ITO 16(3)(3), MUMBAI V. JAYANT KUMAR J CHOKSI, MUMBAI

ITA 7280/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2076 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 27-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.7280/M/2013 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER 19(2)(1), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 VS. SHRI JAYANTKUMAR JAVERILAL CHOKSI, 524, SANDHURST BUILDING, SVP ROAD, OPERA HOUSE, MUMBAI 400 004 PAN: AAEPC3646E (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIMAL PUNMIYA, A.R. REVENUE BY : SHRI, RAJESH OJHA, D.R. DATE OF HEARING : 19.10.2016 DATE OF PRONOUNCEMENT : 11.11.2016 O R D E R PER C.N. PRASAD, JUDICIAL MEMBER: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)]-27, MUMBAI DATED 17.09.2013 FOR THE ASSESSM ENT YEAR 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED CIT(A)ERRED IN CONCLUDING THAT FLAT NO. 2301-A IN LOKHANDWALA RESIDENCY TOWER WORLI WHICH IS RENTED O UT AS PER LEAVE & LICENCE AGREEMENT AND 1/2 SHARE IN THE FLAT NO.2401-A IN LOKHANDWALA RESIDENCY TOWER , WORLI WHICH IS SOP, B E TREATED AS ONE UNIT BY WAY OF SINGLE AGREEMENT, FOR THE PURPOS E OF SEC-54F? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAD ERRED IN CONCLUDING THAT EVE N IF THE NEW ASSET WAS PURCHASED IN JOINT NAME OF ASSESSEE'S WIFE AND DAUGHTER IN LAW, THE CONDITION REGARDING PURCHASE OF NEW ASSET IS F ULFILLED U/S 54F OF THE ACT. 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE AN INDIVIDUAL FILED RETURN OF INCOME ON 19.08.09 DECLARING INCOME OF RS.9,10,790/ -. IN THE RETURN OF ITA NO.5720/M/2013 MRS. SONALI A. SHAH 2 INCOME FILED THE ASSESSEE CLAIMED DEDUCTION UNDER S ECTION 54F AGAINST SALE OF TWO PROPERTIES AND PURCHASE OF A NEW PROPERTY. THE ASSESSMENT WAS COMPLETED ON 30.12.2011 UNDER SECTION 143(3) OF THE ACT DETER MINING THE INCOME OF THE ASSESSEE AT RS.1,24,25,400/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER DENIED DEDUCTION UNDER SECTION 54F HOLDING THAT THE HOUSE I.E. FLAT NOS.2301A AND 2401A IN LOKHANDWALA RESIDENCY TOWER, WORLI IS NOT A SINGLE HOUSE, THEREFORE ON THE DATE OF TRANSFER OF ORIGINAL ASSET ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET AND THEREFORE THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SE CTION 54F OF THE ACT AND NOT ENTITLED FOR DEDUCTION. THE SECOND OBJECTION OF TH E ASSESSING OFFICER FOR DENYING THE CLAIM FOR DEDUCTION UNDER SECTION 54F W AS THAT THE NEW PROPERTY PURCHASED BY THE ASSESSEE WAS REGISTERED IN THE NAM E OF ASSESSEES WIFE AND DAUGHTER IN LAW AND NOT IN THE NAME OF THE ASSESSEE , THUS THE ASSESSING OFFICER HELD THAT ASSESSEE IS NOT ENTITLED FOR DEDUCTION UN DER SECTION 54F. 3. THE ASSESSEE CONTENDED THAT THE FLAT NOS.2301A A ND 2401A IN LOKHANDWALA RESIDENCY TOWER, WORLI IS A PENT HOUSE AND IS A DUPLEX FLAT WHICH IS INTERNALLY CONNECTED BY A STAIRCASE, THERE IS ONLY ONE KITCHEN AND ONE HALL, THEREFORE IS A SINGLE UNIT AND NOT TWO SEPARA TE RESIDENTIAL HOUSES. THE ASSESSEE IN RESPECT OF THE OBJECTION OF THE ASSESSI NG OFFICER THAT THE PROPERTY WAS NOT REGISTERED IN ASSESSEES NAME BUT WAS REGIS TERED IN WIFE AND DAUGHTER IN LAWS NAME AND THEREFORE DEDUCTION IS NOT ALLOWA BLE, SUBMITTED THAT IN THEIR CASTE AND COMMUNITY THEY FEEL THAT IT IS