIL, 2010, EVEN THOUGH THE SAME WAS CLAIMED AS GIFTED TO HER SON. THE ASSESSING OFFICER NOTED THAT THE EFFECT OF NON REGISTRATION OF DOCUMENTS IS THAT THE SAME CANNOT B E ADOPTED OR RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFECTING S UCH PROPERTY. ACCORDINGLY, THE ASSESSING OFFICER CONCLUDED THAT T HE SO CALLED GIFT IS NOT A VALID GIFT AND THEREFORE, IT DOES NOT EXIS T IN THE EYES OF LAW. HE NOTED THAT THE ASSESSEE HAD TRANSFERRED THE SHAR ES OF NANDAN BIO MATRIX ON 2.4.2007 ITSELF, THE DATE ON WHICH TH E AFORESAID GIFT DEED WAS CLAIMED AS EXECUTED. ON VERIFICATION OF TH E STAMP VENDOR BOOK, HE FURTHER FOUND THAT 24 STAMP PAPERS HAD BEEN PURCHASED BY ONE SRI SRINIVAS FOR NANDAN BIO MATRIX LTD., V. BHASKARA RAO, V. JAYA KUMAR , M. PHANEESH, CH. JADA V AND V. SUJATA, ON 14.3.2005 FOR BUSINESS PURPOSE. HE OPIN ED THAT THE LEFT OVER STAMP PAPER WAS USED BY THE ASSESSEE TO S HOW THAT THE GIFT DEED HAD BEEN EXECUTED ON 2.4.2007 ITSELF. ACC ORDINGLY, CONCLUDING THAT THE ASSESSEE HAD RESORTED TO DEVIOU S DEVICE OF GIFTING THE PROPERTY TO HER MINOR SON FOR CLAIMING EXEMPTION U/S. 54F AND AVOID PAYMENT OF TAXES ON LONG TERM CAPITAL GAIN ARISING FROM SALE OF SHARES, EVEN THOUGH SHE CONTINUED TO B E OWNER OF THE PROPERTY. THE CLAIM OF EXEMPTION U/S. 54F OF THE A CT WAS DENIED. 9. THE ASSESSING OFFICER FURTHER NOTED THAT AS PER THE PROVISIONS OF SEC. 27 OF THE IT ACT, THE TRANSFER O F PROPERTY TO A MINOR SON SHALL NOT BE REGARDED AS A TRANSFER AND T HE ASSESSEE ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 5 SHALL BE DEEMED TO BE THE OWNER OF THE PROPERTY. HE , THEREFORE, CONCLUDED THAT IN EFFECT THE ASSESSEE SHALL BE DEEM ED TO BE THE OWNER OF THE SAID PROPERTY, EVEN IF IT WAS TRANSFER RED TO THE MINOR SON OF THE ASSESSEE. 10. WITH REGARD TO THE ALTERNATIVE CLAIM OF JOINT OWNER SHIP OF THE PROPERTY AT 'MY HOME NAVADEEP', THE ASSESSING O FFICER NOTED THAT IN THE CASE OF DR. P.K. VASANTHI RANGARAJAN VS . DCIT, IN ITA NO. 1753/MDS/2004 DATED 25-7-2005 THE CHENNAI ITAT HAD HELD THAT WHEN THE ASSESSEE IS OWNING THE PART OF A RESI DENTIAL PROPERTY, THOUGH NOT FULLY, IT AMOUNTS TO OWNING AN Y RESIDENTIAL PROPERTY AS ENVISAGED IN SEC. 54F BEFORE AMENDMENT AND THE ASSESSEE BECOMES DISQUALIFIED FOR EXEMPTION UNDER S EC. 54F. THE ASSESSING OFFICER NOTED THAT AS PER THE SAID DECISI ON PARTIAL OWNERSHIP IN THE PROPERTY AMOUNTS TO FULL OWNERSHIP AND HENCE THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S. 54F OF THE ACT. 11. THE ASSESSING OFFICER FURTHER NOTED THAT SINCE THE ASSESSEE WAS HOLDING THE 'MY HOME NAVADEEP' PROPERTY JOINTLY WITH HER HUSBAND, SHE HAD FULL RIGHTS OVER THE SAME AND IT C OULD NOT BE SAID THAT SHE WAS NOT OWNING THAT PROPERTY. IT WAS ALSO NOTED THAT AS PER THE LETTER OF THE ASSESSEE, THE ENTIRE RENTA L RECEIPT OF RS. 2,55,400/ - FOR THE YEAR HAD BEEN CONSIDERED IN THE RETURN OR INCOME OF THE ASSESSEE ONLY, WHILE HER HUSBAND HAD NOT SHOWN ANY RENTAL INCOME FROM THE SAID PROPERTY. 