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TMI Blog2017 (7) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 54F - investment in house property made in the names of the assessee’s minor daughters - Held that:- In the present case, the new house property was purchased by the assessee in the name of his daughters, legal heir & dependents and not in the name of any stranger or somebody, who is unconnected with the assessee. Therefore, we are of the considered opinion that the assessee is eligible to claim deduction of exemption under section 54 of the Act.- Decided in favour of assessee. Investment in 40% undivided share in the house property by way of Deed of Mortgage by Conditional Sale - Held that:- In the present case, the arrangement between the assessee (mortgagee) and vendor (mortgagor) to transfer the house property through a 'Deed of Mortgage by Conditional Sale' grossly falls within the definition of transfer under section 2(47)(vi) of the Income Tax Act, therefore the said transaction is a purchase made by the assessee on entering the 'Deed of Mortgage by Conditional Sale'. The agreed consideration of ₹.21,00,000/- was paid by the assessee on 19.09.2005, which is the day on which the 'Deed of Conditional Sale' through mortgage has been executed and register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one to protect the interest of revenue. 2.1 The Learned Commissioner of Income-tax (Appeals) -14 erred in not considering claim of the appellant under Section 54EC of the Act in respect of the Long-term Capital Gains earned on sale of Urban Agricultural Land. 2.2 The Learned Commissioner of Income-tax (Appeals)-14. Chennai erred in not allowing the claim of the appellant under Section 54 of the Act in respect of the investment in new Residential House Property in the name of appellant's two daughters, one of whom is a minor, in respect of the Capital Gains earned on Sale of another Residential House Property, without considering Submission Nos.15.1 to 15.8 of the Written Submissions of the appellant filed during the course of appellate proceedings. 2.3 The Learned Commissioner of Income-tax (Appeals)-14, Chennai erred in not considering the 'Deed of Mortgage by Conditional Sale' coupled with payment of consideration and transfer of possession which is confirmed at a later date by 'Deed of Confirmation of Sale', as 'Purchase' within the meaning of Section 54 of the Act. without considering Submission Nos.16.1 to 16.17 and Submission No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in question was within 8 km Municipal limit of the Municipal area. Accordingly, the assessee admitted the fact and filed revised computation of statement of income against long term capital gain of agriculture land claimed exemption under section 54EC for ₹.43,75,358/- and balance claim of section 54EC for ₹.6,24,742/- claimed against the house property. Moreover, the house property which was sold and there arose a long term capital gain in the original return, the assessee has made claim under section 54EC of the Act. However, the Assessing Officer has observed that as per the provisions of section 142(2) of the Act, it is only to examine whether any claim or loss, exemption, deduction, allowance or relief made in the return is inadmissible and section 143(3) of the Act states that after examining such claim, or claims make assessment determining the total income or the loss as the case may be. Therefore, the Assessing Officer has held that fresh claim of exemption cannot be entertained in a reassessment proceedings. The ld. CIT(A) has also observed that the act does not provide any scope for granting any additional relief to the assessee as reassessment was done o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service of notice under section 148 of the Act, the Assessing Officer reopened the assessment mainly on the ground that the assessee has not offered the gain on sale of agricultural land as taxable income, against which, the assessee has claimed exemption under section 54F of the Act towards sale of that particular agricultural land and moreover, the assessee has not claimed any other deduction during the course of reassessment proceedings. Therefore, we are of the considered opinion that the assessee has not made any fresh claim of deduction and only made the claim of deduction of exemption against which assessment was reopened. 6.2 As relied on by the assessee, in the case of Sun Engineering Works (P) Ltd. v. CIT 198 ITR 297, the Hon ble Supreme Court has held as under: In proceedings under section 147 of the Income-tax Act, 1961, the Income-tax Officer may bring to charge items of income which had escaped assessment other than or in addition to the item or items which led to the issuance of a notice under section 148 and where reassessment is made under section 147 in respect of income which had escaped tax, the Income-tax Officer's jurisdiction is confined only to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee during the course of reassessment proceedings relating to the escaped income are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income, for purposes of reassessment cannot be reduced beyond the income originally assessed. From the above judgement of the Hon ble Supreme Court, it is clear that a matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as escaped income . In this case the assessee has claimed deduction of exemption under section 54F of the Act for investment made in the residential house property out of sale consideration of agricultural land, which was found to be escaped assessment, and no new claim of deduction has made during the course of reassessment proceedings. 