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TMI Blog2015 (2) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... only on the purchase of a new and separate house rather than purchasing the shares / fractional interest in a property wherein the assessee himself is one of the co-sharers - Held that:- Sale proceeds invested for purchase of interest in the residential house owned by the assessee’s husband and son, amounts to purchase and hence entitled for exemption u/s 54F. Section 54F, per se, does not prohibit or bar that fractional interest or share in the property, which has been purchased, will not be entitled for deduction u/s 54F. Thus, following the said proposition we hold that the assessee is eligible for deduction u/s 54F on the amount spent on acquisition of rights in a property from the other members of the family or HUF. - Decided in favour of assessee. MoU, through which the assessee had acquired the rights in the property, has not been registered - Held that:- For the purpose of attracting the provisions of section 54, it was not necessary that the assessee should become owner of the property on only through registration, as the section speaks of “purchase” and registration of document was not imperative. Thus, on all counts, the reasoning given by the A.O. as well as CIT(A) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers of the HUF in equal proportion. Though the land belongs to all the four members, however, the farmhouse was constructed by two members, namely, Smt. Indrani C.Choksi and Shri Chandrakant Choksi HUF for an amount of ₹ 1,21,90,000. The farmhouse was constructed on the basis of Memorandum of Understanding (MoU) dated 31.01.1999 between the members of the family and HUF. There was a clause in MoU that Smt.Indrani C.Choksi had the right to withdraw herself from the ownership and in pursuance thereof, she had withdrawn the right and transferred the right to the assessee-HUF on a consideration made through cheque of ₹ 60,95,000/- who had become the sole owner of the constructed property. The Assessing Officer observed that how the property can be sold without the land on which it was constructed. The assessee has claimed deduction u/s 54F for buying the one half share, that is, the right in the property from Smt.Indrani C.Choksi, who was one of the members of the HUF. Thus, the entire arrangement was made to avoid tax on long term capital gain and to get benefit u/s 54F. Thereafter he discussed the intention and purpose of section 54F and also referred to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been reiterated by the Delhi High Court and Gujarat High Court in the case of Addl.CIT v. Vidya Prakash Talwar 132 ITR 661 (Del) and CIT v. Chandanaben Maganlal 245 ITR 182 (Guj.). Thus, on both the counts for which the A.O. and CIT(A) have rejected the assessee s claim for deduction is no longer sustainable in view of the aforesaid decisions. He further submitted that even registration of MoU, sale agreement or purchase agreement, is not necessary and in support of this proposition he relied upon the following decisions:- (i) CIT v. Dr.Laxmichand Narpal Nagda [211 ITR 804 (Bom.)] (ii) Balraj c. CIT [254 ITR 22 (Del.)] Thus, he submitted that the assessee s claim for deduction u/s 54F should be allowed. 3.2 On the other hand, the learned Departmental Representative strongly relied upon the reasoning given by the A.O. as well as CIT(A). 4. We have heard the rival submissions and perused the relevant finding given in the impugned orders and the material placed on record. The main issue involved in this case is, whether the assessee is entitled for claim of deduction u/s 54F for acquiring the rights / purchase of fractional interest in the property. From the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there can be a bifurcation of a capital gain into long term capital gain pertaining to land and short term capital gain pertaining to superstructure. Similarly, Full Bench of Madras High Court in the case of CIT v. Madras Cricket Club (supra), held that a person may be assessed as an owner of a building and it is not necessary that he should also be an owner of the land on which the building stands. From the ratio as culled out in the aforesaid decisions, it is amply evident that the land is an independent and identifiable capital asset, which can be separate from superstructure built up on it. A person can be the owner of a superstructure and can earn income separately from such a superstructure, either in the form of rent or by gain on selling it. It is not necessary that the assessee should hold the exclusive right on the land while purchasing the house or vice versa. Such kind of arrangement always happen in the case of lease land. Therefore, we are unable to agree with the contention of the department that, simply because the property has been sold without the transferring the right in the land, the same cannot be held to be sale of property. 4.2 So far as the issue, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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