ASHOK G. CHAUHAN, MUMBAI v. ASST CIT 17(3), MUMBAI

ITA 1309/MUM/2016 | 2010-2011
Pronouncement Date: 12-04-2019 | Result: Partly Allowed
Expert Summary: Where assessee's claim for deduction u/s 54F was rejected by Assessing Officer on the ground that at time of sale of capital asset, assessee was owner of more than one residential property, in view of the fact that one residential property was jointly owned by the assessee and his wife and he could not be treated as absolute owner, deduction u/s 54F could not be denied.

Appeal Details

RSA Number 130919914 RSA 2016
Assessee PAN AABPC7897A
Bench Mumbai
Appeal Number ITA 1309/MUM/2016
Duration Of Justice 3 year(s) 1 month(s) 1 day(s)
Appellant ASHOK G. CHAUHAN, MUMBAI
Respondent ASST CIT 17(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-04-2019
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 12-04-2019
Last Hearing Date 19-11-2018
First Hearing Date 19-11-2018
Assessment Year 2010-2011
Appeal Filed On 11-03-2016
Judgment Text
IN THE INC OME TAX APPELLATE TRIBUNAL A BENCH MUMBAI BEFORE HONBLE SH. SHAMIM YAHYA AM & HONBLE SH. SANDEEP GOSAIN JM (DIVISION BENCH) ./ I.T.A. NO . 1309/MUM/2016 ( / ASSESSMENT YEAR: 2010 - 11 ) IN THE MATTER OF; ASHOK G. CHAUHAN FLAT NO. B 301 VEENA BEENA ACHARYA DHONDE MARGE SEWREE MUMBAI. / VS. ASST. CIT - 17(3 ) 6 TH FLOOR R. NO. 614 PIRAMAL CHAMBERS LALBUAG PAREL MUMBAI ./ ./ PAN/GIR NO. AABPC7897A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. VASANTI PATEL AR / RESPONDENTBY : SHRI ASHIM KUMAR MODI DR / DATE OF HEARING : 27/02 /201 9 / DATE OF PRONOUNCEMENT : 12.04.2019 / O R D E R SANDEEP GOSAIN J UDICIAL MEMBER : THE PRESENT APPE AL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 32 MUMBAI DATED 20.01.16 FOR AY 2010 - 11 ON THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW. 2 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN 1 ON THE FACTS AND CIRCUMSTANCES THE CASE THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) - 32 OUGHT NOT TO HAVE CONSIDERED LONG TERM CAPITAL GAIN OF RS.8 50 00 00 0 /= ON SURRENDER OF TENANCY RIGHT IN THE ASSESSMENT YEAR 2010 - 11. 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 32 OUGHT TO HAVE ALLOWED EXEMPTION UNDER SECTION 54 F OF THE INCOME TAX ACT 1961. 3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) 32 FAILED TO APPRECIATE THE FACT THAT THEFLAT IN GOA WAS GIFTED TO HIS DAUGHTER IN ABSOLUTE OWNERSHIP AND POSSESSION HE OUGHT NOT T O HAVE CONSIDERED THE APPELLANT AS DEEMED OWNER BY INVOKING SECTION 27 ( I ) OF THE I NC O ME TAX ACT 1961 WHICH DECIDES DEEMED INCOME UNDER HOUSE PROPERTY. 4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 32 OUGHT NOT TO H AVE ACCEPTED THE ADDITIONAL EVIDEN CE PRODUCE BEFORE HIM AS IT WAS RELEVANT TO DECIDE DATE OF TRANSFER AS IN CASE OF TENANCY HOLDING OF PROPERTY IN POSSESSION IS THE MOST CRUCIAL EVIDENCE OF TENANCY RIGHT. 