12. THE ASSESSING OFFICER FURTHER NOTED THAT IN THE CAS E OF CIT VS. CHANDANBEN MADANLAL (245 ITR 182) (GUJ), IT WAS HELD THAT PURCHASE OF A SHARE IN THE RESIDENTIAL HOUSE IS EQU IVALENT TO PURCHASE OF RESIDENTIAL HOUSE FOR THE PURPOSE OF SE C. 54. ACCORDINGLY, HE OPINED THAT IN VIEW OF THE SAID DEC ISION ALSO, SHARE IN A RESIDENTIAL PROPERTY IS EQUIVALENT TO ONE HOUS E. ACCORDINGLY, CONCLUDING THAT THE ASSESSEE WAS OWNING MORE THAN 2 HOUSES AS ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 6 ON THE DATE OF TRANSFER OF SHARES, THE ASSESSING OF FICER HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U/S. 54 F OF THE ACT. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE TH E CIT(A). 13. BEFORE THE CIT(A) THE ASSESSEE REITERATED THAT A SH ARE IN THE JOINT PROPERTY SHOULD BE REGARDED AS A SHARE ONLY A ND NOT AS A SINGLE INDIVIDUAL OWNERSHIP. IT WAS AVERRED THAT TH E ASSESSING OFFICER DID NOT CONSIDER THE LEGAL POSITION STANDIN G AS ON DATE. IT WAS CONTENDED THAT THE ASSESSEE'S CASE IS CLEARLY C OVERED BY THE DECISIONS, SUCH AS THOSE IN ITO VS. RASIKLAL SATRA (SUPRA) AND IN SETH BANARSI DASS GUPTA VS. CIT (81 ITR 170) (ALL), SB SUGAR MILLS LTD. VS. CIT (166 ITR 783) (SC). IT WAS AVERRED TH AT AS PER THE JUDGEMENT OF THE APEX COURT, A CO-OWNER MEANS A PER SON ENTITLED TO A SHARE IN THE PROPERTY BUT CANNOT BE RECOGNISED AS THE SINGLE OWNER. THE DECISIONS IN THE CASES OF SHIVNARAYAN CH OWDARY VS. CIT (108 ITR 104) (LUCK.) AND IN CIT VS. P. ARAVIND ER REDDY (120 ITR 46) WERE ALSO CITED. 14. THE ASSESSEE FURTHER CONTENDED THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF RASIKAL N. SATRA (SUPRA) WA S NOT CONTESTED FURTHER, AND THEREFORE, SHALL BE CONSIDERED AS FINA L. SHE MAINTAINED THAT IT HAS BEEN ESTABLISHED IN THE SAID CASE THAT PART OWNERSHIP OF THE HOUSE PROPERTY COULD NOT BE A DISQ UALIFICATION FOR CLAIMING EXEMPTION U/S. 54F, AS JOINT OWNERSHIP HAS NOT BEEN CONSIDERED AS A SINGLE (NUMERIC) OWNERSHIP OF A HOU SE PROPERTY. THEREFORE, A JOINT OWNERSHIP IN A HOUSE SHOULD NOT BE CONSIDERED IN COUNTING THE NUMERIC STRENGTH OF THE HOUSE PROPE RTY AS ENVISAGED UNDER THE SAID PROVISIONS FOR CLAIMING EX EMPTION U/S. 54F AND SHOULD BE EXCLUDED. 