K.Uma Maheswari, Madurai V. ITO, Madurai

ITA 736/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4948 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: V D GOPAL
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI B E F O R E DR. O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER .. I.T.A. NO.736(MDS)/2010 ASSESSMENT YEAR: 2006-07 SMT. K.UMA MAHESWARI, THE INCOME-TAX OFFICER, NO.3, LAKSHMIPURAM VS. WARD NO.II(4), 5 TH STEEET, MADURAI-625 001. MADURAI. PAN AADPU9567F. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.D.GOPAL RESPONDENT BY: SHR I B.SRINIVAS O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2006-07. IT IS DIRECTED AGAINST TH E ORDER OF THE I TANO.736(MDS)/2010 2 COMMISSIONER OF INCOME-TAX(APPEALS)-I AT MADURAI DA TED 15-4-2010 AND ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SE CTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE HA S SOLD SIX HOUSE SITES FOR ` 5,86,800/-, IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE SALE CONSIDERATI ON WAS DEPOSITED IN APPROVED BOND SCHEME. THE ASSESSEE CL AIMED EXEMPTION FROM CAPITAL GAINS UNDER SECTION 54F ON T HE GROUND OF THE ABOVE DEPOSIT. 3. THE ASSESSING OFFICER FOUND THAT AT THE TIME OF SALE OF THE PROPERTIES, THE ASSESSEE OWNED THREE PROPERTIES, ON E ABSOLUTE OWNERSHIP AND TWO PROPERTIES FRACTIONAL OWNERSHIP. THE PROPERTY AT NO.4, SIVASHANMUGAM PILLAI STREET, MADURAI WAS ABSO LUTELY OWNED BY THE ASSESSEE. IN RESPECT OF THE PROPERTIES AT T HIRU VI KA STREET AND KUMARASAMY RAJA STREET THE ASSESSEE WAS A FRACT IONAL OWNER. ON THE BASIS OF THE ABOVE, THE ASSESSING OFFICER DE NIED THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F . I TANO.736(MDS)/2010 3 4. WHILE REJECTING THE CLAIM OF THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE RENTAL RECEIPTS FROM THE THRE E PROPERTIES WERE ADMITTED IN THE RETURNS OF INCOME FILED BY THE ASSE SSEE AS INCOME FROM HOUSE PROPERTY AND, THEREFORE, SHE MUST BE HEL D THE OWNER OF THREE PROPERTIES AT THE TIME OF THE SALE OF THE HOU SE PROPERTIES. 5. THE ORDER OF THE ASSESSING OFFICER WAS CONFIRME D IN FIRST APPEAL. 6. THE ASSESSEE IS AGGRIEVED AND, THEREFORE, THE S ECOND APPEAL BEFORE THE TRIBUNAL. 7. THE ONLY ISSUE TO BE CONSIDERED IN THIS APPEAL IS THAT WHETHER THE ASSESSEE IS ENTITLED FOR THE DEDUCTION AVAILABLE UNDER SECTION 54F OR NOT. THE SALE CONSIDERATION WAS DEP OSITED IN THE BOND SCHEME. ONE OF THE CONDITIONS FOR CLAIMING DE DUCTION UNDER SECTION 54F WAS SATISFIED. THE SECOND CONDITION IS THAT, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, THE ASSESSEE COU LD NOT OWN MORE THAN ONE RESIDENTIAL HOUSE. IN THE PRESENT CASE TH E ASSESSEE IS THE ABSOLUTE OWNER OF THE HOUSE PROPERTY AT SIVASHANMUG AM PILLAI I TANO.736(MDS)/2010 4 STREET, MADURAI. THEREFORE, THE