5 THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR TO AMEND ANY ONE OR MOR E OF GROUNDS AS MENTIONED HEREIN ABOVE AS AND WHEN NECESSARY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 27.09.10 DECLARING TOTAL INCOME AT RS. 1 26 99 467/ - SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING NOTICE THE ORDER OF ASSESSMENT WAS PASSED BY AO U/S 143(3) R.W.S 147 OF THE I.T. ACT THEREBY MAKING ADDITIONS BY INVOKING THE PROVISIONS OF SECTION 147 OF THE I.T. ACT. 3 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN 3. AGGRIEVED BY THE ORDER OF THE AO ASSESSEE FILED THE APPEAL BEFORE L D. CIT(A) AND THE LD. CIT(A) AFTER CONS IDERING THE CASE PARTLY ALLOWED THE APPEAL OF THE ASSESSE E. 4 . AGGRIE VED BY THE ORDER OF CIT(A) ASSESSEE FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. GROUND NO. 2 & 3 . 5. SINCE THESE GROUNDS RAISED BY THE ASSESSEE ARE INTER - CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DENYING THE EXEMPTION U/S 54F OF THE I.T. ACT ON THE GROUND THAT ASSESSEE WAS OWNER OF MORE THAN ONE RESIDENTIAL HOUSE THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. SINCE THESE GROUNDS GOES TO THE ROOTS OF THE CASE AND HAVE IMPACT ON THE OTHER GROUNDS THEREFORE WE DISPOSE OF THE SAME FIRSTLY. 6. AT THE OUTSET LD. AR APPEARING ON BEHALF OF THE ASSESSEE R EITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE LD. CIT(A) AND SUBMITTED THAT AO DISALLOWED THE CLAIM OF THE 4 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN ASSESSEE U/S 54F OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS OWNER OF TWO FLATS ON THE DATE OF TRANSFER OF CAPITAL ASSETS. AO TOOK THE VIEW THAT ASSESSEE WAS O WING TWO RESIDENTIAL HOUSE S I.E. ONE AT HOLY PARK CHS LTD GOA PURCHASED IN DEC 2003 AND ANOTHER AT PANCH TANTARA - 1 VERSOVA ANDHERI (WEST) MUMBAI PURCHASED IN JULY 1998. T HEREFORE IN VIEW OF THE ABOVE FACTS THE ASSESSEE WAS DENIED EXEMPTION U/S 54F OF THE ACT. 6.1 IT WAS SUBMITTED THAT IN FACT THE RESIDENTIAL FLAT SITUATED AT GOA WAS ACTUALLY PURCHASES JOINTLY IN THE NAME OF ASSESSEE AS WELL AS HIS WIFE. IN THIS RESPECT LD. AR DRAWN OUR ATTENTION TO PAGE NO. 37 TO 60 OF THE PAPER BOOK WHICH IS AN AGREEMENT OF GOA FLAT JOINTLY PURCHASED IN THE NAME OF ASSESSEE AND HIS WIFE WHICH PRIMA FACIE REFLECTS THAT THE SAID FLAT WAS NOT FULLY AND WHOLLY OWNED BY ONE PERSON. 6.2 IT WAS SUBMITTED THAT AFTER THE PURCHASE OF THE SAID PROPERTY THE SHARE OF THE ASSESSEE WAS TRANSFERRED / GIFTED TO HIS DAUGHTER MS ALISHA ASHOK CHAUHAN BY WAY OF GIFT DEED DATED 15.04.04 WHICH IS AT PAGE NO. 61 TO 66 OF THE PAPER BOOK . BY 5 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN VIRTUE OF THE ABOVE GIFT DEED THE ASSESSEE HA D ALREADY RELINQUISHED HIS 50% SHARE OUT OF LOVE AND AFFECTION TO HIS DAUGHTER MS. ALISHA ASHOK CHAUHAN I.E. DONEE AND IN THIS WAY THE ASSESSEE WAS NOT LEFT WITH ANY RIGHT OF OWNERSHIP IN T HE SAID PROPERTY WHICH WAS ALREADY TRANSFERRED IN THE NAME OF H IS DAUGHTER BY WAY OF GIFT DEED. 6.3 LD. AR RELIED UPON THIS TIME TO