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TMI Blog2024 (11) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... but not in assessee s hand alone. AO has taken a view that the assessee s wife has no existence in case of ownership right. But it was taken from the different judicial pronouncement and as per the Transfer of Property Act, both the assessee and his wife has equal right on the ownership. So tax will be computed in specific hands. Whether exemption u/s 54F will be applicable or not if the assessee has invested in new property with his son? - If we look back quickly in section 54F, the criteria should be fulfilled with the time limits for purchasing new property, the assessee should invest through selling the original property and assessee should be the owner of new property. Amount assessee invested Rs. 46 lakhs from the bank account where the assessee received the sale consideration of original asset . The assessee is also the owner of flat No.508B. Considering this, we respectfully rely on the order of Jennifer Bhide [ 2011 (9) TMI 161 - KARNATAKA HIGH COURT] So addition of son is not affecting the claim of deduction under section 54F of the Act. Considering the additional ground of the assessee, the income should be taken 50% of Rs. 1,30,00,000/- which works out to Rs. 65 lakhs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has taken the following additional ground also: - 1. The Ld. CIT(A) failed to appreciate that the residential property sold on 26/10/2010 was in joint name of deceased assessee and his wife Mrs. Gulbanu Shaikh, therefore capital gain ought to have been assessed in hands of deceased assessee and his wife, as according to section 4 of the Act the income has to be assessed in right persons' hand, therefore assessing total capital gain in hands of assessee is not justified. 3. Brief facts of the case is that the assesseewas the owner of residential house bearing Flat No.4 at Bandra Sunbeam CHS, Mumbai with joint ownership with his wife Mrs. Gulbanu Shaikh and value of the property was Rs. 18 lakh, purchased on dated 18/02/2000. The said property was duly sold in the value of Rs. 1,30,00,000/- and transfer of property was held on dated 26/10/2010. Market valuation was lesser amount to Rs. 88,56,500/- but the Ld. Assessing Officer accepted the valuation of Rs. 1,30,00,000/- and the assessee had no objection on that. After that, the assessee purchased 3 new residential units in the following manner:- Flat No. Name of Owners Value 508A Mrs. Gulbanu Shaikh Mr. Samad Shaikh (Son) Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee as the ground is taken by the ld. AR first time before the bench. 7. The Ld.AR in argument placed computation in relation to the joint ownership of the property and the exemption claimed under section 54F. The computation is annexed herewith:_ Total 50% share of Assessee 50% share Wife-joint owner Sale proceedings Residential House being Flat No.4 situated at SUNBEAM CHS Bandra (West), Mumbai-400 050. Jointly owned by Late Mr. Abdul Nayab Shaikh his wife Mrs. Gulbanu Nayabi Shaikh Sold as per Agreement dt. 26.10.2010 Less: Indexed Cost of the purchased as per Agreement dt.18.02.2000 jointly by Mrs. Gulbano Abdul Nayab Shaikh and late Mr. Abdul Nayab Shaikh Cost 18,00,000 Stamp Duty paid 1,02,750 19,02,750 1,30,00,000 65,00,000 65,00,000 1) Indexed Cost 1902750 x 711 = 34.80 lacs 389 34,80,000 17,40,000 17,40,000 Long Term Capital Gain 95,20,000 47,60,000 47,60,000 Less : Exemption u/s 54 of Income-tax Act 1961 a) To Mr. Abdul Nayab for purchase of Residential flat NO.508-B Cost 46,00,000 Stamp Duty 2,12,600 48,12,600 48,12,600 48,12,600 b) To Mrs Gulbano Abdul Nayab Shaikh For purchase of flat Nop.508-A Cost 49,00,000 Stamp Duty paid 2,27,600 51,27,600 51,27,600 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 79 have taken the opposite view. The Andhra Pradesh High Court first expressed the other view, then in Choudry's case [1980] 158 ITR 224 (AP). it took the view which we have taken and then again in B'. R. Construction,s' case [1993] 202 ITR 222 (AP) [FB]. it has gone back to the other view and reiterated the view taken in the judgment under appeal. In Ramanlal Mudanlal v. CIT (1979) 116 ITR 657 Sabyasachi Mukharji J., speaking for a Bench of the Calcutta High Court, recognised the distinction in the language employed in section of the 1922 Act and section 4 of the present Act, but that was a case of an unregistered firm where the Income-tax Officer had assessed the incomes in the hands of the partners individually. In such a situation, the learned judge held the Income-tax Officer cannot, at the same time, bring the unregistered firm to tax in respect of the very same income, Section 183 was also referred to in that connection. 