AUSPICIOUS IF THE PROPERTY IS REGISTERED IN THE NAME OF LADIES AS THEY CONSIDER FEMALE MEMBE RS OF THE FAMILY AS LAXMI. FURTHER IT WAS CONTENDED THAT ENTIRE SALE CONSIDERATION WAS PAID ONLY BY THE ASSESSEE AND NO PART OF CONSIDERATION WAS PA ID BY EITHER WIFE OR DAUGHTER IN LAW AND THUS THE DEDUCTION SHOULD NOT B E DENIED. HOWEVER, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT D ENIED THE CLAIM FOR DEDUCTION UNDER SECTION 54F OF THE ACT WITHOUT APPR ECIATING THE SUBMISSIONS. ITA NO.5720/M/2013 MRS. SONALI A. SHAH 3 4. ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AN D THE LD. CIT(A), CONSIDERING THE ELABORATE SUBMISSIONS MADE BY THE A SSESSEE, THE EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFIC ER AND BEFORE HIM AND THE AVERMENTS OF THE ASSESSING OFFICER, HELD THAT THE P ROPERTY SITUATED IN FLAT NOS.2301A AND 2401A SHOULD BE CONSIDERED AS A SINGL E UNIT AS THIS PROPERTY (DUPLEX FLAT) WAS PURCHASED BY A SINGLE AGREEMENT, THERE IS A SINGLE ENTRANCE WITH 4 BED ROOMS AND SINGLE KITCHEN, THEREFORE SHOU LD BE CONSIDERED AS A SINGLE UNIT IN VIEW OF THE SPECIAL BENCH DECISION OF THE M UMBAI, ITAT IN THE CASE OF ITO VS. SUSHILA M. JHAVERI (107 ITD 327). THUS THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE DUPLEX FLAT IS A SINGLE HOUSE OWNED BY THE ASSESSEE ON THE DATE OF TRANSFER OF ORIGINAL ASSET AND DEDUCTION UNDER SECTION 54F OF THE ACT IS ALLOWABLE. THE LD. CIT(A) ALSO H ELD THAT IN VIEW OF VARIOUS DECISIONS THE DEDUCTION UNDER SECTION 54F CANNOT BE DENIED FOR THE REASON THAT THE PROPERTY IS REGISTERED IN THE NAME OF ASSESSEE S WIFE AND DAUGHTER IN LAW WHEN THE ENTIRE SALE CONSIDERATION WAS PAID BY THE ASSESSEE ONLY. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. D.R. VEHEMENTLY SUPPORTS THE ORDER OF TH E ASSESSING OFFICER IN DENYING DEDUCTION UNDER SECTION 54F TO THE ASSESSEE AND SUBMITS THAT THE DUPLEX FLAT CANNOT BE CONSIDERED AS A SINGLE UNIT A S IT HAS TWO FLOORS AND THEREFORE TO BE CONSIDERED AS TWO SEPARATE HOUSES. HE FURTHER SUPPORTING THE ASSESSMENT ORDER SUBMITS THAT WHEN THE PROPERTY IS NOT REGISTERED IN ASSESSEES NAME NO DEDUCTION CAN BE ALLOWED UNDER SECTION 54F. 6. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY SUPP ORTED THE ORDERS OF THE LD. CIT(A). FURTHER, THE LD. COUNSEL FOR THE ASSES SEE REFERRING TO PAGE 36 OF THE PAPER BOOK WHICH IS THE AGREEMENT FOR SALE OF L OKHANDWALA PROPERTY SUBMITTED THAT WHAT WAS PURCHASED WAS PENT HOUSE CO NSISTING OF 4 BED ROOMS, HALL, KITCHEN, DINING AREA AND WHICH IS NOTHING BUT DUPLEX FLAT HAVING ATTACHED TERRACES. HE SUBMITS THAT THIS FLAT WAS PURCHASED AS ONE UNIT BY COMMON AGREEMENT. HE FURTHER SUBMITS THAT PENT HOUSE IS A LWAYS SOLD AS ONE UNIT BY ITA NO.5720/M/2013 MRS. SONALI A. SHAH 4 THE BUILDER SINCE IT IS CONSTRUCTED ACCORDINGLY HAV ING COMMON KITCHEN AND LIVING ROOM. THEREFORE, HE SUBMITS THAT IT IS NOT POSSIBLE TO SPLIT INTO TWO FLATS SEPARATELY. FURTHER, REFERRING TO PAGE 48 & 49 OF THE PAPER BOOK WHICH IS THE FLOOR PLAN OF THE FLAT SUBMITTED THAT THE FLAT IS C ONNECTED BY A COMMON STAIRCASE AND HAS A COMMON KITCHEN AND LIVING ROOM AS IS EVID ENT FROM THE FLOOR PLAN. THEREFORE, HE SUBMITS THAT THE ASSESSEE OWNS NO OTH ER RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ON THE DATE OF