THE DECISION OF THE COORDINATE BENCH OF ITAT I N THE CASE OF ITO VRS. RASIKLAL N. SATRA (2006) 98 ITD 335 (MUM)/(2006) 100 TTJ 1039 (MUM) WHEREIN IT WAS HELD THAT SECTION 54 F OF THE INCOME - TAX ACT 1961 - CAPITAL GAINS - EXEMPTION OF IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE - ASSESSMENT YEAR 1998 - 99 - WHETHER WORD 'OWN' APPEARING IN SECTION 54F INCLUDES ONLY SUCH RESIDENTIAL HOUSE WHICH IS FULLY AND WHOLLY OWNED BY ONE PER SON AND NOT A RESIDENTIAL HOUSE OWNED BY MORE THAN ONE PERSON - HELD YES - ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54F BY INVESTING CAPITAL GAINS IN PURCHASE OF RESIDENTIAL FLAT - ASSESSING OFFICER DENIED ASSESSEE'S CLAIM ON GROUND THAT ASSESSEE WAS ALRE ADY A CO - OWNER OF ANOTHER FLAT - WHETHER ASSESSEE NOT BEING ABSOLUTE 6 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN OWNER OF ANOTHER RESIDENTIAL FLAT EXEMPTION UNDER SECTION 54F COULD BE DENIED - HELD NO . WORDS AND PHRASES - 'OWN' AS OCCURRING IN SECTION 54F OF THE INCOME - TAX ACT 1961 AND ALSO THE DECISION OF HONBLE CHENNAI TRIBUNAL IN THE CASE OF MRS. V. R. USHA VRS. ITO [2016]70 TAX MANN.COM 340 (CHENNAI - TRIB.)/[2016]159ITD 402 (CHENNAI T RIB) WHEREIN IT WAS HELD THAT WHERE OWNERSHIP OF ASSESSEE OVER PROPERTY WAS SUBJECT TO LIFE INTEREST RETAINED BY HER MOTHER IN SAID PROPERTY IT COULD NOT BE SAID THAT ASSESSEE OWNED SAID PROPERTY FULLY AND IT COULD NOT BE A REASON TO DENY EXEMPTION UNDER SECTION 54F CLAIMED BY ASSESSEE ON SALE OF HER ANOTHER PROPERTY . 6.4 THUS REFERRING TO THE AFOREMENTIONED JUDGMENTS LD. AR ARGUED THAT THE ASSESSEE WAS NOT THE OWN ER OF FLAT AND HENCE ASSESSEE WAS ENTITLED FOR EXEMPTION U/S 54F OF THE ACT. 7. ON THE OTHER HAND LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES AND SUBMITTED THAT FROM THE COPY OF GIFT DEED IT IS SEEN THAT THE DAUGHTER OF THE ASSESSEE IS MINOR AND THE GIFT HAS BEEN ACCEPTED BY HER ON BEHALF OF HER MOTHER I.E. WIFE 7 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN OF THE ASSESSEE. ACCORDING TO SECTION 27(I) OF THE ACT WHICH DEFINES THE OWNER OF HOUSE PROPER TY AN D ACCORDING TO THIS SECTION IF AN INDIVIDUAL WHO TRANSFERS ANY HOUSE PROPERTY TO A MINOR CHILD NOT BEING A MINOR DAUGHTER SHALL BE DEEMED TO BE THE OWNER OF THE HOUSE PROPERTY SO TRANSFERRED . 7.1 IT WAS THUS SUBMITTED THAT THE DAUGHTER OF THE ASSESSEE WAS MINOR AT THE TIME OF TRANSFER HENCE ASSESSEE SHALL BE DEEMED TO BE OWNER OF THE HOUSE PROPERTY SO TRANSFERRED. THEREFORE ALTHOUGH THE ASSESSEE HAD TRANSFERRED HIS SHARE BUT STILL THE ASSESSEE WOULD BE CONS IDERED AS DEEMED OWNER OF THE GOA FLAT. THEREFORE IN SUCH AS SITUATION THE DEDUCTION U/S 54F IS NOT AVAILABLE TO THE ASSESSEE. 8. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSE D THE MATERIAL PLACED ON RECORD JUDGMENT CITED BY T HE PARTIES AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE FIND THAT IT IS AN UNDISPUTED FACT THAT ASSESSEE WAS ACTUALLY CO - OWNER OF THE PROPERTY I.E. FLAT AT GOA ALONGWITH HIS WIFE AND HAD TRANSFERRED HIS SHARE TO HIS DAUGHTER MS ALISHA ASHOK CHAUHAN BY VIRTUE OF GIFT DEED DATED 15.04.04. 