15. THE ASSESSEE SUBMITTED THAT IN THE CASE OF SETH BAN ARSI DAS GUPTA (SUPRA), SB SUGAR MILLS LTD. (SUPRA) ALSO A F RACTIONAL SHARE IN AN ASSET WAS NOT CONSIDERED AS COMING WITHIN THE AMBIT OF ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 7 SINGLE OWNERSHIP. IT WAS HELD THAT THE TEST TO DET ERMINE A SINGLE OWNER IS THAT 'THE OWNERSHIP SHOULD BE VESTED FULLY IN ONE SINGLE NAME AND NOT AS JOINT OWNER OR A FRACTIONAL OWNER'. THE ASSESSEE SUBMITTED THAT THAT THE SHARE IN A JOINT OWNERSHIP IN THE PROPERTY AT 'MY HOME NAVADEEP' SHOULD BE EXCLUDED AND NOT CO NSIDERED AS DISQUALIFICATION FOR CLAIMING EXEMPTION U/S. 54F OF THE ACT. 16. THE CIT(A) OBSERVED THAT AS REGARDS THE PROPERTY AT 204, MEENAKSHI ROYAL COURT, ROAD NO. 11, BANJARA HILLS, HYDERABAD, IT IS THE CONTENTION OF THE ASSESSEE THAT IN VIEW OF T HE GIFT DEED DATED 2.4.2007, WHEREBY THE SAID PROPERTY WAS GIFTED TO T HE ASSESSEE'S MINOR SON, THE ASSESSEE WAS NO MORE THE OWNER OF TH E SAID PROPERTY. IT IS ALSO CONTENDED THAT THE PROVISIONS OF SEC. 27 OF THE ACT TO THE EFFECT THAT ANY PERSON, WHO TRANSFERS, O THERWISE THAN FOR ADEQUATE CONSIDERATION, ANY HOUSE TO A MINOR CHILD, SHALL BE DEEMED TO BE THE OWNER OF THE HOUSE PROPERTY SO TRA NSFERRED, IS RELEVANT ONLY IN THE CONTEXT OF COMPUTATION OF INCO ME FROM 'HOUSE PROPERTY' AND NOT FOR THE PURPOSE OF DECIDING OWNER SHIP IN THE CONTEXT OF SEC. 54F OF THE ACT. 17. THE CIT(A) FURTHER OBSERVED THAT THE CONTENTIONS OF THE ASSESSEE ARE UNACCEPTABLE. FIRSTLY, IT IS CLEAR THA T THE GIFT DEED DATED 2.4.2007 IS NOT A REGISTERED DOCUMENT, SO AS TO HAVE ANY LEGAL SANCTITY. IN THE ABSENCE OF REGISTRATION OF T HE GIFT AND ATTESTATION THEREOF' BY TWO WITNESSES, THE RIGHTS O F THE OWNER CANNOT BE CONSIDERED AS TRANSFERRED IN FAVOUR OF TH E SO-CALLED 'DONEE'. BESIDES, IT IS SEEN THAT THE SO CALLED 'G IFT DEED' IS CLAIMED AS EXECUTED ONLY ON THE DATE OF TRANSFER OF SHARES OF NANDAN BIO MATRIX BY THE ASSESSEE. IT IS ALSO SEEN THAT WHILE THE ASSESSEE DID NOT PAY ANY STAMP DUTY TOWARDS THIS NOR SHE GOT THE PROPERTY REGISTERED LATER, EVEN THE STAMP PAPERS USED BY THE ASSESSEE FOR THE SAME WERE THOSE PURCHASED BY THE PERSONNEL OF N ANDAN BIO MATRIX LTD. ITSELF ON 14.3.2005 FOR BUSINESS PURPOS E. UNDER THE ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 8 CIRCUMSTANCES, IT IS CLEAR THAT THE ENTIRE ARRANGEM ENT OF 'GIFT' IS ONLY AN AFTERTHOUGHT, PUT ON RECORD ONLY WITH A VIE W TO SHOW THAT THE ASSESSEE WAS OWNING ONLY ONE HOUSE AS ON THE DA TE OF TRANSFER OF SHARES. 