THE TRANSFER. TH EREFORE, HE SUBMITS THAT ASSESSEE DOES NOT OWN MORE THAN ONE RESIDENTIAL HOU SE ON THE DATE OF TRANSFER AND THEREFORE THE CONTENTION OF THE ASSESSING OFFIC ER THAT THE ASSESSEE OWNS MORE THAN ONE HOUSE IS NOT CORRECT. THE LD. COUNSE L FURTHER SUBMITS THAT IN VARIOUS JUDICIAL PRONOUNCEMENTS IT WAS HELD THAT WH ERE THE ASSESSEE HAS PURCHASED MORE THAN ONE HOUSE AND HAS CONVERTED THE SAME INTO ONE RESIDENTIAL HOUSE HAVING A COMMON ENTRANCE AND COMMON KITCHEN T HE SAME HAS TO BE CONSTRUED AS ONE RESIDENTIAL HOUSE FOR THE PURPOSE OF DEDUCTION UNDER SECTION 54/54F, IF THEY ARE INTERNALLY CONNECTED. FOR THE ABOVE PROPOSITION HE RELIED ON THE FOLLOWING CASE LAWS: 1. CIT VS. RAMKUMAR SURI [29 TAXMANN.COM 231 (BOMB AY)] 2. ITO VS. SUSHILA M. JHAVERI (107 ITD 327) (MUMBA I SPECIAL BENCH) 3. SHRI DEEPAK S. BHEDA (ITA NO.5011/M/2010) FURTHER PLACING RELIANCE ON THE DECISION OF THE HY DERABAD BENCH IN THE CASE OF N. REVATHI VS. ITO (45 TAXMANN.COM 30) THE LD. COUNSEL SUBMITS THAT A RESIDENTIAL HOUSE DOES NOT MEAN A SINGLE RESIDE NTIAL HOUSE EVEN WHERE THE ASSESSEE CONSTRUCTS OR RECEIVES A NUMBER OF FLATS A DJACENT TO EACH OTHER OR IN DIFFERENT FLOORS OF THE SAME BUILDING THEN ALSO THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION UNDER SECTION 54F OF THE ACT. 7. IN RESPECT OF THE OWNERSHIP OF THE PROPERTY PURC HASED THE LD. COUNSEL SUBMITS THAT THE PROPERTY WAS PURCHASED IN THE NAME OF MRS. ALKA CHOKSI (WIFE) AND NEHA CHOKSI (DAUGHTER IN LAW). HE SUBMI TS THAT IN ASSESSEES CASTE/COMMUNITY IT IS CONSIDERED AUSPICIOUS TO PURC HASE PROPERTY IN THE NAME ITA NO.5720/M/2013 MRS. SONALI A. SHAH 5 OF THE FEMALE MEMBERS OF THE FAMILY AS THEY ARE CON SIDERED AS LAXMI. HE FURTHER SUBMITS THAT WIFE AND DAUGHTER IN LAW OF TH E ASSESSEE HAVE EXECUTED AN AFFIDAVIT WHEREIN THEY HAVE AFFIRMED THAT ENTIRE SA LE CONSIDERATION FOR THE PURCHASE OF THE PROPERTY IS PAID BY THE ASSESSEE HI MSELF AND THEY HAVE NO RIGHT, TITLE AND INTEREST AND POSSESSION IN THIS PROPERTY AND THAT THE PROPERTY BELONGS TO ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBM ITS THAT INVESTMENT WAS SHOWN IN ASSESSEES BOOKS OF ACCOUNT, ENTIRE PURCHA SE CONSIDERATION ALONG WITH OTHER EXPENSES, STAMP DUTY, REGISTRATION, CORPORATI ON TAX AND LEGAL EXPENSES HAVE BEEN PAID BY THE ASSESSEE. NO AMOUNT HAS BEEN CONTRIBUTED BY THE WIFE OR DAUGHTER IN LAW. ALL THE PAYMENTS WERE MADE THR OUGH BANKING CHANNELS AS IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF. THE L D. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE REVENUE IS ASSESSING THE R ENTED INCOME FROM THE SAID NEW PROPERTY IN THE ASSESSEES HANDS. THEREFORE HE SUBMITS THAT IN SUCH CIRCUMSTANCES THERE IS NO JUSTIFICATION IN REJECTIN G THE ASSESSEES CLAIM UNDER SECTION 54F. 8. FURTHER PLACING RELIANCE ON VARIOUS DECISIONS TH E LD. COUNSEL SUBMITS THAT FOR ALLOWING DEDUCTION UNDER SECTION 54F HOUSE PROPERTY SHOULD BE PURCHASED BY THE ASSESSEE BUT IT DOES NOT STIPULATE THAT HOUSE SHOULD BE PURCHASED IN ASSESSEES NAME. FOR THE ABOVE PROPOS ITION THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECIS IONS: 1. CIT VS. RAVINDRA KUMAR ARORA [15 TAXMANN.COM 30 7 (DELHI)] 2. CIT VS. KAMAL WAHAL [30 TAXMANN.COM 34 (DELHI)] 3. DIT(INTERNATIONAL TAXATION) VS. MRS. JENNIFER