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2019 (8) TMI 180 - AT - Income TaxDeduction u/s. 54F - assessee has not become the owner of the property in question - HELD THAT - Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini 2017 (10) TMI 323 - SUPREME COURT that as per the requirement of section 54, the assessee buyer is not required to become absolute owner of the property in question. On this aspect of the matter, this subsequent judgment of Hon ble Apex Court does not make difference because as per this subsequent judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra), the assessee has not become the owner of the property in question because there is no registered sale deed executed by the vendor but as per the judgment of Hon ble Delhi High Court, becoming the owner of the property in question is not required for the purpose of section 54 of the IT Act. Section 54F of the IT Act is parametria with section 54. Hence, we respectfully follow this judgment of Hon ble Delhi High Court and decide the issue in favour of the assessee.
Issues Involved:
1. Denial of deduction under section 54/54F of the Income Tax Act. 2. Requirement of registered conveyance for claiming deduction under section 54/54F. 3. Applicability of legal precedents cited by both the assessee and the revenue. 4. Interpretation of the amendments to the Registration Act, 1908, and the Transfer of Property Act, 1882. 5. Examination of whether the assessee's transaction qualifies as a purchase under section 54F. Detailed Analysis: 1. Denial of Deduction Under Section 54/54F: The primary issue in this appeal is the denial of deduction under section 54/54F of the Income Tax Act. The assessee contended that the lower authority's decision to deny this deduction was erroneous both in law and on facts. The assessee argued that the denial was based on an incorrect interpretation of the requirement for a registered conveyance. 2. Requirement of Registered Conveyance: The CIT(A) confirmed the disallowance of the deduction on the grounds that there was no registered conveyance. The CIT(A) noted that the transaction was documented only as a sale agreement and not a registered sale deed, which could be reversed at any time. The CIT(A) relied on the Supreme Court's decision in CIT Vs. Balbir Singh Maini, which emphasized the necessity of a registered agreement for the purposes of section 53A of the Transfer of Property Act, 1882. 3. Applicability of Legal Precedents: The assessee argued that the decisions cited by the CIT(A) were not directly applicable to the issue at hand. Instead, the assessee cited the Delhi High Court's decision in Balraj Vs. CIT, which held that for the purposes of section 54, it is not necessary for the assessee to become the owner of the property through a registered sale deed. The Delhi High Court had concluded that an agreement of sale coupled with possession could be considered a purchase under section 54. 4. Interpretation of Amendments to the Registration Act and Transfer of Property Act: The CIT(A) considered the amendments to section 17A of the Registration Act, 1908, and section 53A of the Transfer of Property Act, 1882, which require registration of the agreement for it to have legal effect. The CIT(A) followed the Supreme Court's ruling in CIT Vs. Balbir Singh Maini, which held that an unregistered agreement has no effect in law for the purposes of section 53A. 5. Examination of Whether the Transaction Qualifies as a Purchase: The Tribunal examined whether the assessee's transaction could be considered a purchase under section 54F despite the absence of a registered sale deed. The Tribunal noted that the Delhi High Court's decision in Balraj Vs. CIT emphasized that the term "purchase" in section 54 should be given its common meaning, which does not necessarily require registration. The Tribunal also considered the affidavit provided by the assessee and the confirmation from the vendor, which indicated that the assessee had taken possession of the property and was entitled to specific performance of the agreement. Conclusion: The Tribunal concluded that the judgment of the Delhi High Court in Balraj Vs. CIT was applicable and that the subsequent Supreme Court decision in CIT Vs. Balbir Singh Maini did not change the legal position regarding the requirement of ownership for the purposes of section 54/54F. Therefore, the Tribunal decided in favor of the assessee, allowing the appeal and granting the deduction under section 54F. Final Order: The appeal filed by the assessee was allowed, and the order was pronounced in the open court.
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