18. THE CIT(A) OBSERVED WITH REGARD TO THE DEEMING FICT ION CREATED BY SEC. 27 OF THE ACT, IT IS TRUE THAT THE SAME HAS BEEN PRESCRIBED IN THE CONTEXT OF COMPUTATION OF INCOME FROM HOUSE PROPERTY, HOWEVER, IT IS CLEAR THAT THE PROVISIONS OF SEC. 54F HAVE BEEN ENACTED WITH A VIEW TO GIVE FILLIP TO THE HOUS ING SECTOR ONLY. THEREFORE, IN ORDER TO DECIDE THE ELIGIBILITY OF AN ASSESSEE FOR DEDUCTION U/S. 54F, THE SAID PROVISION IS REQUIRED TO BE APPLIED, SO AS TO ENSURE THAT THE INTENDED INCENTIVE IS NOT MIS USED. ACCORDINGLY, EVEN IF THERE HAD BEEN A VALID AND REG ISTERED GIFT DEED, THE ASSESSEE COULD NOT HAVE BEEN CONSIDERED AS NOT BEING THE OWNER OF THE HOUSE SO GIFTED, FOR THE REASON THAT I N THE INSTANT CASE THE GIFT WAS MADE TO A MINOR CHILD, WITHOUT AD EQUATE CONSIDERATION. 19. THE CIT(A) OBSERVED THAT IN THE INSTANT CASE, HOWEV ER, THERE WAS NO VALID GIFT AT ALL. IT IS SEEN THAT THE ASSES SEE NOT ONLY CONTINUED TO STAY IN THE SAME PREMISES BUT WAS ALSO BEING SHOWN AS THE OWNER OF THE PROPERTY IN THE MUNICIPAL RECOR DS EVEN TILL APRIL, 2010. BESIDES, IN THE COMPUTATION OF TOTAL I NCOME, THE PROPERTY WAS SHOWN AS SELF OCCUPIED, SHOWING THAT S HE WAS IN POSSESSION OF THE SAID PROPERTY. IN VIEW OF THE ABO VE FACTS, IT IS CLEAR THAT THE ASSESSEE CONTINUED TO BE THE OWNER O F THE PROPERTY AT 204, MEENAKSHI ROYAL COURT, ROAD NO. 11, BANJARA HILLS, HYDERABAD. 20. AS REGARDS THE PROPERTY AT 301, MY HOME NAVDEEP, MADHAPUR, HYDERABAD, THE CIT(A) OBSERVED THAT ADMIT TEDLY THE SAME WAS JOINTLY OWNED BY THE ASSESSEE WITH HER HUS BAND. THE ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 9 QUESTION, THEREFORE, IS WHETHER THE PART OWNERSHIP OF THE ASSESSEE OF THE SAID FLAT COULD BE CONSIDERED AS OWNERSHIP O F THE FLAT. IN THIS REGARD, IT IS SEEN THAT IN THE DECISION IN THE CASE OF DR. P.K. VASANTHI RANGARAJAN (SUPRA), IT HAS INDEED BEEN HEL D THAT IF AN ASSESSEE OWNS PART OF A RESIDENTIAL PROPERTY, THOUG H NOT FULLY, IT AMOUNTS TO OWNING OF A RESIDENTIAL PROPERTY AS ENVI SAGED IN SEC. 54F BEFORE AMENDMENT, AND THE ASSESSEE BECOMES DISQ UALIFIED FOR EXEMPTION U/S. 54F. HOWEVER, IS ALSO SEEN THAT TH E TRIBUNAL MUMBAI IN THE CASE OF RASIKLAL N. SATRA (SUPRA) HAV E TAKEN A VIEW THAT OWNERSHIP IS DIFFERENT FROM ABSOLUTE OWNERSHIP . THEY HAVE HELD THAT IN THE CASE OF A RESIDENTIAL UNIT, NONE O F THE CO-OWNERS CAN CLAIM THAT HE IS THE OWNER OF THE RESIDENTIAL H OUSE. THE TRIBUNAL OBSERVED THAT OWNERSHIP OF A RESIDENTIAL H OUSE MEANS OWNERSHIP TO THE EXCLUSION OF ALL OTHERS. IN THIS R EGARD THEY RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF SETH BANARASI DASS GUPTA VS. CIT (166 ITR 783), HOLDING THAT FRAC TIONAL OWNERSHIP IS NOT SUFFICIENT FOR CLAIMING EVEN FRACT IONAL DEPRECIATION U/S. 32 OF THE ACT. IT WAS HELD THAT THE WORD 'OWN' WOULD NOT INCLUDE A CASE WHERE A RESIDENTIAL HOUSE IS PARTLY OWNED BY ONE PERSON OR PARTLY OWNED BY OTHER PERSON(S). T HE TRIBUNAL FELT THAT AFTER THE AFORESAID DECISION OF THE SUPREME CO URT, THE LEGISLATURE COULD HAVE AMENDED THE PROVISIONS OF SE