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TMI Blog2021 (9) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... by one provisions of the Act cannot be super-imposed on another provisions of the Act which has a fiction. Section 54F of the Income Tax Act, 1961 is a provision granting deduction to the Assessee and therefore, it has a fiction. Respectfully following the decision of Mr. Ajit Thomas, Chennai [ 2015 (11) TMI 1847 - ITAT CHENNAI] AND [ 2016 (8) TMI 1545 - MADRAS HIGH COURT] we hold that the Assessee is entitled to claim the benefit of Section 54F of the Income Tax Act, 1961. Accordingly, we cancel the orders passed by both the lower authorities and we direct the Assessing Officer to allow the benefit of claim made by the Assessee u/s.54F. - Decided in favour of assessee. - I.T.A No.542/Chny/2017 - - - Dated:- 8-9-2021 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Mr. S. Sridhar, Advocate For the Respondent : Mrs. R. Anita, JCIT ORDER PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the Assessee is against the order of the learned Commissioner of Income Tax, (Appeals)-2, Chennai in I.T.A. No.193/CIT(A)-2/2015-16, dated 31.01.2017 relevant to the Assessment Year 2013 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to claim deduction u/s.54F and avoid paying Long Term Capital gains tax, the Assessee had settled his share of properties at Bangalore and Chennai in his wife‟s name. Therefore, it becomes evident that the settlement deed was clearly an afterthought and a tailor-made arrangement for evading payment of tax under capital gains. 3.3 It is to be pointed out that the object of the enactment of the section is to prevent avoidance of tax or reducing the incidence of tax on the part of the Assessee by transfer of his assets to his wife or minor child. It is a sound rule of interpretation that a statute should be so construed as to prevent the mischief and to advance the remedy according to the true intention of the makers of the statute. The Assessee could have been extended the benefit, if the property is settled in the name of his son or married daughter had not if it was settled in favour of his spouse. 3.4 The Hon‟ble Supreme Court in the case of Sevantilal Manekial Sheth (1968 AIR 697) had upheld the action of the Assessing Officer in a case where the Assessee had transferred the assets in his name to his wife‟s name and the income arising out of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is a genuine transaction and which is legally enforceable by the option of parties and submitted that the transaction cannot be said to have entered only to avoid tax. 7. In so far as the judgement relied upon by the Assessing Officer in the case of Sevantilal Maneklal Sheth Vs. Commissioner of Income Tax (Central), Bombay, it was in the context of the Indian Income Tax Act, 1922 and not applicable to the facts of the present case. The learned Counsel for the Assessee has further submitted that recently the Hon ble Jurisdictional High Court of Madras has decided the single issue in favour of the Assessee in the case of Commissioner of Income Tax, Chennai Vs. Mr. Ajit Thomas reported in Tax Case Appeal No.497 of 2016 dated 30th August, 2016. The same may be followed. 8. On the other hand, the learned Departmental Representative had submitted that the Assessee has relinquished his rights on the two properties and settled the same in favour of his wife only with an intension to avoid paying tax and submitted that Section 54F of the Income Tax Act, 1961 cannot be granted. He further submitted that the Assessing Officer as well as the learned Commissioner of Income Tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax (Central), Bombay (supra). The same is confirmed by the learned Commissioner of the Income Tax (Appeals). 13. We find that recently the Co-ordinate Bench of this Tribunal has considered Section 27 of the Income Tax Act, 1961 in the case of Deputy Commissioner of Income Tax, Chennai Vs. Mr. Ajit Thomas, Chennai in I.T.A. No.1453/Mds/2015 dated 06.11.2015 has held that a fiction created by one provisions of the Act cannot be super-imposed on another provisions of the Act which has a fiction. Section 54F of the Income Tax Act, 1961 is a provision granting deduction to the Assessee and therefore, it has a fiction. Hence, while interpreting the provision of Section 54F of the Income Tax Act, 1961, any other provision of the Act, which has a fiction, cannot be super-imposed. The relevant portion of the order is extracted as under: 7. We have heard both the parties and carefully perused the materials available on record. From the facts of the case, it is evident and not disputed that the Assessee‟s second house property at No.24, Vijayaraghavachari Road, T. Nagar, Chennai 600 017 was transferred to his wife vide settlement deed during the year 2003. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual value of the property . Therefore, the decisions of the Hon‟ble Supreme Court, cited supra by the Revenue, do not apply to the facts of this case. Whereas, in this case, as categorically held by the Commissioner of Income Tax (Appeal) and the Tribunal that Section 27(1) of the Act is a deeming provision applicable only for Sections 22 to 26, in computing the annual value of the property and as such deeming provisions cannot be extended to deny the exemption under Section 54F of the Act. 12. Therefore, we are of the considered view that Section 54F of the Act, for granting exemption applies for the purpose of capital gains of transfer of certain capital assets not to be charged in the case of investment in residential house. To this context, Section 54F of the Act would apply as an independent provision, to the instant case. Therefore, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have rightly come to the conclusion that Section 27Ii) of the Act is not applicable to the facts of the present case. For the reasons stated supra, we are not inclined to entertain the instant appeal and the substantial questions of law raised in this T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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