BH IDE [15 TAXMANN.COM 82 (KAR)] 4. CIT VS. V. NATARAJAN [154 TAXMAN 399 (MADRAS HC) ] 5. N. RAM KUMAR VS. ASTT. CIT [138 ITD 317/25 TAXMA NN.COM 337 (HYD)] 6. JCIT VS. SMT. ARMEDA K. BHAYA [95 ITD 313 (MUM)] 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW, THE CASE LAWS RELIED ON. THE AS SESSING OFFICER DENIED THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 54F MA INLY ON THE GROUND THAT THE ITA NO.5720/M/2013 MRS. SONALI A. SHAH 6 ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE AS ON THE DATE OF TRANSFER OF ORIGINAL ASSET BECAUSE THE PENT HOUSE WHICH THE ASS ESSEE OWNS ACCORDING TO THE ASSESSING OFFICER IS NOT A SINGLE UNIT/RESIDENTIAL HOUSE BUT THEY ARE TWO RESIDENTIAL HOUSES. THE SECOND MAIN OBJECTION OF T HE ASSESSING OFFICER IS THAT THE ASSET WHICH THE ASSESSEE PURCHASED WAS NOT IN H IS NAME BUT IT WAS REGISTERED IN THE NAME OF HIS WIFE AND THE DAUGHTER IN LAW THEREFORE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE IS NOT EN TITLED FOR DEDUCTION UNDER SECTION 54F OF THE ACT. THE LD. CIT(A) AFTER CONSI DERING THE ELABORATE SUBMISSIONS OF THE ASSESSEE AND THE VARIOUS CASE LA WS ON THE ISSUES ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE SPECIAL BENC H, MUMBAI IN THE CASE OF ITO VS. SUSHILA M JHAVERI (SUPRA) AND REFERRING TO VARIOUS OTHER DECISIONS WHEREIN IT WAS HELD THAT ASSET NEED NOT BE REGISTER ED IN ASSESSEES NAME FOR THE PURPOSE OF ALLOWING DEDUCTION UNDER SECTION 54/54F OF THE ACT OBSERVING AS UNDER: 2.4.4 THE LD. AO ON THE BASIS OF DOCUMENT SUBMITTE D FOUND THAT THE APPELLANT HAD NOT INVESTED THE ENTIRE AMOUNT FROM H IS ACCOUNT FOR THE PURCHASE OF THE NEW ASSET. FURTHER, HE ALSO FOUND THAT AS PER T HE BALANCE SHEET AND LEAVE AND LICENSE AGREEMENT PRESENTED BEFORE HI M, THE APPELLANT OWNED TWO PROPERTIES VIZ, 1/2 SHARE IN FLAT NO.2401 -A, LOKHANDWALA RESIDENCY TOWER, WORLI WHICH WAS CLAIMED AS SELF OC CUPIED PROPERTY AND SECONDLY FLAT NO. 2301-A, LOKHANDWALA RESIDENCY TOW ER, WORLI WHICH WAS LET OUT AS PER LEAVE AND LICENSE AGREEMENT DATE D 07-01-2008. THUS, THE LD. AO CAME TO THE CONCLUSION THAT THE AP PELLANT HAS BEEN OWNING TWO PROPERTIES AS ON THE DATE OF SALE OF ORI GINAL ASSET AND HENCE, HE WAS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S. 54F. 2.4.5 DURING THE COURSE OF APPELLATE PROCEEDINGS, T HE LD. AR HAS FILED DETAILED REASONING IN SUPPORT OF THE APPELLANTS CLA IM. IT HAS BEEN STATED THAT THE APPELLANT HAS PURCHASED A RESIDENTIAL PROPERTY AT UDAIPUR JOINTLY IN THE NAME OF HIS WIFE WITH HIS DAUGHTER-IN-LAW AND THE E NTIRE CONSIDERATION WAS PAID BY HIM ALONG WITH THE STAMP DUTY AND CORPORATI ON TAX AT THE TIME OF REGISTRATION OF SALE DEED. HOWEVER, NO AMOUNT WAS C ONTRIBUTED BY HIS SPOUSE TOWARDS PURCHASE OF THE HOUSE. AFTER DISCUSSING IN DETAIL THE PRIMARY REQUIREMENTS FOR CLAIMING DEDUCTION AND THE FACT TH AT THE CONSIDERATION RECEIVED TOWARDS SALE OF PROPERTY WAS INVESTED IN T HE NEW ASSET AND AFTER DISCUSSING THE INTENTION OF THE LEGISLATURE IN INTR ODUCING SECTION 54F AS EXPLAINED IN BOARD'S CIRCULAR NO. 346 DATED 30-06-1 982, WHICH WAS FOR ENCOURAGING HOUSE CONSTRUCTION, THE LD. AR RELIED O N A NUMBER OF DECISIONS IN HIS FAVOUR TO BUTTRESS HIS CLAIM THAT EVEN IF TH E HOUSE WAS PURCHASED IN ITA NO.5720/M/2013 MRS. SONALI A. SHAH 7 JOINT NAME, DEDUCTION U/S. 54F WAS AVAILABLE. 