C. 54F TO INCLUDE PART OWNERSHIP. HOWEVER, SINCE THE SAME IS NOT DONE, IT WAS TO BE HELD THAT THE WORD 'OWN' IN SEC. 54 F WOU LD INCLUDE ONLY THE CASE WHERE A RESIDENTIAL HOUSE IS FULLY AND WHO LLY OWNED BY THE ASSESSEE AND NOT ONE OWNED BY MORE THAN ONE PER SON. 21. THE CIT(A) OBSERVED THAT WHILE IT MAY BE TRUE THAT THE SAID DECISION OF THE TRIBUNAL MUMBAI BENCHES IN THE CASE OF RASIKLAL N. SATRA (SUPRA) WAS NOT CONTESTED FURTHER, IT IS A LSO SEEN THAT THE CHENNAI BENCH OF THE TRIBUNAL IN A RECENT DECISION IN THE CASE OF ACIT VS. K. SURENDRA KUMAR IN ITA NO. 1324/MDS/2010 DATED 12.8.2011 HAVE FOLLOWED THE SAME DECISION. GOING AG AINST THE ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 10 DECISION OF THEIR CO-ORDINATE BENCH IN THE CASE OF DR. P.K. VASANTHI RANGARAJAN (SUPRA), THE TRIBUNAL NOTED THA T THE DECISION OF THE SUPREME COURT IN THE CASE OF SETH BANARASI D ASS GUPTA (SUPRA) HAD NOT BEEN CONSIDERED BY THEM, WHEREAS TH E SAME WAS CONSIDERED IN THE DECISION IN THE CASE OF RASIKLAL N. SATRA (SUPRA) BY THE TRIBUNAL MUMBAI BENCHES. SINCE IN THE SAID C ASE THE ASSESSEE WAS ONLY A PART OWNER OF THE TWO RESIDENTI AL PROPERTIES, THEY HELD THAT HE COULD NOT BE SAID AS OWNING A RES IDENTIAL HOUSE AS REQUIRED FOR THE PURPOSE OF BENEFIT U/S. 54F OF THE ACT. 22. THE CIT(A) OBSERVED THAT AS PER THE FACTS OF THE CA SE OF THE PRESENT ASSESSEE, EVEN THOUGH THE ASSESSEE IS STILL CONSIDERED AS THE OWNER OF THE PROPERTY AT 204, MEENAKSHI ROYAL C OURT, ROAD NO. 11, BANJARA HILLS, HYDERABAD, SHE IS UNDISPUTED LY ONLY A PART OWNER OF THE PROPERTY AT 301, MY HOME NAVADEEP, MAD HAPUR, HYDERABAD. IN THE LIGHT OF THE DECISIONS OF THE TRI BUNAL MUMBAI AND CHENNAI BENCHES AS DISCUSSED ABOVE, THE ASSESSE E CANNOT BE CONSIDERED AS OWNING THE LATTER PROPERTY, IN EXCLU SION OF THE JOINT OWNER, I.E., HER HUSBAND, SO AS TO BE CALLED THE 'O WNER' OF FLAT NO. 301, MY HOME NAVDEEP, MADHAPUR, HYDERABAD FOR THE P URPOSE OF SEC. 54F OF THE ACT. UNDER THESE CIRCUMSTANCES, THE ASSESSEE CAN BE SAID AS OWNING ONLY ONE PROPERTY AS ON THE DATE OF SALE OF SHARES, AND THEREFORE, IS ELIGIBLE FOR DEDUCTION U/ S. 54F OF RS. 1,12,28,000/-. ACCORDINGLY, THE CIT(A) DECIDED THE GROUNDS RAISED BY THE ASSESSEE IN HER FAVOUR AND DIRECTED THE ASSE SSING OFFICER TO REVISE THE COMPUTATION OF INCOME. AGAINST THIS, TH E REVENUE IS IN APPEAL BEFORE US. 23. THE LEARNED DR SUBMITTED THAT THE CIT(A) WRONGLY GR ANTED DEDUCTION U/S. 54F OF THE ACT, THOUGH THE ASSESSEE IS OWNING MORE THAN ONE RESIDENTIAL HOUSE. ACCORDING TO THE LEARN ED DR THE ASSESSEE HAS THE FOLLOWING HOUSES: ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 11 (I) 204, MEENAKSHI ROYAL COURT, ROAD NO. 11, BANJARA HILLS, HYDERABAD (GIFTED TO MINOR SON THROUGH AN UN - REGISTERED GIFT DEED). (II) 301, MY HOME NAVDEEP, MADHAPUR, HYDERABAD (JOINTLY OWNED WITH HER HUSBAND). 