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TMI Blog2016 (9) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of the short term capital loss - Held that:- In the former part of this order it has already been observed that the assessee made the entire payments for purchasing the house property and the name of his wife was entered only for the security purposes. Therefore, the ld. CIT(A) was not justified in restricting the short term capital loss claimed by the assessee to the extent of 50%. I, therefore, considering the peculiar facts of this case set aside the impugned order on this issue and direct the AO to allow the claim of the assessee for short term capital loss. - ITA No. 1511/Del/2016 - - - Dated:- 23-8-2016 - Sh. N. K. Saini, Accountant Member Assessee by : Sh. Ved Jain, Adv. Revenue by : Sh. V. R. Sonbhadra, Sr. DR ORDER This is an appeal by the assessee against the order dated 05.01.2016 of ld. CIT(A)-1, Gurgaon. 2. Following grounds have been raised in this appeal: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee should have been the owner of the property and in this case the assessee was legal owner of the property to the extent of 50%. 6. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted as under: Disallowance of the House Property loss u/s 24(l)(vi) 22. During the year under consideration appellant earned rental income from the House 1-401, SPS Residency, Vaibhav Khand Indrapuram, Ghaziabad. Purchase of flat was funded by the appellant. However, the house was registered in jointly with his spouse. The wife's name was added as a precautionary or safety measure, that is, in order to retain to ownership or smooth transfer of ownership in the case of any mishappening with appellant. The appellant has funded the property purchase as is evident from his bank statement while wife is just a co-owner. Not even a single penny was contributed by wife for the purchase of house. It is evident from the rent agreement and bank statement that the appellant is getting the rental income in his individual saving account. Since the appellant is beneficial owner of the house, all the liabilities and rights ideally be the appellant's, therefore he di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. A.O. only on the ground that the wife of assessee is also co-owner in the property and assessee is only 50% legal owner of the property. 25. The action of the Id. A.O. is against the facts on record as well as the position of taw. The Ld. A.O. has erred in appreciating the facts that it is the only assessee who is making the repayment of loan. Wife of assessee has never contributed any amount for repayment, then how she can be get tax benefitted by allowing deduction of interest to her. Disallowance of loss by ₹ 1,57,839/- made by Ld. A.O, stating that the plain reading of the section 22 to 24 for determining the income from house property that the assesses should be the owner of the said property and any sum should be paid by him. The Ld. A.O, has not examined whether the wife has contributed any amount toward the purchase of house from the details submitted to her. She has simply slated that the assessee should be owner of the property and Smt. Ritu Mittal, wife, is also earning the Income. The Ld. AO has erred to consider the appellant as 50% owner in total disregard to the provisions of Income from house property u/s 22 to 27 of the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce which was an internal arrangement of both spouse. He further observed that the dominion over the property existed in the name of wife and she was lawfully entitled to claim the income emerging from the property. Therefore, the right of the wife could not have been denied because she was co-borrower of the amount on the bank and her ownership over the property was by virtue of loan and her registration and that the mere fact of EMI were paid by the husband would not disentitle her domineer over the property. He, therefore, sustained the disallowance made by the AO. The reliance was placed on the following case laws: R.B. Jodha Mal Kuthiala Vs CIT (1971) 82 ITR 520 (SC) Kaur Singh Vs CIT (1983) 144 ITR 756 (P H) Biraj Mohan Biswal Vs CIT (1992) 198 ITR 465 (Ori.) Keshar Deo Chamaria Vs CIT (1937) 5 ITR 246 (Cal.) 9. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that during the year under consideration there was a loss of ₹ 3,15,679/- while computing the income from house property but the AO restricted the same to 50% of the loss by holding that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies below and reiterated the observations made therein. 11. I have considered the submission of both the parties and carefully gone through the material available on the record. In the present case, it is not in dispute that the assessee purchased the property in the joint name with his wife. However, the whole of the investment was made by the assessee which is evident from para 2 of the assessment order dated 31.0l.2014 wherein the AO has not rebutted this contention of the assessee that the total investment was made by the assessee himself. It is also noticed from the copy of the cash book of the assessee placed at page nos. 20 to 22 of the assessee s paper book that the assessee had made the payment of ₹ 2,62,200/- on 15.12.2009, ₹ 3,50,000/- on 31.12.2009 and ₹ 3,00,000/- on 31.01.2010 for the house at Indrapuram. The assessee also claimed that the installments towards the repayment of the loan taken from bank for purchase of the property were paid by him only not by his wife. 12. On a similar issue the Hon ble Supreme Court in the case of CIT Vs Podar Cements Pvt. Ltd. (supra) held as under: Though under the common law 'owner' means a perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o interest in such property identical as nearly as may be with the interest to which they were respectively entitled in the fund. If such consideration is paid out of separate funds belonging to them respectively then such persons will be entitled to interest in such property in proportion to the shares of the consideration which they respectively advanced. The last requirement of section is that in the absence of evidence as to the interest in the funds to which they were respectively entitled or as to the shares which they respectively advanced such persons shall be presumed to be equally interested in the property. The third requirement is the exception to rule. The first two conditions of s. 45 of the Transfer of Property Act clearly specifies that in the absence of contract to the contrary, the persons will be entitled to the share in the property according to their shares in the consideration which they have invested or advanced out of common fund or separate fund. If no evidence is available, then all such persons will be presumed to be equally interested in the property. In the case of the assessee the AO has clearly spelt out the shares of the investment made by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by raising loan from the bank, in support of the said claim, the assessee filed copies of bills for renovation as well as the brokerage paid. The AO observed that all the payments for renovation were made in cash during the period of December 2009 and January 2010 which was completely not verifiable from the withdrawals made from bank during the said period. He, therefore, disallowed the claim of short term capital loss amounting to ₹ 1,25,650/-. 19. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted as under: Disallowance of STCL of ₹ 1,25,550/- due to non verifiability of cash withdrawn from bank for paying off expenses on renovation. 26. During the year under consideration i.e. a/y 2012-13, assesses sold the same flat from which he was earning rental income for total sales consideration of ₹ 43,75,000/-. Apart from the cost of acquisition of ₹ 38,06,550/-, assesses also incurred renovation expenses on the said flat amounting to ₹ 6,50,000/-. On sale of said flat assesses claimed STCL of ₹ 1,25,550/-, however Ld. A.O. disallowed loss because she didn t find the cash paid verifiable from the withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c 09, Jan Feb 2010 as evident from the copy of bills and cash book. It is also be noted that during the course of renovation work, assessee advanced some amount to contractor which the contractor deducted while making bill (page no. 68 of paper book). Assesses is a salaried person and working in corporate sector, it is not possible for him to visit the bank frequently for withdrawing cash. Therefore during the course of renovation work he withdraws cash from bank in lump sum on 3-4 dates and paid the contractors accordingly. Further Ld. Assessing officer disallowed STCL of ₹ 1,25,550/- whereas the expenditure on renovation is of ₹ 6,50,000/-. From the disallowance it seems that out of total expenses of ₹ 6,50,000/- she didn't find expenses verifiable from withdrawn to the extent of ₹ 1,25,550/- only. Out of total expenditure of ₹ 6,50,000/- what amount of expenditure Ld. A.O. didn't find verifiable or considered, for denying the STCL of ₹ 1,25,550/- to assessee, has not been stated clear anywhere in the order. From the order it seems, Ld. AO disallowed STCL as if she was bound to do the same. The said action is highly unappr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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