24.6 IT IS SEEN THAT VIDE PURCHASE AGREEMENT DATED 25-09-2009, THE UDAIPUR PROPERTY WAS PURCHASED BY THE APPELLANT IN HIS WIFE'S AND DAUGHTER- IN-LAW'S NAME, WHICH WAS ALSO EXPLAINED TO THE LD A O VIDE LETTER DATED 16-12- 2011 STATING AS UNDER: 'AS EXPLAINED IN MY LETTER DATED 28-11-2011, I HAVE PURCHASED THE PROPERTY IN THE NAME OF MY WIFE AS BENAMIDAT. THE T RANSACTION IS OF BENAMI NATURE, WHICH CAN BE CONFIRMED, IN VIEW OF T HE BELOW FACTS: A) THE CONSIDERATION FOR PURCHASE OF THE PROPERTY HAS BEEN PAID BY ME. B) THE PHYSICAL POSSESSION OF THE PROPERTY IS ALSO WIT H ME. C) THE ORIGINAL TITLE DEEDS ARE IN MY POSSESSION. D) I HAVE PURCHASED THE PROPERTY IN MY WIFE NAME AS BE NAMIDAR AND SHE IS ONLY A OSTENSIBLE OWNER OF THE PROPERTY. E) MY WIFE HAS NO RIGHT, TITLE AND INTEREST IN THE SAI D PROPERTY. F) THE PROPERTY IS SHOWN AS ASSET IN MY BALANCE SH EET AND THE BALANCE SHEET OF MY WIFE DOES NOT REFLECT THE SAID PROPERTY . I AM THE REAL ACTUAL OWNER OF THE PROPERTY.' 2.4.7 IT HAS ALSO BEEN STATED THAT LD. AO WAS INCOR RECT IN OBSERVING THAT NO PAYMENTS WERE MADE TOWARDS INVESTMENT IN NEW HOUSE FROM THE SALE PROCEEDS OF THE OLD HOUSE. IN THIS REGARD, IT HAS B EEN EXPLAINED AS UNDER: 'SALE CONSIDERATION OF KESRI BHAVAN AMOUNT RS.45,00 ,000/- AND SALE CONSIDERATION OF SANGHVI BHAVAN RS.40,00,000/- WAS FIRST DEPOSITED INTO APPELLANT NKGSB ACCOUNT (REFER PAGE 63). OUT O F THAT SALE PROCEEDS APPELLANT TRANSFERRED RS.70,00,000/- TO DE NA BANK FOR 91 DAYS FDR BECAUSE RATE OF INTEREST WAS HIGHER IN FDR (REFER PAGE NO.61). THEREAFTER, WHEN FDR MATURED AMOUNT WAS TRANSFERRED TO HDFC BANK ACCOUNT ALONG WITH INTEREST OF FDR. (REFER NO. 65-6 6). AFTER FUNDS COME IN HDFC BANK ACCOUNT PURCHASE CONSIDERATION OF UDAIPUR PROPERTY WAS PAID. 2.4.8 IN THIS REGARD, LD. AR HAS PLACED RELIANCE O N THE DECISION OF HON'B LE MUMBAI BENCH OF ITAT IN THE CASE OF BOMBAY HOUSING CORPORATION VS. CIT, 81 LTD 545 , THAT EVEN IF THE ASSESSEE BORROWED THE REQUIRED FUN DS AND SATISFIED THE CONDITIONS RELATING TO INVESTMENT IN SPECIFIED ASSETS, HE SHOULD BE ENTITLED TO EXEMPTION. 2.4.9 IN THE CASE OF JCIT VS. SMT. ARMEDA K. BHAYA, 95 LTD 313 (MUM), HON'BLE MUMBAI BENCH OF ITAT HELD THAT THE NEW ASSE T IN THE NAME OF THE ASSESSEE JOINTLY WITH HIS MOTHER AND FATHER WAS SUFFICIENT C OMPLIANCE FOR AVAILING EXEMPTION U/S. 54F. 2.4.10 SIMILARLY, IN THE CASE OF CIT VS. V.NATARAJA N (2006) 154 TAXMANN 399 (MAD), IT HAS BEEN HELD BY THE HON'BLE HIGH COURT THAT THE PURCHASE OF HOUSE IN THE NAME OF WIFE WITHOUT EVEN INCLUDING THE ASSESSE ES NAME IN THE TITLE DEED WILL NOT DENY THE BENEFIT OF EXEMPTION U/S. 54F. 2.4.11 IN THE CASE OF RAVINDER KAUR ARORA VS. CIT (2012) 21 TAXMANN.COM 305 (DEL), IT HAS BEEN HELD THAT IF THE NEW HOUSE WAS BOUGHT IN ITA NO.5720/M/2013 MRS. SONALI A. SHAH 8 THE NAME OF THE SPOUSE, THE ASSESSEE COULD CLAIM EX EMPTION 54F IF PAYMENT FOR PURCHASE OF THE NEW HOUSE WAS MADE BY THE ASSESSEE AS THE ELIGIBILITY FOR AVAILING DEDUCTION WAS SATISFIED AND MERELY BECAUSE THE TITLE DEED CONTAINED THE NAME OF THE SPOUSE, THE SAME COULD NOT BE DENIED. 