24. FURTHER, HE SUBMITTED THAT THE GIFT TO THE MINOR SO N THROUGH AN UNREGISTERED GIFT DEED IS INVALID. BEING SO, TH E TITLE IN THE PROPERTY HAS NOT BEEN PASSED TO THE ASSESSEE'S MINO R SON AND THE ASSESSEE IS THE ABSOLUTE OWNER OF THAT PROPERTY. F URTHER, THE ASSESSEE BEING PARTIAL OWNER OF THE PROPERTY AT 301 , MY HOME NAVDEEP, MADHAPUR, HYDERABAD, CONSIDERING THE PARTI AL OWNERSHIP AND ABSOLUTE OWNERSHIP OF THE OTHER HOUSE SITUATED AT 204, MEENAKSHI ROYAL COURT, ROAD NO. 11, BANJARA HI LLS, HYDERABAD, THE ASSESSEE IS OWNING MORE THAN ONE HOU SE AND IS NOT ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT. FU RTHER, HE SUBMITTED THAT EVEN PARTIAL OWNERSHIP IS TO BE CONS IDERED AS FULL OWNERSHIP IN THE PROPERTY AND SHE CANNOT GRANTED DE DUCTION U/S. 54F OF THE ACT. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWING JUDGEMENTS: I) CIT VS. RAVINDER KUMAR ARORA (342 ITR 38) (DEL) I N THAT CASE THE ASSESSEE HAS PURCHASED A NEW RESIDENTIAL H OUSE ALONG WITH HIS WIFE. THE AO GRANTED DEDUCTION U/S. 54F TO THE EXTENT OF 50% AS PER THE ASSESSEE'S SHARE IN THE PROPERTY. ON FURTHER APPEAL, THE TRIBUNAL AS WELL AS THE HIGH COURT HELD THAT THE ASSESSEE IS ENTITLED FOR F ULL EXEMPTION U/S. 54F OF THE ACT AND THE ASSESSING OFF ICER WAS NOT JUSTIFIED IN RESTRICTING THE EXEMPTION TO T HE EXTENT OF 50% OF THE AMOUNT INVESTED IN THE NEW RESIDENTIAL HOUSE. ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 12 II) MRS. KAMLESH BANSAL VS. ITO (109 TTJ 417) WHEREIN I T IS HELD THAT THE ASSESSEE INVESTING CAPITAL GAIN IN CONSTRUCTION OF A RESIDENTIAL HOUSE ON THE LAND OWN ED BY HER HUSBAND AND UNDER AGREEMENT HAVING 50% SHARE THEREIN WAS ELIGIBLE FOR EXEMPTION U/S. 54F NOT- WITHSTANDING ABSENCE OF REGISTERED DEED IN HEAR FAV OUR. III) FURTHER, HE RELIED ON THE JUDGEMENT OF CALCUTTA HI GH COURT IN THE CASE OF MADGUAL UDYOG VS. CIT (184 ITR 484). HE ALSO RELIED ON THE ORDER OF THE TRIBUNAL INTHE CASE OF DCIT VS. M/S. GREENKO ENERGIES PVT. LTD. IN ITA NOS. 3-7/HYD/13 DATED 10.5.2013. 25. ACCORDING TO THE DR EVEN FRACTIONAL OR PARTIAL OWNE RSHIP OF THE IMMOVABLE PROPERTY DISENTITLES THE ASSESSEE FOR CLAIMING DEDUCTION U/S. 54F OF THE ACT. FINALLY, HE SUBMITT ED THAT EVEN THE FRACTIONAL OWNERSHIP OF THE PROPERTY BY THE ASSESSE E AT 301, MY HOME NAVDEEP, MADHAPUR, HYDERABAD ALONG WITH HER HU SBAND AND OWNING A PROPERTY AT 204, MEENAKSHI ROYAL COURT , ROAD NO. 11, BANJARA HILLS, HYDERABAD IS TO BE TREATED AS AS SESSEE IS OWNING MORE THAN ONE RESIDENTIAL HOUSE AND THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT. 26. