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TMI Blog2013 (9) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... han one residential in his/her own title exercising such dominion over the residential house as would enable other being excluded therefrom and having right to use and occupy the said house and/or to enjoy its usufruct in his/her own right should be deemed to be the owner of the residential house for the purpose of section 54F of the Act - The proviso to section 54F of the Act clearly provided that no deduction shall be allowed if the assessee owns on the date of transfer of the residential asset more than one residential house. - Decided in favour of Revenue. - ITA No. 557/Hyd/2012 - - - Dated:- 13-9-2013 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Sri G. S. Phani Kishore For the Respondent : Sri K. C. Devadas ORDER Per Chandra Poojari, AM:- This appeal is directed against the order of the CIT(A)-IV, Hyderabad dated 31.01.2012 for assessment year 2008-09. 2. The Revenue raised the following grounds of appeal: 1. The CIT(A) erred on both facts and law. 2. The CIT(A) erred in allowing exemption u/s. 54F to the assessee though the owned more than one residential houses as on the date of transfer. 3. Brief facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above facts, the Assessing Officer required the assessee to explain as to why the claim of exemption should not be disallowed, as the assessee was owning more than one house as on the date of transfer. Vide letter dated 16.12.2010 it was submitted by the assessee that sec. 27 defines a owner of a house in the context of computing income from house property under the head "Income from House Property", within the provisions of sec. 22 to 26. It was averred that the assessee had got the Gift Deed notarized, which duly conveyed the transfer and is therefore a legal transfer. 7. Alternatively, the assessee claimed that the house at "My Home Navadeep" is a joint property, held by the assessee jointly with her husband. The assessee relied on the decision in the case of ITO vs. Rasiklal N. Satra (100 TTJ 1039), holding that share in a house per se is not a single ownership. Accordingly, it was claimed that the assessee was eligible for exemption u/s. 54. On a consideration of the contentions of the assessee, the Assessing Officer opined that as per sec. 123 of the Transfer of Property Act, unless a gift of property is registered and stamped, and further attested by two witnesses, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sec. 27 of the IT Act, the transfer of property to a minor son shall not be regarded as a transfer and the assessee shall be deemed to be the owner of the property. He, therefore, concluded that in effect the assessee shall be deemed to be the owner of the said property, even if it was transferred to the minor son of the assessee. 10. With regard to the alternative claim of Joint ownership of the property at "My Home Navadeep", the Assessing Officer noted that in the case of Dr. P.K. Vasanthi Rangarajan vs. DCIT, in ITA No. 1753/Mds/2004 dated 25-7-2005 the Chennai ITAT had held that when the assessee is owning the part of a residential property, though not fully, it amounts to owning any residential property as envisaged in sec. 54F before amendment and the assessee becomes disqualified for exemption under sec. 54F. The Assessing Officer noted that as per the said decision partial ownership in the property amounts to full ownership and hence the assessee is not eligible for exemption u/s. 54F of the Act. 11. The Assessing Officer further noted that since the assessee was holding the "My Home Navadeep" property jointly with her husband, she had full rights over the same and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be excluded. 15. The assessee submitted that in the case of Seth Banarsi Das Gupta (supra), SB Sugar Mills Ltd. (supra) also a fractional share in an asset was not considered as coming within the ambit of single ownership. It was held that the test to determine a single owner is that "the ownership should be vested fully in one single name and not as joint owner or a fractional owner". The assessee submitted that that the share in a joint ownership in the property at "My Home Navadeep" should be excluded and not considered as disqualification for claiming exemption u/s. 54F of the Act. 16. The CIT(A) observed that as regards the property at 204, Meenakshi Royal Court, Road No. 11, Banjara Hills, Hyderabad, it is the contention of the assessee that in view of the gift deed dated 2.4.2007, whereby the said property was gifted to the assessee's minor son, the assessee was no more the owner of the said property. It is also contended that the provisions of sec. 27 of the Act to the effect that any person, who transfers, otherwise than for adequate consideration, any house to a minor child, shall be deemed to be the owner of the house property so transferred, is relevant only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the above facts, it is clear that the assessee continued to be the owner of the property at 204, Meenakshi Royal Court, Road No. 11, Banjara Hills, Hyderabad. 20. As regards the property at 301, My Home Navdeep, Madhapur, Hyderabad, the CIT(A) observed that admittedly the same was jointly owned by the assessee with her husband. The question, therefore, is whether the part ownership of the assessee of the said flat could be considered as ownership of the flat. In this regard, it is seen that in the decision in the case of Dr. P.K. Vasanthi Rangarajan (supra), it has indeed been held that if an assessee owns part of a residential property, though not fully, it amounts to owning of a residential property as envisaged in sec. 54F before amendment, and the assessee becomes disqualified for exemption u/s. 54F. However, is also seen that the Tribunal Mumbai in the case of Rasiklal N. Satra (supra) have taken a view that ownership is different from absolute ownership. They have held that in the case of a residential unit, none of the co-owners can claim that he is the owner of the residential house. The Tribunal observed that ownership of a residential house means ownership to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sec. 54F of the Act. Under these circumstances, the assessee can be said as owning only one property as on the date of sale of shares, and therefore, is eligible for deduction u/s. 54F of Rs. 1,12,28,000/-. Accordingly, the CIT(A) decided the grounds raised by the assessee in her favour and directed the Assessing Officer to revise the computation of income. Against this, the Revenue is in appeal before us. 23. The learned DR submitted that the CIT(A) wrongly granted deduction u/s. 54F of the Act, though the assessee is owning more than one residential house. According to the learned DR the assessee has the following houses: (i) 204, Meenakshi Royal Court, Road No. 11, Banjara Hills, Hyderabad (gifted to minor son through an un- registered gift deed). (ii) 301, My Home Navdeep, Madhapur, Hyderabad (jointly owned with her husband). 24. Further, he submitted that the gift to the minor son through an unregistered gift deed is invalid. Being so, the title in the property has not been passed to the assessee's minor son and the assessee is the absolute owner of that property. Further, the assessee being partial owner of the property at 301, My Home Navdeep, Madhapur, Hyderabad, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhapur, Hyderabad along with her husband cannot be construed as owning of residential house and it should be treated as owning only one residential house and the assessee is to be granted deduction u/s. 54F of the Act and the order of the CIT(A) is to be confirmed. The AR relied on the following judgements: i) Seth Banarsi Das Gupta vs. CIT (supra) wherein the Apex Court held that depreciation on assets is to be granted only when the assessee is owner of the property and not in respect of a fractional ownership of the property. ii) Mysore Minerals Ltd. vs. CIT (239 ITR 775) wherein the Apex Court held that any one in his possession of property in his own title exercising such dominion over the property as would enable the others being excluded therefrom and having right to use and occupy the property in his own right would be the owner of the building. According to the AR the fractional ownership cannot be construed as the assessee is owning second residential house. Being so, the assessee is entitled for deduction u/s. 54F of the Act. iii) The AR also relied on the judgement of Supreme Court in the case of CIT vs. Vegetable Products Ltd. (88 ITR 192) for the proposition th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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