2.4.12 AS REGARDS THE LD. AO'S OBSERVATION THAT TH E APPELLANT WAS ALREADY HAVING TWO HOUSE PROPERTIES AND HENCE, THE NEW HOUS E PROPERTY AT UDAIPUR WAS HIS THIRD HOUSE, IT HAS BEEN STATED THAT THE AP PELLANT'S FLAT IN LOKHANDWALA RESIDENCY TOWER, WORLI IS A DUPLEX WHIC H IS INTERNALLY CONNECTED BY A STAIR CASE AND THERE IS ONLY ONE KIT CHEN AND ONE HALL IN THE SAID FLAT. FURTHER, THERE WAS A SINGLE AGREEMENT FO R THE PURCHASE OF THE SAID FLAT AND THE SAID AGREEMENT MENTIONED THAT THIS FLA T HAS BEEN SOLD AS A SINGLE UNIT AS A DUPLEX FLAT. HENCE, RELYING ON THE SPECIA L BENCH DECISION OF THE MUMBAI ITAT IN THE CASE OF ITO VS. SUSHILA JHAVER, 107 LTD 327 IT HAS BEEN ARUGD THAT THE DUPLEX FLAT IN QUESTION SHOULD BE TR EATED AS ONLY ONE HOUSE AND HENCE, THERE WAS NO CONFLICT WITH THE CLAIM OF DEDUCTION MADE BY THE APPELLANT U/S. 54F IN SO FAR AS THESE OBJECTIONS RA ISED BY THE LD. AO IS CONCERNED. IN THE SAID CASE OF SUSHILA JHAVER IT HAS BEEN HELD AS UNDER: '11. IN VIEW OF THE ABOVE DISCUSSIONS, IT IS HELD T HAT EXEMPTION U/S. 54 AND 54F OF THE ACT WOULD BE ALLOWABLE IN RESPECT OF ONE RESIDENTIAL HOUSE ONLY. IF THE ASSESSEE HAS PURCHASED MORE THAN ONE RESIDENTIAL HOUSE, THEN THE CHOICE WOULD BE WITH ASSESSEE TO AV AIL THE EXEMPTION IN RESPECT OF EITHER OF THE HOUSES PROVIDED THE OTH ER CONDITIONS ARE FULFILLED, HOWEVER, WHERE MORE THAN ONE UNIT ARE PU RCHASED WHICH ARE ADJACENT TO EACH OTHER AND ARE CONVERTED INTO ONE H OUSE FOR THE PURPOSE OF RESIDENCE BY HAVING COMMON PASSAGE, COMM ON KITCHEN, ETC., THEN, IT WOULD BE A CASE OF INVESTMENT IN ONE RESIDENTIAL HOUSE AND CONSEQUENTLY, THE ASSESSEE WOULD BE ENTITLED TO EXEMPTION.' 2.4 13 THE OBJECTIVE OF INTRODUCTION OF SECTION 54F WAS TO ENCOURAGE HOUSE CONSTRUCTION. THE ASSESSEE COULD NOT BE DENIED THE EXEMPTION MERELY BECAUSE THE CONTRACTOR HAD THE USE OF THE FUNDS IN HIS HOUSE CO NSTRUCTION BUSINESS. THE PRESENT CASE WAS NO DIFFERENT EXCEPT THAT THE HOUSE CONSTRU CTION BUSINESS HAPPENED TO BE THAT OF THE APPELLANT HIMSELF. YET IT WAS NOT TO BE GAINSAID THAT IT FULFILLED THE MAIN OBJECT OF THE SECTION, VIZ., TO ENCOURAGE THE CONSTRUCTION OF HOUSES. IN THE CIRCUMSTANCES, IT WAS TO BE HELD THA T THE UTILIZATION OF THE MONIES BY THE APPELLANT IN THE ABOVE MANNER AMOUNTE D TO UTILIZATION OF THE FUNDS FOR THE PURPOSE OF THE CONSTRUCTION HIS OWN R ESIDENTIAL HOUSE. HENCE, THE CLAIM OF THE APPELLANT FOR DEDUCTION UNDER SECT ION 54F TO THE EXTENT TO WHICH THERE WAS A REINVESTMENT IN THE NEW RESIDENTI AL HOUSE FULFILLING THE OTHER CONDITIONS OF SECTION 54F, WAS TO BE UPHELD. 2.4.14 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT EVEN IF THE NEW ASSET WAS PURCHASED IN THE JOINT NAME OF THE AP PELLANT'S WIFE AND DAUGHTER-IN- LAW, THE FIRST CONDITION REGARDING PURCHASE I CONST RUCTION OF A NEW ASSET IS FULFILLED. SECONDLY, KEEPING IN VIEW THE SPECIAL BE NCH DECISION OF HON'BLE MUMBAI BENCH OF TAT IN THE CASE OF SUSHILA JHAVER ( SUPRA) WHICH IS BINDING ON THE APPELLATE AUTHORITIES IN MUMBAI, IN THE FACT S OF THE CASE WHERE THE APPELLANT HAS PURCHASED A DUPLEX UNIT BY WAY OF A S INGLE AGREEMENT, THE SECOND LIMB OF SECTION 54F IS ALSO FULFILLED AS THE APPELLANT WOULD BE OWNING JUST ONE HOUSE PROPERTY AND NOT TWO HOUSE PROPERTIE S THOUGH LYING AT TWO ITA NO.5720/M/2013 MRS. SONALI A. SHAH 9 DIFFERENT FLOORS INTERCONNECTED BY A STAIRCASE. 