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TMI Blog2024 (4) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... Prashant Maharishi, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Vipul Joshi For the Revenue : Shri Manoj Kumar ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 23/03/2023 passed under section 250 of the Income Tax Act, 1960 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [ learned CIT(A) ], for the assessment year 2013-14. 2. The present appeal is delayed by 135 days. Along with the appeal, the assessee has filed an application seeking condonation of aforesaid delay which is duly supported by her affidavit. In the affidavit, the assessee submitted that the impugned order was neither received by her on the registered email ID nor was physically delivered at the registered address. It is further submitted that the notice of hearing dated 29/12/2022 issued by the learned CIT(A) was also neither received by the assessee on her registered email I.D. nor any real-time alert was sent on her registered mobile no. and only upon a random check on the e-filing portal, notice of hearing was found out by her. Pursuant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submitted that, in the facts and the circumstances of the case, and in law, the appellate order so framed be held as bad and illegal, as: (1) The same is framed in breach of the principles of natural justice; and (ii) The same is passed without application of mind to the facts and the submissions brought on record by the Appellant. (iii) The same is passed without providing an opportunity of a personal hearing 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. WITHOUT PREJUDICE TO THE ABOVE 3. DISALLOWANCE OF DEDUCTION U/S 54F FOR Rs. 61,65,546/- OF THE ACT 3.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making disallowance of Rs. 61,65,546/- u/s. 54F of the Act while computing the income of the Appellant by considering the Appellant as joint co-owner of more than two residential houses at the time of sale of the original capital asset. 3.2 It is submitted that in the facts and the circumstances of the case, and in law, no such disallowance was called for. 3.3 Without prejudice to the above, assuming but not admitting that some disallowance was called for, it is submitted that the computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner of this residential property. Regarding the second residential property, the assessee submitted that she was a joint holder till the death of her father and after his death, she inherited the said property after relinquishment of the rights by her mother and by her brother on 05/11/2012. Accordingly, the assessee submitted that on the date of sale of the original asset on 03/09/2012, she did not own any residential house and was only a joint holder in both residential properties. 7. The Assessing Officer ( AO ) vide order dated 18/03/2016 passed under section 143(3) of the Act did not agree with the submissions of the assessee and by placing reliance upon the decision of the Hon ble Karnataka High Court in CIT v/s M.J. Siwani, [2014] 366 ITR 356 held that the assessee s claim of deduction under section 54F of the Act is not allowable, as she was the owner of more than one residential house at the time of sale of the original capital asset. Accordingly, the deduction claimed by the assessee under section 54F of the Act to the tune of Rs. 61,65,546 was disallowed and added to the total income of the assessee. 8. The learned CIT(A), vide impugned order, dismissed the appeal file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court as well as the Hon ble Madras High Court, a similar issue has been decided in favour of the taxpayer. 12. We find that the Hon ble Madras High Court in Dr. Smt. P.K.Vasanthi Rangarajan (supra) held that merely because the assessee jointly owned another property on the date of transfer of the asset, its claim for deduction under section 54F of the Act could not be rejected in respect of capital gains earned from transfer of original asset. The relevant findings of the Hon ble Madras High Court, in the aforesaid decision, are reproduced as under:- 12. A reading of the provisions contained in Section 54F(1), as it stood at the relevant point of time, shows that exemption from payment of tax on the capital gains arising on the transfer of any long-term capital asset not being a residential house is available to an assessee being a Hindu Undivided Family or an individual, if the long-term capital gain is invested in purchasing a residential house or constructing the residential house within the time stipulated therein. Proviso to sub section (1) states that the exemption contemplated under sub section (1) would not be available where an assessee owns a residential house as on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from that, 50% ownership is with reference to the clinic situated in the ground floor. As such, the entire property is not an exclusive residential property. Hence, we are inclined to agree