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT EV EN IF THE GIFT DEED MADE TO ASSESSEE'S MINOR SON IN RESPE CT OF PROPERTY SITUATED AT 204, MEENAKSHI ROYAL COURT, ROAD NO. 11 , BANJARA HILLS, HYDERABAD IS INVALID, THE PARTIAL OWNERSHIP OF THE PROPERTY SITUATED AT 301, MY HOME NAVDEEP, MADHAPUR, HYDERAB AD ALONG WITH HER HUSBAND CANNOT BE CONSTRUED AS OWNING OF R ESIDENTIAL HOUSE AND IT SHOULD BE TREATED AS OWNING ONLY ONE R ESIDENTIAL HOUSE AND THE ASSESSEE IS TO BE GRANTED DEDUCTION U /S. 54F OF THE ACT AND THE ORDER OF THE CIT(A) IS TO BE CONFIRMED. THE AR RELIED ON THE FOLLOWING JUDGEMENTS: ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 13 I) SETH BANARSI DAS GUPTA VS. CIT (SUPRA) WHEREIN THE APEX COURT HELD THAT DEPRECIATION ON ASSETS IS TO BE GRA NTED ONLY WHEN THE ASSESSEE IS OWNER OF THE PROPERTY AND NOT IN RESPECT OF A FRACTIONAL OWNERSHIP OF THE PROPERT Y. II) MYSORE MINERALS LTD. VS. CIT (239 ITR 775) WHEREIN THE APEX COURT HELD THAT ANY ONE IN HIS POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE THE OTHERS BEING EXCLU DED THEREFROM AND HAVING RIGHT TO USE AND OCCUPY THE PROPERTY IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDING. ACCORDING TO THE AR THE FRACTIONAL OWNER SHIP CANNOT BE CONSTRUED AS THE ASSESSEE IS OWNING SECON D RESIDENTIAL HOUSE. BEING SO, THE ASSESSEE IS ENTIT LED FOR DEDUCTION U/S. 54F OF THE ACT. III) THE AR ALSO RELIED ON THE JUDGEMENT OF SUPREME COUR T IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (88 ITR 192) FOR THE PROPOSITION THAT WHEN TWO VIEWS ARE POSSIBL E, THE VIEW WHICH FAVOURS THE ASSESSEE IS TO BE ADOPTED. 27. IN REJOINDER, THE LEARNED DR SUBMITTED THAT THE JUD GEMENTS RELIED ON BY THE LEARNED AR ARE RELATING TO GRANTIN G OF DEDUCTION U/S. 32 AND THE LANGUAGE USED THEREIN IS ENTIRELY D IFFERENT FROM SECTION 54F OF THE INCOME-TAX ACT AND THESE JUDGEME NTS ARE NOT APPLICABLE TO THE FACTS OF THE CASE. 28. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. EXEMPTION U/S. 54F HAS BEEN GRANTED TO THE ASSESSEE WITH A VIEW TO ENCOURAGE CONSTRUCTION OF ONE RESIDE NTIAL HOUSE. THE CONSTRUCTION/PURCHASE OF A HOUSE OTHER THAN ONE RESIDENTIAL HOUSE IS NOT COVERED BY SECTION 54F OF THE ACT. TH E CONCESSION PROVIDED U/S. 54F W.E.F. 1.4.2001 WOULD NOT BE AVAI LABLE IN A CASE ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 14 WHERE THE ASSESSEE ALREADY OWNS, ON THE DATE OF TRA NSFER OF THE ORIGINAL ASSETS, MORE THAN ONE RESIDENTIAL HOUSE. THEREFORE, IT IS CLEAR THAT EMPHASIS HAS BEEN GIVEN ON OWNING MORE T HAN ONE RESIDENTIAL HOUSE BY ANY ASSESSEE. THE ASSESSEES, WHO ALREADY