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2022 (6) TMI 968 - AT - Income TaxGrant of deduction u/s 54F - assessee purchased India bulls property jointly along with his wife. Therefore the assessee was not the full owner of the property which was required by section 54F - HELD THAT - We are inclined to hold that the issue raised by the assessee is squarely covered in favour of the assessee by the judgment of Dr. Smt. P .K Vasanthi Rangarajan 2012 (7) TMI 563 - MADRAS HIGH COURT and the assessee cannot be denied exemption under section 54F of the Act merely because he was the holder of 50% of the share jointly with Smt. Saroj Aggarwal of the property situated at Siddarth Extension Residential Scheme and the AO was not justified in denying claim of the assessee under section 54 of the Act and the first appellate authority was incorrect in upholding the action of the AO on this issue. Finally in view of our foregoing discussion we dismiss the action of the AO as well as impugned order pertaining to the claim of deduction under section 54F of the Act and the AO is directed to allow the same to the assessee. We find from the records that the Indiabulls property was under construction and the possession was handed over to the assessee only on 28.12.2016 till such time income from the said property was not chargeable under the head Income from house property and hence the condition stipulated in clause (b) of proviso to sec. 54F (1) disentitling claim u/s 54F is not satisfied. - Decided in favour of assessee.
Issues Involved:
1. Grant of deduction under Section 54F of the Income Tax Act, 1961. 2. Ownership status of the residential properties held by the assessee. 3. Applicability of proviso (a)(i) and (a)(ii) to Section 54F. Issue-wise Detailed Analysis: 1. Grant of Deduction under Section 54F: The primary issue revolves around the assessee's claim for deduction under Section 54F of the Income Tax Act, 1961, in respect of the sale of land at Jambhe and the subsequent purchase of residential property from Indiabulls Properties Ltd. The assessee also claimed deduction under Section 54 on Long Term Capital Gain (LTCG) earned by selling a flat in Pune. 2. Ownership Status of the Residential Properties: The facts of the case reveal that the assessee purchased multiple properties, including a flat from Indiabulls Properties Ltd. and another property in Pune. The assessing officer (AO) contested the assessee's claim on the grounds that the assessee owned more than one residential property at the time of the sale of the original asset, thus violating the conditions stipulated under Section 54F. The AO noted that the assessee, along with his wife, signed an application form for the Indiabulls property, which explicitly stated that the application did not constitute a binding agreement to sell. Consequently, the AO rejected the claim that the Indiabulls property was purchased in 2009-10, asserting that the assessee owned two residential houses on the date of transfer of the original asset. 3. Applicability of Proviso (a)(i) and (a)(ii) to Section 54F: The AO denied the deduction under Section 54F on the basis that the assessee owned more than one residential house on the date of transfer of the original asset, as stipulated by proviso (a)(i) and (a)(ii) to Section 54F. The AO further argued that joint ownership of the Indiabulls property with the assessee's wife does not qualify for the exemption under Section 54F, citing various judicial precedents. The assessee, however, contended that the Indiabulls property was under construction and possession was handed over only on 28.12.2016. Therefore, the income from the said property was not chargeable under the head "Income from house property," and the condition stipulated in clause (b) of proviso to Section 54F (1) was not satisfied. Tribunal's Decision: The Tribunal considered the rival submissions and perused the materials placed on record. It referred to various judicial precedents, including the Delhi Bench of ITAT in the case of Amit Gupta v. Asstt. CIT and the Hon'ble Madras High Court in the case of Dr. Smt. P.K. Vasanthi Rangarajan v. CIT. These cases held that joint ownership is not a bar for claiming exemption under Section 54F. The Tribunal found merit in the assessee's arguments and concluded that the Indiabulls property was under construction and possession was handed over only on 28.12.2016. Thus, the income from the said property was not chargeable under the head "Income from house property," and the conditions stipulated in clause (b) of proviso to Section 54F (1) were not met. Conclusion: The Tribunal allowed the appeal of the assessee and directed the AO to grant the consequential relief. The order was pronounced in the open court on 14/06/2022.
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