2,4.15 IN VIEW OF THE SAME, APPELLANT'S CLAIM FOR D EDUCTION U/S. 54F IS SUSTAINED AND THE GROUND RAISED IS ALLOWED. I AM ALSO FORTIFIED IN THIS VIEW BY THE DECISION OF HON'BLE ITAT CHENNAI I N THE CASE OF RAMACHANDRAN VS. ITO 1TA/941/MDS/2011 DATED 24-01-2012 WHERE IT HAS BEEN INTERALIA HELD AS UNDER: IN THE INSTANT CASE, THE APPELLANT HAS APPARENTLY SATISFIED THE ULTIMATE OBJECTIVE OF THE SECTION BY INVESTING IN A RESIDENTIAL HOUSE BY WAY OF CONSTRUCTION WITHIN THE TIME ALLOWED U/S. 54. WH AT THE APPELLANT HAS FAILED TO DO IS TO MAKE AN INVESTMENT IN THE CAPITAL GAINS ACCOUNT SCHEME AS REQUIRED U/S. 54(2) WITHIN THE TIME ALLOWED FOR FURNISHING THE RETURN U/S. 139(1). THIS THE APPELLA NT CONTENDS IS ONLY A TECHNICAL BREACH. THE APPELLANT APPARENTLY INTENDED TO INVEST IN A RESIDENTIAL HOUSE WHICH IS OBVIOUS FROM THE FACT TH AT HE ACQUIRED THE LAND WITHIN A SHORT TIME AFTER THE END OF THE PREVIOUS Y EAR AND BEFORE THE TIME ALLOWED FOR FILING THE RETURN AND COMMENCED CO NSTRUCTION LATER ON THE SAID LAND WHICH WAS COMPLETED WITHIN T HE TIME AL/OWED U/S. 54(1). THESE ACTS OF THE APPELLANT CLEARLY GO TO SHOW THAT THE APPELLANT ALWAYS INTENDED TO INVEST IN A RESIDENTIA L HOUSE BY WAY OF CONSTRUCTION. IT, THEREFORE, APPEARS THAT THE FAILU RE TO INVEST IN THE CAPITAL GAIN ACCOUNT SCHEME IS ONLY A TECHNICAL DEFAULT GIV EN THE CIRCUMSTANCES AND THE PECULIAR FACTS SHOULD NOT BE EXTENDED TO SU CH AN EXTENT AS TO DENY THE EXEMPTION U/S. 54 WHEN THE ULTIMATE PURPOS E OF THE PROVISION IS ACHIEVED. TO HOLD THAT THE EXEMPTION SHOULD BE FORF EITED FOR A TECHNICAL BREACH DOES NOT APPEAR TO BE THE CORRECT PROPOSITIO N PARTICULARLY SINCE THE APPELLANT PLEADS THAT HE WAS NOT AWARE OF THE R EQUIREMENT TO INVEST IN THE CAPITAL GAINS ACCOUNT SCHEME AND ALSO STATES TH AT HIS OBJECTIVE WAS TO INVEST IN A RESIDENTIAL HOUSE WHICH IS APPARENT FRO M THE FACT THAT HE HAS PURCHASED A LAND AND ALSO CONSTRUCTED A HOUSE T HEREON. IT IS ALSO SEEN THAT SECTION 54E (SINCE DELETED) AND SECTION 5 4EC AND 54ED WHICH REQUIRE INVESTMENT OF THE PROCEEDS IN SPECIFIED ASS ETS, SPECIFICALLY PROVIDES THAT THE EXEMPTION WOULD BE FORFEITED IF T HE SPECIFIED ASSETS IS GIVEN AS A SECURITY FOR TAKING LOAN. IN SECTION 54. WE DO NOT FIND ANY SUCH PROVISION AND THEREFORE, IN OUR C ONSIDERED VIEW THE PURPOSE OF SECTION 54(2) IS NOT TO DEPRIVE THE ASSE SSEE OF AN EXEMPTION BUT ONLY TO AVOID RECTIFICATION. THE ULTIMATE OBJECT OF THE SECTION HAVING BEEN SATISFIED NAMELY TO ENCOURAGE CONSTRUCTION OF HOUSES, WE ARE CONVINCED THAT THE UTILIZATION OF THE FUNDS IN CONS TRUCTING A RESIDENTIAL HOUSE SHOULD BE TREATED AS SUFFICIENT C OMPLIANCE OF SECTION 54 AND THEREFORE, HOLD THAT THE APPELLANT I S ENTITLED TO THE EXEMPTION U/S. 54 EVEN IN RESPECT OF THE AMOUNT 'IN VESTED BY WAY OF CONSTRUCTION OF THE RESIDENTIAL HOUSE AMOUNTING TO RS.16,40,311/-. BEFORE WE DEPART, WE MAY MENTION THAT THE SUPREME COURT IN MOTILAL PADAMPAT SUGAR MILLS CO. LTD. VS. STATE OF UTTAR PRADESH (19 79) 118 ITR 326 HAS OBSERVED AS FOLLOWS: 'THAT THERE IS NO PRESUMPTION THAT EVERY PERSON KN OWS THE LAW, IT IS OFTEN SAID THAT EVERY ONE IS PRESUMED TO KNOW THE L AW, BUT THAT IS NOT A CORRECT STATEMENT, THERE IS NO SUCH MAXIM KNOWN TO THE LAW. 6. THEREFORE, BY RESPECTFULLY FOLLOWING THE ABOVE D ECISION, WE ALLOW THIS CLAIM OF THE ASSESSEE. 