ASSESSEE IS UNDOUB TEDLY THE OWNER OF ONE RESIDENTIAL HOUSE. IN RESPECT OF THE REMAIN ING TWO PROPERTIES AT KUMARASAMY RAJA STREET AND THIRU VI KA STREET, T HE ASSESSEE IS ONLY A PART OWNER. THE QUESTION IS WHETHER THIS PA RT OWNERSHIP COULD BE CONSIDERED AS OWNERSHIP OF THE PROPERTIES SO AS TO HOLD THAT THE ASSESSEE IS THE OWNER OF THOSE TWO PROPERTIES AS WE LL. 8. THE ASSESSEE IS NOT THE ABSOLUTE OWNER OF THE T WO HOUSE PROPERTIES AT KUMARASAMY RAJA STREET AND THIRU VI K A STREET. THE ASSESSEE IS HAVING A FRACTIONAL RIGHT IN THOSE PROP ERTIES. EVEN THOUGH THE ASSESSEE CAN BE TECHNICALLY DESCRIBED AS A PART OWNER OF THOSE TWO HOUSE PROPERTIES, IT IS NOT PERMISSIBLE IN LAW TO HOLD THAT THE ASSESSEE OWNS THOSE TWO PROPERTIES. AT THE TIME OF FINAL SETTLEMENT OF THE RIGHTS BETWEEN THE CO-OWNERS IT IS NOT KNOWN HOW THE RIGHT OF THE ASSESSEE WOULD BE SATISFIED. THE RIGHT OF THE ASSESSEE IN THOSE TWO PROPERTIES COULD BE SATISFIED IN DIFFERENT WAYS . THE TWO HOUSES COULD BE VALUED AND THE ASSESSEE MAY BE DISCHARGED HER RIGHT OF SHARE BY PAYING IN TERMS OF MONEY. IT IS ALSO POSS IBLE, DEPENDING UPON CIRCUMSTANCES, THAT THE ASSESSEE MAY BE ASSIGN ED A PARTICULAR PORTION OF THE TWO HOUSES AND BESTOWED WITH PHYSICA L POSSESSION OF I TANO.736(MDS)/2010 5 THAT PART OF THE PROPERTY. BUT UNLESS AND UNTIL A FINAL SETTLEMENT IS ARRIVED AT, IT IS NOT POSSIBLE TO SAY THAT THE ASSE SSEE IS THE OWNER OF THOSE TWO PROPERTIES. IN FACT WHAT THE ASSESSEE EN JOYED WAS ONLY A SHARE OF RIGHT IN THOSE PROPERTIES. THAT RIGHT MAY BE REDEEMED IN DIFFERENT WAYS. THOSE ARE MATTERS CONTINGENT AND E VENTS OF FUTURE. OWNERSHIP OF RESIDENTIAL HOUSES MUST BE EARMARKED, SPECIFIC AND ABSOLUTE RIGHT OVER A PROPERTY AND AVAILABLE IN PRA ESENTI. THE ASSESSEE, HAVING ONLY A RIGHT OF SHARE IN THOSE TWO HOUSES, CANNOT BE HELD AS THE OWNER OF THOSE TWO HOUSES. 9. IN THESE CIRCUMSTANCES THE LOWER AUTHORITIES HA VE ERRED IN LAW IN HOLDING THAT THE ASSESSEE IS THE OWNER OF TWO HOUSE PROPERTIES AT THIRU VI KA STREET AND KUMARASAMY RAJA STREET. IN FACT THE ASSESSEE IS THE OWNER OF ONLY ONE HOUSE AT SIVASHAN MUGAM PILLAI STREET. THEREFORE, IT IS TO BE SEEN THAT AT THE TI ME OF SALE OF THE RESIDENTIAL ASSETS, THAT IS, HOUSE PLOTS, THE ASSES SEE WAS OWNER OF ONE RESIDENTIAL PROPERTY. THIS CONDITION IS ALSO SA TISFIED. I TANO.736(MDS)/2010 6 10. THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPT ION UNDER SECTION 54F. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE ASSESSMENT AFTER GIVING RELIEF TO THE ASSESSEE AS D IRECTED. 11. IN THE RESULT THIS APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 8 TH DAY OF JUNE, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 8 TH JUNE, 2011. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.