with the assessee's contention that the joint ownership of the property would not stand in the way of claiming exemption under Section 54F. 13. We find that while deciding a similar issue in favour of the taxpayer, the coordinate bench of the Tribunal in Mukesh Arvindlal Vakharia v/s ITO, [2023] 153 taxmann.com 55 (Surat-Trib), after considering the aforesaid decision of the Hon ble Karnataka High Court as well as the Hon ble Madras High Court, observed as under:- 17. We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee. We note that assessee claimed deduction u/s 54F of the Act to the tune of Rs. 48,96,993/- on the ground that assessee owns only one house at the Oberoi Palace Housing Society in this name at the time of the sale. It is the contention of the assessee that the other two properties are owned jointly with others and therefore it is not required to be considered for the purpose of condition of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted. Therefore, respectfully following the judgment of the Hon'ble Madras High Court in case of Dr. Smt. P. K. Vasanthi Rangarajan (supra). we allow ground No. 2 raised by the assessee. 14. Further, we find that in Zainul Abedin Ghaswala v/s CIT, [2023] 152 taxmann.com 662 (Mum-Trib.), the coordinate bench of the Tribunal, after considering the aforesaid decision of the Hon ble Karnataka High Court as well as the Hon ble Madras High Court, observed as under:- 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted assessee's claim for deduction under section 54. 3. As regards deduction under section 54F, revenue authorities having found that assessees were having two residential houses having one half share each therein on date of sale of land, rejected assessee's claim. 4. The Tribunal, however, allowed assessee's claim for deduction under section 54F holding that 'a residential house, on date of sale of long term asset as mentioned in said section meant complete residential house and would 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constructing the residential house within the time stipulated therein. Proviso to sub-section (1) states that the exemption contemplated under sub-section (1) would not be available where an assessee owns a residential house as on the date of the transfer and that the income from the residential house is chargeable under the head income from house property . The Finance Act, 2001 amended the proviso with effect from 2001-02 to permit exemption under section 54F, even if the assessee has owned one residential house as on the date of transfer, other than the new asset, or 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 propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal in the case of Tej International (P) Ltd. v. Dy. CIT [2000] 69 TTJ 650 (Delhi) held that in case of conflict in the decision of the non-jurisdictional High Court, the view which is favourable to the assessee should be followed. The relevant finding of the Tribunal (supra) is reproduced as under: 4. As to what should be the view to be taken in these circumstances, ie. when there are conflicting decisions of Hon'ble Courts above and when we do not have the benefit of the guidance by Hon'ble jurisdictional High Court, we find guidance from the decision of a co-ordinate bench in the case of Tej International Pvt Ltd. v. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon'ble High Courts, adopt an objective criterion for deciding as to which of the Hon'ble High Court should be followed by us. 8. We find guidance from the judgment of Hon'ble Supreme Court in the matter of CIT v. Vegetable Products Ltd. [1973] CTR (SC) 177: [1972] 88 ITR 192 (SC) Hon'ble Supreme Court has laid down 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t need to allowed, as there is no material to show that assessee is exclusively owner of the other five residential properties/flats which are occupied by the other family members. The grounds of appeal of the assessee are accordingly allowed. 15. In the present case also, not even a single decision of the Hon ble jurisdictional High Court, which is contrary to the claim of the assessee, has been placed on record/referred by the Revenue. Therefore, respectfully following the decision of the Hon ble Madras High Court and the coordinate bench of the Tribunal cited supra, we are of the considered view that the joint ownership in two residential properties at the time of sale of the original asset does not disentitle the assessee to claim of deduction under section 54F of the Act. As a result, ground no.3 raised in assessee s appeal is allowed. 16. During the hearing, the learned AR submitted that if the relief is granted to the assessee in respect of ground no.3 then other grounds raised in the appeal may be left open. Accordingly, in view of the submissions of the learned AR, ground no.1 and ground no.2 are left open. 17. In the result, the appeal by the assessee is allowed. Order pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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