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TMI Blog2023 (6) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. A.N. Bhalekar, DR ORDER PER OM PRAKASH KANT, AM This appeal by the assessee has been preferred against order dated 10.01.2023 passed by the Ld. Commissioner of Income-tax (Appeals) National Faceless Appeal Centre, Delhi [in short the Ld. CIT(A) ] for assessment year 2016-17, raising following grounds: 1. The Ld. AO has erred in disallowing exemption claimed u/s 54F of the I.T. Act amounting to Rs. 2,60,00,000/- without appreciating the facts of the case as well law. 2. The Ld. CIT (A) has erred in not appreciating the fact that appellant was owner of one residential house only, and was not at all the co-owner of the other flats as has been alleged/ misinterpreted by the Ld. Assessing officer and Hon'ble CIT (A) 3. The Ld. CIT (A) has erred in observing that the appellant had failed to produce any documents / agreement so as to establish that he had purchased/ acquired only one flat, without appreciating the fact that since the property i.e. residential house owned by appellant (having inherited from his late father being self constructed there could not be any agreement. 4. The Ld. CIT (A) has erred in not considering/following the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal by way of raising grounds as reproduced above. 4. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute before us is whether the co-ownership of the assessee in more than one residential properties could make assessee liable for non-eligibility of deduction u/s 54F of the Act. The fact of the case as culled out from orders of lower authorities and submissions of the assessee are that the assessee s father late Shri Iqbal Ghaswala along with other five family members had inherited land being 142/148, Ghaswala Estate Jogeshwari (west), on which land, all the six members constructed 6 flats (i.e. one flat each on their own as per their requirements which were occupied by each owner namely Shri Mohd. Ali Suleman Ghaswalla (flat no. 201), Shri Sikander Suleman Ghaswalla (flat no. 202), Shri Abdul Rahim Ghaswalla (flat no. 301), Shri Munaf Moinuddin Anwar Ghaswalla (legal heirs of late shri Anwar Ghaswalla) (flat no. 302), Shri Ilyas Zainul Ghaswalla (legal heirs of late Shri Iqbal Ghaswalla) (flat no. 401) and Shri Abdul Suttar Suleman Ghaswala (flat no. 402). According to assessee, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not include shared interest in residential house. On revenue's appeal to Hon'ble Karnataka High Court it was held as under: Section 54F provides that if the assessee has a residential house he cannot seek the benefit of long term capital gain. Under this provision, merely because, the words residential house are preceded by article 'a' would not exclude a house shared with any other person. Even if the residential house is shared by an assessee, his right and ownership in the house, to whatever extent, is exclusive and nobody can take away his right in the house without due process of law. In other words, co-owner is the owner of a house in which he has share and that his right, title and interest is exclusive to the extent of his share and that he is the owner of the entire undivided house till it is partitioned. The and logy applied by the Tribunal based on the judgment of the Supreme Court in Banarsi Dass Gupta (supra), wherein, the Supreme Court considered the provisions contained in section 32 of the Act, would not apply to the faces of the present case. The right of a person, may be one half, in the residential house cannot be taken away without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase in investments any residential house other than the new asset within a period of one year or three years as the case may be, but after the date of transfer of the original asset and the income from such residential house other than the one owned on the date of transfer of the original asset is chargeable under the head income from house property . 13. As far as the present case is concerned, contrary to the contention of the assessee, the assessee as well as her husband had offered 50% share each in the clinic in the income tax assessment and had claimed depreciation thereon. So too 50% share in the property in the wealth tax proceedings is offered by the assessee and her husband. The note submitted to the Assistant Commissioner of Income Tax, City Circle 5(1), Madras, by the assessee discloses that the assessee owned 50% of the property in 828, Poonamallee High Road, Chennai, for use as residential property and 50% as clinic; so too for the property at Door No. 828A, Poonamallee High Road, Chennai. The facts thus reveal that as joint owners of the property, the assessee and her husband had shown 50% share with reference to the clinic and the residential portion in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tej International Pvt Ltd Vs DCIT [(2000) 69 TTJ 650 (Del)] wherein the coordinate bench has, inter alia, observed as follows:- 6. We have considered the rival submissions and perused the records. It is not in dispute that two High Courts, namely, Gauhati High Court and Karnataka High Court, have expressed conflicting views regarding levy of interest under sections 234B and 234C on deemed income under section 115J. Hon'ble Gauhati High Court has opined that when legal fiction is to be created for an obvious purpose, full effect to it should be given. Quoting Lord Asquith who said, the statute says that you must imagine a certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to inevitable corollaries of that state of affairs , Hon'ble Gauhati High Court has held that there is no statutory exception excluding the operations of section 115J of the Act. Hon'ble Karnataka High Court, on the other hand, has held that the words 'for the purposes of this section' in Explanation to section 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability to tax. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a principle that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This principle has been consistently followed by the various authorities as also by the Hon'ble Supreme Court itself. In another Supreme Court judgment, Petron Engg. Construction (P.) Ltd. Anr. v. CBDT Ors. [1988] 75 CTR (SC) 20 : [1989] 175 ITR 523 (SC), it has been reiterated ITA No.2237/Ahd/2014 Assessment Year: 2011-12 that the above principle of law is well established and there is no adopt about that. Hon'ble Supreme Court had, however, some occasion to deviate from this general principle of interpretation of taking statute which can be construed as exception to this general rule. It has been held that the rule of resolving ambiguities in favour of tax payer does not apply to deductions, exemptions and exceptions which are allowable only when plainly authorised. This exception, laid down in Littman v. Barron 1952 (2) AIR 393 and followed by apex Court in Mangalore Chemicals Fertilizers Ltd. v. Dy. Commr. of CCT [1992] Suppl. (1) SCC 21 and Novopa India Ltd. v. CCE C 1994 (73) ELT 769 (SC), has been summed up in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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