OWNS, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET , MORE THAN ONE RESIDENTIAL HOUSE, ARE NOT ELIGIBLE FOR THE CONCESS ION PROVIDED U/S. 54F OF THE ACT. EVEN IF OTHER RESIDENTIAL HOUSE MA Y BE EITHER OWNED BY THE ASSESSEE WHOLLY OR PARTIALLY. THEREFO RE, THE CONCESSION HAS BEEN GIVEN ONLY TO ENCOURAGE THAT AN Y ASSESSEE SHOULD HAVE HIS OWN RESIDENTIAL HOUSE. IN OTHER WO RDS, WHEN ANY ASSESSEE WHO OWNS MORE THAN ONE RESIDENTIAL IN HIS/ HER OWN TITLE EXERCISING SUCH DOMINION OVER THE RESIDENTIAL HOUSE AS WOULD ENABLE OTHER BEING EXCLUDED THEREFROM AND HAVING RI GHT TO USE AND OCCUPY THE SAID HOUSE AND/OR TO ENJOY ITS USUFRUCT IN HIS/HER OWN RIGHT SHOULD BE DEEMED TO BE THE OWNER OF THE RESID ENTIAL HOUSE FOR THE PURPOSE OF SECTION 54F OF THE ACT. THE PROVISO TO SECTION 54F OF THE ACT CLEARLY PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED IF THE ASSESSEE OWNS ON THE DATE OF TRANSFER OF THE RESIDE NTIAL ASSET MORE THAN ONE RESIDENTIAL HOUSE. 29. THIS HAS BEEN CONSIDERED IN THE CASE OF SMT. BHAVAN A THANAWALA VS. ITO (15 SOT 377) (MUM). IN THE CASE OF RAVINDER K. ARORA VS. ACIT (SUPRA) IT WAS HELD THAT EVEN JOI NT OWNERSHIP OF THE PROPERTY BY THE ASSESSEE ALONG WITH HIS WIFE IS CONSTRUED AS INVESTMENT BY THE ASSESSEE AND DEDUCTION U/S. 54F I S ALLOWABLE. 30. IN THE CASE OF SMT. V.K.S. BAWA VS. ACIT (53 ITD 2 32) WHEREIN IT WAS HELD THAT WHEN AN ASSESSEE HAS BECOM E OWNER OF A SHARE (FRACTIONAL) IN PROPERTY BEQUEATHED TO HER BY HER MOTHER, BY THE TIME THE ASSESSEE PURCHASED ANOTHER PROPERTY, S HE COULD NOT CLAIM EXEMPTION U/S. 54F OF THE ACT. ITA NO. 557/HYD/2012 MS. APSARA BHAVANA SAI ================= 15 31. IN THE CASE OF RAVINDER KUMAR ARORA (SUPRA) IT WAS HELD THAT THE ASSESSEE HAVING INVESTED THE ENTIRE AMOUNT OF L ONG TERM CAPITAL GAIN IN PURCHASE OF NEW RESIDENTIAL HOUSE W AS ENTITLED TO EXEMPTION U/S. 54F IN RESPECT OF THE ENTIRE AMOUNT EVEN THOUGH THE NEW PROPERTY WAS IN THE JOINT NAMES OF ASSESSEE AND HIS WIFE. 32. IN VIEW OF THE FOREGOING DISCUSSION, IF AN ASSESSEE IS JOINTLY OWNING MORE THAN ONE PROPERTY, THEN THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE INCLINED TO REVERSE THE O RDER OF THE CIT(A). THE GROUND TAKEN BY THE REVENUE IS ALLOWED. 33. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH SEPTEMBER, 2013. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 13 TH SEPTEMBER, 2013 COPY FORWARDED TO: 1. THE INCOME TAX OFFICER, WARD - 6(3), 6 TH FLOOR, 'C' BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 2. MS. APSARA BHAVANA SAI, 8 - 2 - 615/A/204, ROAD NO. 11, BANJARA HILLS, HYDERABAD. 3. THE CIT(A) - IV, HYDERABAD. 4. THE CIT - III, HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD. TPRAO