6.3 Further, in the case of CIT v. Caixa Economica De Goa 210 ITR 719, the Hon ble Bombay High Court has held that it is open to the assessee to put forward claims of deductions for any expenditure which is relatable to the income which is sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the new house property during the year. 7.3 The Assessing Officer has observed as per the deed, one of the children was already a major on the date of agreement on 19.09.2005 and so, 50% of it gone to a major daughter and the assessee has no claim on it. Other 50% belong to a minor, but for all practical purposes, the property were purchased by his daughter only and belongs to her and cannot be treated as a property were purchased and owned by assessee at any point of time and therefore, held that acquisition of a property in the name of another person also not qualify for exemption. Moreover, the second 40% of the house property was acquired by way of Deed of Mortgage by Conditional Sale against which exemption cannot be claimed under section 54F of the Act since there was no purchase or construction. The Assessing Officer has further observed from the terms of agreement that it is not an agreement of purchase but advancement of a loan on interest and in case of default in payment of loan/interest the owner ceases right on it. Cessation of right is not equivalent to purchase of a property. Accordingly, the Assessing Officer rejected the claim of deduction under section 54F o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 54 of the Income Tax Act, 1961, is that a person who sells a residential house for the purpose of purchasing another convenient house must be given exemption so far as capital gains are concerned. The word assessee in section 54 must be given a wide and liberal interpretation so as to include his legal heirs also. There is no warrant for giving too strict an interpretation to the word assessee as that would frustrate the object of granting the exemption. By following the ratio laid down in the case of CIT v. V. Natarajan (supra) and in the case of Mir Gulam Ali Khan v. CIT (supra), in the case of CIT v. Kamal Wahal [2013] 351 ITR 4 (Del), the Hon ble Delhi High Court has held as under: 9. It thus appears to us that the predominant judicial view, including that of this Court, is that for the purposes of Section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. It is moreover to be noted that the assessee in the present case has not purchased the new house in the name of a stranger or somebody who is unconnected with him. He has purchased it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional sale: PROVIDED that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale. In view of the above provisions of Transfer of Property Act, we are of the opinion that the Mortgage is a 'Sale' in the first place, wherein; the possession of the property gets transferred to the mortgagee. The sale gets void when the mortgage-money is repaid by the mortgagor. In other words, the sale gets confirmed on default of the mortgagor to repay the mortgagemoney. In the present case, the assessee has obtained the possession of the property through a registered 'Deed of Conditional Sale' through mortgage deed executed on 19.09.2005, which can be understood from the following clause of the said Deed: The MORTGAGOR has put the MORTGAGEES in possession of the property forming the subject matter of this Mortgage Deed. The MORTGAGOR has also handed over all original documents of title pertaining to this property to the MORTGAGESS the receipt of which the MORTGAGEES also acknowledges. 8.1 On perusal of the paper book page 36 to 41, the said sale through mortgage ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein, by relying on various decisions of the Hon ble Supreme Court, the Hon ble Delhi High Court has observed and held as under: 3. The Assessing Officer, the appellate authority as well as the Tribunal rejected the claim of the assessed in respect of the assessment year 1975-76 on the ground that he did not become the owner of the property, as the said transaction was not evidenced by registration thereof as provided under Section 17 of the Registration Act. For the purpose of attracting the provisions of Section 54 of the Income-tax Act, it is not necessary that the assessee should become the owner of the property . Section 54 of the said Act speaks of purchase. Moreover, the ownership of the property may have different connotation in different statutes. The question which arises for consideration appears to be squarely covered by a decision of the apex court in CIT v. T.N. Aravinda Reddy [1979] 120 ITR 46, where it has been held that the word 'purchase' occurring in Section 54(1) of the Act had to be given its common meaning, viz., buy for a price or equivalent of price by payment in kind or adjustment towards a debt or for other monetary consideration. Each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the claim of the assessee was not entertainable. 9.1 Admittedly, the assessee made investment in NABARD bonds on 10.06.2005. However, the said investment was not made within a period of six months after the date of such transfer as stipulated under section 54EC(1) of the Act. The agriculture land was originally sold on 16.08.2004, whereas, investment in NABARD bonds were made on 10.06.2005, much after six month and the assessee has not furnished any valid reason either before the authorities below or before the Tribunal for the belated investment in the bonds after six months period of sale. 9.2 The case law relied on by the assessee in the case of Alkaben B. Patel v. ITO 148 ITD 31 (Ahd)(SB) has no application to the facts of the assessee s case because, in that case the sale document was registered on 10.06.2008 and the assessee should have purchased the bond within 10.12.2008. However, the assessee has submitted the application for the purchase of bonds and tendered the cheque on 08.12.2008, which was within the period of six months from the date of transfer of the long term capital asset. However, since the cheque issued by the assessee for purchase of bond was clea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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