2019 (4) TMI 1024 - AT - Income Tax

Exemption u/s 54F - assessee was owner of more than one residential house - one house was in Joint ownership - AR argued that the assessee was not the owner of flat and hence assessee was entitled for exemption u/s 54F - 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 of the assessee - HELD THAT - 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 Hon ble Supreme Court in the case of Seth Banarsi Dass Gupta 1987 (4) TMI 7 - SUPREME COURT , 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 54F, it has to be held that the word own in Section 54-F would include only the case where a residential house is fully and wholly owned by the assessee and consequently would not include a residential house owned by more than one person. However, by virtue of gift deed, the share of the assessee has already been transferred in the name of his daughter. Thus even if, as per the provision of section 27(1) of the Act, the assessee is considered to be a deemed owner of the Goa flat, but even then, assessee would still being a co-owner cannot be termed that Goa flat is fully and wholly owned by him, thus cannot be denied exemption. Therefore, in such circumstances, assessee could not be treated as absolute owner of the residential flat situated at Goa and the exemption u/s 54F of the Act cannot 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 assessee. Therefore we direct the AO to allow the exemption u/s 54 of the Act.- Decided in favour of assessee.

Summary

Issues:
1. Consideration of Long Term Capital Gain on Surrender of Tenancy Right
2. Exemption under Section 54 F of the Income Tax Act
3. Deemed ownership under Section 27(i) of the Income Tax Act
4. Acceptance of additional evidence for deciding the date of transfer

Issue 1: Consideration of Long Term Capital Gain on Surrender of Tenancy Right
The appellant contested the inclusion of Long Term Capital Gain of ?8,50,00,000 on the surrender of tenancy right for the Assessment Year 2010-11. The appellant argued that the Commissioner of Income Tax (Appeals) should not have considered this gain.

Issue 2: Exemption under Section 54 F of the Income Tax Act
The appellant claimed exemption under Section 54 F of the Income Tax Act, contending that they were not the owner of two residential houses as the property in Goa was jointly owned with the wife and later gifted to their daughter. The appellant cited relevant case law to support their claim that shared interest in a property does not amount to ownership for the purpose of exemption under Section 54 F.

Issue 3: Deemed Ownership under Section 27(i) of the Income Tax Act
The dispute revolved around whether the appellant should be deemed the owner of the property in Goa under Section 27(i) of the Income Tax Act due to the transfer to their minor daughter. The appellant argued that even if deemed owner, they could not be considered the absolute owner of the property, hence entitled to exemption under Section 54 F.

Issue 4: Acceptance of Additional Evidence for Deciding Date of Transfer
The appellant challenged the acceptance of additional evidence by the Commissioner of Income Tax (Appeals) for determining the date of transfer concerning the tenancy holding of the property, emphasizing the importance of possession as crucial evidence of tenancy right.

The Tribunal analyzed the arguments, case law, and provisions of the Income Tax Act. Ultimately, the Tribunal allowed the exemption under Section 54 F for the appellant, concluding that joint ownership does not equate to absolute ownership for the purposes of claiming exemption. The Tribunal directed the Assessing Officer to grant the exemption under Section 54 of the Act. As a result, the appeal filed by the appellant was partly allowed, with certain grounds becoming infructuous and others requiring no specific adjudication.