2024 (12) TMI 191 - AT - Income Tax

LTCG - Disallowance u/s 54 - transaction of GPA - AO denied the deduction by observing that the assessee is not entitled to claim deduction for having more than one residential property - CIT(A) confirmed the said disallowance by observing that son of the assessee is a Co-Parcener. HELD THAT - The Hon ble Supreme Court in the case of Suraj Lamp Industries Pvt. Ltd. 2011 (10) TMI 8 - SUPREME COURT clearly held that the transaction of GPA does not convey any title nor create any interest in an immovable property and that the transfer under GPA as concluded transfer is not good in law. By taking same principle to the present case in hand, as discussed above, the son of the assessee as Co-Parcener got GPA to deal with the property as per the terms and conditions therein with 3 persons and clause 15 of the said GPA clearly shows that no consideration or possession of the property given to the said Co- Parcener, who is son of the assessee HUF. Therefore, when there is no payment of consideration nor possession was given, it is not a transfer under law. Therefore, the finding of the ld. CIT(A) in confirming the view of the Assessing Officer as concluded transfer is not justified. We note that the Co-Parcener is son of assessee HUF representing 3 owners sold the property to the assessee HUF, having authority only to represent, but, nothing else. In true sense, it can be safely concluded that the said 3 persons having received sale consideration and given possession of the property to the assessee HUF is a valid transaction to hold the assessee HUF acquired right on the property from the above said 3 persons, but not from Co-Parcener i.e., son of assessee HUF by a registered deed of conveyance as held by the Hon ble Supreme Court in the case of Suraj Lamp Industries Pvt. Ltd. (supra). As decided in Amit Chand Mitra Anr. 2023 (9) TMI 1601 - SUPREME COURT that no title could be transferred with respect to an immovable property on the basis of even registered POA nor any title would confer on the GPA over the property even in respect of having valid GPA. Therefore, we are of the opinion that the findings of the ld. CIT(A) is not justified to hold that the assessee HUF is not entitled to the benefit of deduction u/s 54 of the Act as it was a transaction of selling of property between assessee HUF to assessee HUF. Thus assessee is entitled to allowance of deduction under section 54 - Decided in favour of assessee.

Summary

Issues:
Whether delay in filing the appeal should be condoned.
Whether the assessee is entitled to claim deduction under section 54 of the Income Tax Act, 1961.

Analysis:
The appeal was filed with a one-day delay, and the assessee sought condonation of the delay, which was granted by the Appellate Tribunal. The Tribunal found the reasons for the delay to be genuine and accepted the petition for condonation.

The main issue in consideration was whether the assessee could claim deduction under section 54 of the Act. The Assessing Officer disallowed the deduction, stating that the assessee, being a member of HUF, was not eligible due to owning more than one residential property. The ld. CIT(A) upheld this disallowance, citing the son of the assessee as a Co-Parcener.

The assessee argued that the property acquired through a registered GPA did not constitute a transfer under the law, referencing relevant Supreme Court judgments. The ld. DR contended that the assessee was ineligible for the deduction due to owning multiple residential properties.

The Tribunal examined the facts and found that the property acquired by the assessee was one, despite being transferred through two sale deeds. It noted that the son of the assessee, as a Co-Parcener, did not transfer any title or interest in the property to the assessee. Relying on the Supreme Court's decision, the Tribunal held that the assessee was entitled to the deduction under section 54 of the Act.

The Tribunal emphasized that the transaction between the assessee HUF and the son, acting on behalf of the owners, did not constitute a transfer under law. It concluded that the assessee was eligible for the deduction based on the principles established in the Supreme Court judgments cited.

In light of the above analysis, the Tribunal allowed the appeal filed by the assessee, overturning the decision of the ld. CIT(A) and confirming the entitlement of the assessee to the deduction under section 54 of the Act.