8. The Ld.AR respectfully relied on the order of the Hon ble High Court of Bombay in the case of Nirmala L Mehta vs A Balasubramanyam, CIT Ors 269 ITR 1. The relevant paragraph is reproduced below:- The problem arose because the petitioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the name of assessee's wife and son. 3.6. As held by the Karnataka High Court in the case of DIT v Mrs. Jennifer Bhide (2011) ITA 169/2011 (349 ITR 80), the entire Section 54 does not expressly provide that to claim the exemption under the said section the new property should be purchased or the construction of the property should be in the name of the taxpayer only. What the section requires is the reinvestment of the capital gain. Therefore, if the assessee has reinvested the gain amount within the time allowed, that is a sufficient compliance of the law and he should be allowed the deduction. 3.7. Mumbai ITAT in the case of Jitendra V Faria v. Income-tax Officer, 18(2)(1), Mumbai [2017] 81 taxmann.com 16 upheld assessee's claim where he has claimed 54 exemption for a property purchased in the joint name with his brother. After confirming the facts, the ITAT provided the desired relief and observed that though the name of the assessee's brother was added in the Agreement of new property so purchased, it was just for the sake of convenience only. In fact, the entire investment for the purchase of new property along with stamp duty and registration charges were p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Dinesh Verma (ITA no. 381 of 2014), I find no reason in interfering with the order of the AO. The ground of appeal 1 is dismissed. 6.2 The appellant in his ground of appeal 2 has challenged the initiation of penalty u/s 271(1)(c) and also the charging of interest u/s 234. As the ground regarding the initiation of penalty is being offered on the same. Similarly as the charging of interest is consequential no comment is being offered on the same. 7. The appeal is dismissed. 12. We heard the rival submissions and considered the documents available in the records. Both the parties agitated the issue related to the validity of claim of exemption under section 54F and the income in proper hands. The original asset was in ownership of assessee and his wife. Both are the eligible owners of the original asset . In an ordinary sense, property is something that a person exclusively owns and something peculiar to a person. Property is ownership of something, thus, giving an exclusive and unrestricted right. In the case of McAlister v. Pritchard (1921),287 Mo 494 date of order 09/04/1921 the Hon ble Supreme Court of Missouri, Division One, held that the term property is believed to be extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pronouncements of the concerned High Courts in the circles on the scope of Section 22 of the Act. The High Courts of Allahabad. Punjab and Haryana, Rajasthan, Calcutta and Patna have taken the view by correctly understanding the ratio laid down in Jodha Mal's case and the High Courts of Bombay, Delhi and Andhra Pradesh have taken a different view wrongly distinguishing on facts in Jodha Mal's case. Now the question will come in respect to the additional ground. The assessee claimed that the income should be in right persons s hands. Though the Ld.DR vehemently opposed acceptance of this additional ground. The Ld. DR in argument stated that the issue was never taken up before any of the Revenue authorities. But respectfully considering the order of Hon ble Apex Court in the case of National Thermal Power Corporation Ltd vs CIT 229 ITR 383 (SC), the additional ground is duly accepted adjudicated in favour of the assessee. Ld. AR relied on the order in the case of Nirmala A Mehta vs A Balasubramanyam, CIT (supra). So there is no question of estoppels in the statute. By selling of original asset, both the assessee and his wife gained the capital gain and the income will be d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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