10. WE FURTHER NOTICE THAT THE PROPOSITION OF THE D ECISION OF SPECIAL BENCH IN THE CASE OF SUSHILA M JHAVERI (SUPRA) HAS BEEN APPROVED IN THE ITA NO.5720/M/2013 MRS. SONALI A. SHAH 10 CASE OF CIT VS. RAMAN KUMAR SURI BY THE JURISDICTIO NAL HIGH COURT (29 TAXMANN.COM 231) WHEREIN IT WAS HELD AS UNDER: ( D ) WE FIND NO FAULT WITH THE ORDER OF THE TRIBUNAL W HICH HAS UPHELD THE FINDING OF FACT OF THE COMMISSIONER OF INCOME TAX (APPEALS) TO THE EFFECT THOUGH THE RESPONDENT-ASSESSEE HAD PURCHASED FLAT NOS. 416A AN D 516A IT WAS ONLY PURCHASE OF ONE RESIDENTIAL HOUSE. FURTHER, THE TRIBUNAL HEL D THAT TWO FLATS WERE JOINED TOGETHER BEFORE THE RESPONDENT ASSESSEE BECAME THE OWNER OF THE TWO FLATS. THE CERTIFICATE FROM THE SOCIETY ALSO ESTABLISHED THE F ACT THAT TWO FLAT NOS. 416A AND 516A WERE JOINED TOGETHER AND WERE CONSIDERED AS ON E RESIDENTIAL HOUSE. THESE CONCURRENT FINDINGS OF FACT BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL HAVE NOT BEEN SHOWN TO BE PERVERSE OR ARBI TRARY. FURTHER, SECTION 54 OF THE ACT EXEMPTS CAPITAL GAIN TO THE EXTENT THE CONS IDERATION IS PAID FOR THE PURPOSE OF A RESIDENTIAL HOUSE. CONSEQUENTLY, WHERE RESPOND ENT-ASSESSEE HAS ACQUIRED ONE RESIDENTIAL HOUSE CONSISTING OF TWO FLATS, IT CANNO T BE SAID THE RESPONDENT ASSESSEE HAD PURCHASED TWO RESIDENTIAL HOUSES. IN VIEW OF TH E ABOVE, WE FIND THAT QUESTION (E) AND (F) ALSO DO NOT RAISE ANY SUBSTANTIAL QUEST ION OF LAW. THEREFORE, THE APPEAL IS DISMISSED WITH REGARD TO QUESTION (E) AND (F) ABOVE . 11. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE SPECIAL BENCH AND THE HONBLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE PENT HOUSE PURCHASED BY THE ASSESSEE IN THE FORM OF DUPL EX FLAT IS A SINGLE RESIDENTIAL HOUSE/SINGLE OWNED BY THE ASSESSEE AT T HE TIME OF TRANSFER OF ORIGINAL ASSET AND THE CLAIM OF THE ASSESSEE UNDER SECTION 54F IS ALLOWABLE. 12. COMING TO THE OBJECTION OF WHETHER DEDUCTION SH OULD BE ALLOWED WHEN THE PROPERTY IS NOT REGISTERED IN THE NAME OF ASSESSEE HIMSELF, IN VIEW OF THE DECISIONS WHICH WERE REFERRED TO BY THE LD. CIT(A) AND RELIED ON BY THE ASSESSEE WHICH CLEARLY HELD THAT A SSET NEED NOT BE REGISTERED IN THE ASSESSEES NAME BUT SHOULD BELONG TO THE ASSESSEE. IN THE CASE ON HAND IT IS NOT DISPUTED THAT THE ENTIRE SALE CONSIDERATION HAS BEEN PASSED THROUGH CHEQUES WHICH WERE GIVEN BY THE ASSESSEE. WE ALSO NOTICE THAT THE REVENUE IS ASSESSING THE RENTA L INCOME FROM THE VERY SAME PROPERTY IN THE HANDS OF THE ASSESSEE. I N SUCH CIRCUMSTANCES, IT CANNOT BE DENIED THAT THE ASSESSEE IS NOT THE RE AL OWNER OF THE PROPERTY. THEREFORE IN VIEW OF VARIOUS JUDICIAL PR ONOUNCEMENTS RELIED ON BY THE ASSESSEE REFERRED TO IN PARA 7 ABOVE WE H OLD THAT EVEN THOUGH ITA NO.5720/M/2013 MRS. SONALI A. SHAH 11 THE PROPERTY WAS REGISTERED IN THE NAME OF ASSESSEE S WIFE AND DAUGHTER IN LAW THE DEDUCTION AS CLAIMED BY THE ASSESSEE UND ER SECTION 54F IS TO BE ALLOWED. IN VIEW OF OUR ABOVE DISCUSSION WE UPHOLD THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54F OF THE ACT. 13. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.11.2016. SD/- SD/- (N.K. PRADHAN) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 11.11.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.