9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2006 (7) TMI 288 - AT - Income TaxRight to partition - Refusal to recognize the partition of HUF under section 171 of the Income- tax Act, 1961 - deduction of residential house allowable under section 54. Right to partition - Refusal to recognize the partition of HUF under section 171 of the Income- tax Act, 1961 - HELD THAT - In the present case, Sri P.C. Ramakrishna, H.U.F. apart from P.C. Ramakrishna, Karta, two daughters viz., Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna along with his wife, Smt. Hymavathi Ramakrishna are the members of H.U.F. After the amendment of Hindu Succession (T.N. Amendment) Act, 1989 vide clauses (i) and (ii), the daughter in H.U.F. shall by birth become a coparcener in her own right in the same manners as the son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship and shall be subject to liabilities and disabilities in respect thereto as the son. She is entitled to partition of a Joint Hindu Family coparcenary property and in such partition, Hindu Family coparcenary property shall be so divided to a daughter so as to allot the same share as is allottable to a son - The amendment brought out w.e.f. 25th March, 1989 has removed the distinction as regards to a son or a daughter in respect thereto coparcenary property of Joint Hindu family as governed by Mitakshara law and daughters are clearly treated as coparceners. In the present case, there are two daughters to the Karta. Hence, there are three coparceners in the Joint Hindu Family and the daughters have been allotted a sum of Rs. 12,50,000 i.e. Ms. Samyuktha Ramakrishna Ms. Saranya Ramakrishna each - there are no infirmity in the partition of the Joint Hindu Family which is in accordance with the Hindu Succession (T.N. Amendment) Act, 1989. In view of this, the partition is as per the amended provisions of Hindu Succession (T.N. Amendment) Act, 1989. Hence, there is no reason to refuse Registration to family partition of Joint Hindu Family property. Accordingly, the partition of H.U.F. is recognized under section 171 of the Act and the Assessing Officer is directed to pass a consequential order recognizing the partition of the H.U.F. In the result, the assessee's appeal is allowed. Whether a residential house should be treated as allowable under section 54 or whether more than one residential house can be considered as allowable under section 54 of the Act? - HELD THAT - A bare reading of section 54 of the Act, clearly infers that there is no bar to claim deduction for more than one residential house and if the assessee is holding a residential house and on sale of such property, the assessee requires another property, the assessee is eligible for deduction under section 54 of the Act. If the assessee, in the same year sell a residential house and acquires a house property out of such transaction, still the assessee is eligible for deduction under section 54 of the Act. There is no bar in acquiring more than one house/residential house under section 54 unlike under section 54F of the Act - It can easily be held that if the assessee purchases two houses to meet his needs out of the sale proceeds of one residential house, he cannot be denied exemption under section 54 of the Act. What is to be examined is whether the other conditions as specified in section 54 are satisfied at the time of investment in each of the property or not. In the present case, it is clear that these two flats are acquired simultaneously under the terms of agreement entered into on 29th October, 1993 and on the same date the possession of these flats were given in the same year, simultaneously - Under section 54 of the Income-tax Act, capital gains arising on the transfer of a house property which in the two years immediately preceding the date of its transfer was used by the assessee or a parent of his for self-residence is exempted from income-tax if the assessee, within a period of one year before or after that date, purchases or within a period of two years after the date of such transfer constructs a house property for the purpose of his own residence. The exemption of capital gains is restricted to the amount of such capital gain utilized for the purchase or construction of the new house property. Both the flats are acquired by the assessee, simultaneously and hence the conditions for acquiring the residential house within the time specified under section 54 of the Act are complied with. There is no bar in acquiring more than one residential houses to claim deduction under section 54 of the Act unlike section 54F of the Act. Therefore, the assessee is eligible for deduction under section 54 of the Act in respect of the investment made in both the flats simultaneously for computation of capital gains. The appeal of the Revenue is dismissed and the assessee's appeal is allowed.
Issues Involved:
1. Recognition of partition of Hindu Undivided Family (HUF) under section 171 of the Income-tax Act, 1961. 2. Entitlement to deduction under section 54 of the Income-tax Act, 1961 for acquiring more than one residential house. Issue-wise Detailed Analysis: 1. Recognition of Partition of HUF under Section 171 of the Income-tax Act, 1961: The assessee's appeal concerned the refusal by the CIT (Appeals) to recognize the partition of the HUF under section 171 of the Income-tax Act, 1961. The facts revealed that an oral partition took place on 16-9-1994, later confirmed by a Deed of Declaration on 9-3-1995. The Assessing Officer (AO) deemed the partition a sham, intended to reduce tax liability, and refused recognition under section 171. The AO's rejection was based on the interpretation of the Hindu Succession (Tamil Nadu Amendment) Act, 1989, which he believed did not confer inherent partition rights to female members. Additionally, the AO noted that the partition did not provide for the maintenance of the assessee's wife, Smt. Hymavathi Ramakrishna. The CIT (Appeals) upheld the AO's decision, citing that under Hindu Law, a partition requires two or more coparceners, and an HUF with only one coparcener cannot be partitioned. The CIT (Appeals) relied on various case laws, including V.V.S. Natarajan v. CIT and S. Sadasivam v. Commissioner of Agrl. IT, to support this view. The Tribunal, however, referred to the Supreme Court's judgment in S. Sai Reddy v. S. Narayanan Reddy, which interpreted similar amendments in the Hindu Succession Act by the Andhra Pradesh Legislature. The Supreme Court emphasized that the amendment conferred coparcenary rights to daughters, enabling them to claim partition and share in the family property on par with sons. The Tribunal concluded that the Tamil Nadu Amendment Act, 1989, similarly conferred coparcenary rights to daughters, making them entitled to claim partition. The Tribunal found no infirmity in the partition of the HUF, recognizing it under section 171 of the Act. 2. Entitlement to Deduction under Section 54 of the Income-tax Act, 1961: The Revenue's appeal concerned the denial of deduction under section 54 for acquiring more than one residential house. The AO denied the exemption, interpreting "a residential house" to mean only one house. The Tribunal examined sections 54 and 54F of the Act, noting the distinction between them. Section 54 pertains to the transfer of a residential house, while section 54F deals with the transfer of any long-term capital asset other than a residential house. The Tribunal observed that section 54 does not restrict the exemption to one residential house, unlike section 54F. The Tribunal considered the assessee's acquisition of two flats, one on the ground floor and another on the third floor, and the reasons for such acquisition, including the accommodation needs of the assessee's mother. The Tribunal referred to the case law of K.G. Vyas v. ITO, where the Tribunal allowed exemption under section 54 for multiple flats in the same building used as a single residence. The Tribunal concluded that there is no bar in section 54 against claiming exemption for more than one residential house, provided the conditions of the section are met. Consequently, the Tribunal allowed the deduction under section 54 for both flats acquired by the assessee. Conclusion: The Tribunal recognized the partition of the HUF under section 171 of the Income-tax Act, 1961, and allowed the deduction under section 54 for acquiring more than one residential house, dismissing the Revenue's appeal and allowing the assessee's appeal.
|
