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TMI Blog2015 (9) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... g rise to this appeal are that during the assessment proceedings, the assessee claimed deduction u/s 54B of the Income Tax Act, 1961 (for short the Act) which was deposited in capital gains account with Punjab National Bank on 28.10.06. To support this claim, the assessee pointed out before the AO that as per order dated 24.7.2006 of Govt. of India, Ministry of Finance, Dept. of Revenue (CBDT) issued u/s 119(2) (b) of the Act, the date of filing of return was extended to 31.10.06, therefore, the claim of the assessee is established and allowable. The AO dismissed the claim of the assessee u/s 54B of the Act by holding that it is mandatory that the amount of capital gain which was not utilized by the assessee for the purchase of new asset before the date of furnishing a return of income u/s 139 of the Act shall be deposited by him before the furnishing of such return and the assessee has not complied with the provisions of section 54B of the Act for claiming deduction thereunder as in his case, the due date for filing return was 31.7.2006 and not 31.10.06 as claimed by the assessee. The AO disallowed the claim of the assessee and added the amount of Rs. 32 lakh to the taxable income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the due date for furnishing the return of income for assessment year 2006-07 was extended by the CBDT to 31.10.2006 in all cases of noncorporate tax payers including partners of firms and charitable trusts and institutions. Along with the order u/s 119(2)(b), the appellant also submitted a copy of its Account under the Capital Gains Accounts Scheme, as per which an amount of Rs. 32,00,000/- was deposited in the account on 28.10.2006. In view of the order u/s 119(2)(b) of the Income Tax Act dated 24.07.2006 issued by the CBDT and the requisite evidence filed by the appellant in support of depositing of Rs. 32,00,000 in his bank account on 28.10.2006, I hold that the appellant rightly claimed the exemption u/s 54B of the Income Tax Act amounting to Rs. 32,00,000/-. This ground of appeal is thus allowed." 7. In view of above, when the assessee is showing income from business and profession in the return of income either negative or positive, then obviously, the assessee falls within the ambit of non-corporate tax payers which includes partners of the firm and hence, date of filing of return applicable for the assessee would be 31.10.06. We may further point out that when admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in her/his name only and was the holder of only 50% of share, then the provisions of section 54F of the Act do not create a rider and the assessee should be held entitled to exemption u/s 54F of the Act. 10. Replying to the above, ld. DR supported the action of the authorities below and submitted that on combined reading of the facts of the case, together with the provisions of section 54 of the Act shows that the appellant assessee should not own more than one residential house on the date of transfer of the original asset. Ld. DR strongly supporting the assessment order and the impugned order of the CIT(A) further submitted that the assessee appellant owned two residential properties on the date of transfer of original asset viz. property no. 2109, sector 28, Faridabad and SFS Flat No. 36B, First Floor, Pocket C, Siddarth Extension Residential Scheme, New Delhi and the assessee was also seeking claim of exemption u/s 54F of the Act by purchasing a third property no. 614, sector 21-C, Faridabad which is clearly hit by the proviso (a) (i) to section 54F(1) of the Act. Ld. DR submitted that the AO rightly denied exemption u/s 54 of the Act to the assessee which was rightly uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as per proviso (a) (i) to section 54F(1) of the Act. However, from the copy of Will available at page 65 of the assessee's paper book available at page 65 of the assessee's paper book, it is vivid that the assessee does not exclusively own this property but having only 50% of the share jointly with Smt. Saroj Aggarwal. Hence, the dicta laid down by Hon'ble Madras High Court in the case of Dr. P.K. Vasnathi Rangarajan vs CIT (supra) supports the case of the assessee wherein their lordships held that the joint ownership of the property would not stand in the way of claiming exemption u/s 54 of the Act. In a peculiar situation where the assessee did not own residential house exclusively in his name and was the holder of 50% share and hence, the assessee was held to be entitled to exemption u/s 54F of the Act. On a specific query from the bench, ld. DR could not show us any other judgement or order which could lead us to take a different view on this issue. Hence, we are inclined to hold that the issue raised by the assessee is squarely covered in favour of the assessee by the judgment of Hon'ble Madras High Court in the case of Dr. P.K. Vasnathi Rangarajan vs CIT (supra) and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,200 as rental income from the said property during the relevant financial period. This kind of addition cannot be made on the basis of facts of the earlier assessment year and for making such type of addition, it is relevant that the AO is duty bound to bring out and establish the fact that the AO actually earned rental income from the alleged property during the relevant financial period which was not offered to tax by the assessee. From careful reading of the impugned assessment order and order of the CIT(A), we are unable to see any fact or evidence which can substantiate that the assessee actually earned rental income from the said property during the previous year, even we are unable to see any name or entity to whom the said property was rented by the assessee. In this situation, addition made by the AO on the basis of surmises and conjectures cannot be held as sustainable and the view taken by the CIT(A) is mechanical and we decline to accept the same. Accordingly, addition made by the AO is directed to be deleted and thus, ground no. 3 of the assessee is also allowed. 16. In the result, the appeal of the revenue is dismissed and appeal of the assessee is partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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