8 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN 8.1 ACCORDING TO THE ABOVE DECISION OF COORDINATE BENCH OF ITAT IN THE CASE OF MRS. V. R. USHA VRS. ITO [2016]70 TAXMANN.COM 340 (CHENNAI - TRIB.)/[2016]159ITD 402 (CHENNAI T RIB) WHEREIN IT WAS HELD THAT WHERE OWNERSHIP OF ASSESSEE OVER PROPERTY WAS SUBJECT TO LIFE INTEREST RETAINED BY HER MOTHER IN SAID PROPERTY IT COULD NOT BE SAID THAT ASSESSEE OWNED SAID PROPERTY FULLY AND IT COULD NOT BE A REASON TO DENY EXEMPTION UNDER SECTION 54F CLAIMED BY ASSESSE E ON SALE OF HER ANOTHER PROPERTY . 8.2 THEREFORE AS PER THE PRINCIPLE S LAID DOWN ABOVE THE ASSESSEE CANNOT BE SAID TO BE THE FULL OWNER OF THE PROPERTY AND THUS CANNOT BE DENIED EXEMPTION U/S 54 OF THE ACT AS CLAIMED BY HIM . EVEN OTHERWISE AS PER THE DECISION OF COORDINATE BENCH OF ITAT IN THE CASE OF ITO VRS. RASIKLAL N. SATRA (2006) 98 ITD 335 (MUM)/(2006) 100 TTJ 1039 (MUM) IT HAS BEEN CATEGORICALLY HELD THAT THE WORD ' OWN' APPEARING IN SECTION 54F OF THE ACT INCLUDES ONLY SUCH RESIDENTIAL HOUS E WHICH IS FULLY AND WHOLLY OWNED BY ONE PERSON AND NOT A RESIDENTIAL HOUS E OWNED BY MORE THAN ONE PERSON . THE ABOVE DECISION OF ITO VRS. RASIKLAL N. SATRA (2006) 98 ITD 335 (MUM)/(2006) 100 TTJ 9 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN 1039 (MUM) ALSO REFERRED AND RELIED UPON OTHER DECISIONS I.E. I) CIT VRS. ARAVINDA REDDY 120 ITR 46 (SC) II) SHIV NARAYAN CHAUDHARI V. CWT 108 ITR 104 (ALLAHABAD) III) SMT. KULWANTI D. ALREJA VRS. ITO (BOM) AND IV) ABDUL REHMAN VRS. CIT 12 ITR 302 (LAHORE) WHER EIN IT WAS HELD THAT SHARED INTEREST IN THE PROPERTY DOES NOT AMOUNT TO OWNERSHIP OF THE PROP ERTY. 8. 3 NOW THE ONLY QUESTION REMAINS AS TO WHETHER ASSESSEE CAN BE SAID TO BE THE OWNER OF RESIDENTIAL HOUSE /FLAT AT GOA . THE LEGISLATURE HAS USED THE WORD 'A' BEFORE THE WORDS 'RESIDENTIAL HOUSE'. IN OUR OPINION IT MUST MEAN A COMPLETE RESIDENTIAL HOUSE AND WOULD NOT IN CLUDE SHARED INTEREST IN A RESIDENTIAL HOUSE. WHERE THE PROPERTY OWNED BY MORE THAN ONE PERSON IT CANNOT BE SAID THAT ANY ONE OF THEM IS THE OWNER OF THE PROPERTY. IN SUCH A CASE NO INDIVIDUAL PERSON O F HIS OWN CAN SELL THE ENTIRE PROPERTY. NO DOUBT HE CAN SELL HIS SHARE OF INTEREST IN THE PROPERTY BUT AS FAR AS THE PROPERTY IS CONSIDERED IT WOULD CONTINUE TO BE OWNED BY CO - OWNERS . JOINT OWN ERSHIP IS DIFFERENT FROM ABSOLUTE OWNERSHIP . IN THE CASE OF RESIDENTIAL UNIT NONE OF THE CO - OWNERS CAN CLAIM THAT HE IS THE OWNER OF RESIDENTIAL HOUSE. OWNERSHIP OF 10 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN A RESIDENTIAL HOUSE IN OUR OPINION MEANS OWNERSHIP TO THE EXCLUSION OF ALL OTHERS. THERE FORE WHER E A HOUSE IS JOINTLY OWNED BY TWO OR MORE PERSONS NONE OF THEM CAN BE SAID TO BE THE OWNER OF THAT HOUSE. THIS VIEW OF OURS IS ALSO FORTIFIED BY TH E JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SETH BANARSI DS GUPTA V. CIT 166 ITR 783 W HEREIN IT WAS HELD THAT A FRACTIONAL OWNERSHIP WAS NOT SUFFICIENT FOR C LAIMING EVEN FRACTION D EPRECIATION 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 OWNED BY ONE PERSON OR PARTLY OWNED BY OTHER PERSON(S). AFTER THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SETH BANARSI DASS GU PTA (SUPRA) THE LEGISLATURE COULD ALSO AMEND THE PROVISIONS OF SECTION 54F SO AS TO INCLUDE PART OWNERSHIP. SINCE THE LEGISLATURE HAS CONSCIOUSLY NOT AMENDED THE PROVISIONS OF SECTION 54 F IT HAS TO BE HELD THAT THE WORD 'OWN' IN SECTION 54 - F WOULD INCLU DE ONLY THE CASE WHERE A RESIDENTIAL HOUSE IS FULLY AND 11 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN WHOLLY OWNED BY THE ASSESSEE AND CONSEQUENTLY WOULD NOT INCLUDE A RESIDENTIAL HOUSE OWNED BY MORE THAN ONE PERSON. 8.4 IN THIS WAY IN THE PRESENT CASE ADMITTEDLY THE FLAT AT GOA WAS NOT FULLY AND WHOLLY OWNED BY THE ASSESSEE AS THE SAME WAS INITIALLY OWNED CO - JOINTLY IN THE NAME OF ASSESSEE AND HIS WIFE . ADMITTEDLY IT IS NOBODYS CASE THAT WIFE WAS BENAMI OF THE ASSESSEE. THEREFORE THE SAID HOUSE WAS JOINTLY OWNED BY ASSESSEE AND HIS WIFE. HOWEVE R BY VIRTUE OF GIFT DEED DATED 15.04.04 WHICH IS AT PAGE NO. 37 TO 60 OF THE PAPER BOOK THE SHARE OF THE ASSESSEE HAS ALREADY BEEN TRANSFERRED IN THE NAME OF HIS DAUGHTER. THUS E VEN IF AS PER THE PROVISION OF SECTION 27(1) OF THE ACT THE ASSESSEE IS C ONSIDERED TO BE A DEEMED OWNER OF THE GOA FLAT B UT EVEN THEN ASSESSEE WOULD STILL BE ING A CO - OWNER CANNOT BE TERMED THAT GOA FLAT IS FULLY AND WHOLLY OWNED BY HIM THUS CANNOT BE DENIED EXEMPTION. 8.5 THEREFORE IN SUCH CIRCUMSTANCES ASSESSEE COULD NOT BE TREATED AS ABSOLUTE OWNER OF THE R ESIDENTIAL FLAT SITUATED AT GOA AND THE E XEMPTION U/S 54F OF THE ACT CANN OT BE DENIED TO THE ASSESSEE. ON THE OTHER HAND LD. DR HAD NOT PLACED ON RECORD ANY CONTRARY JUDGMENTS TO REBUT THE CONTENTIONS OF THE ASSESSE E . 1 2 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN 8.6 THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF ITAT IN THE AFOREMENTIONED CASE S WHICH ARE MUTATIS MUTANDI IN THE PRESENT CASE WE DIRECT THE AO TO ALLOW THE EXEMPTION U/S 54 OF THE ACT. WITH THESE DIRECTIONS THESE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. GROUND NO. 1 & 4 9. SINCE WE HAVE ALREADY ALLOW THE EXEMPTION U/S 54 OF THE ACT THEREFORE THESE GROUNDS RAISED BY THE ASSESSEE BECOME INFRUCTUOUS. GROUND NO.5 . 10 . THIS GROUND IS GENERAL IN NATURE AND NEEDS NO SPECIFIC ADJUDICATION. 1 1 . IN THE NET RESULT THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL 2019 SD/ - SD/ - ( SHAMIM YAHYA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 12 . 04 .201 9 SR.PS . DHANANJAY 13 I.T.A. NO. 1309 /MUM/201 6 ASHOK G. CHAUHAN / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. / DR ITAT MUMBAI 6. / GUARD F I LE / BY ORDER . / (DY./ASSTT.REGISTRAR) / ITAT MUMBAI