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TMI Blog2025 (4) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 54 of the Act are duly fulfilled; c) the Appellant has filed all the relevant documentary evidences for claiming the deduction u/s. 54 of the Act and the observation in CIT(A) order are contrary to the facts of the case: and hence, the disallowance of deduction u/s. 54 of the Act of Rs. 1,30,30,729-is without any justification and needs to be deleted. B) Addition of Rs. 10,43,158/- (after allowing standard deduction @30%) u/s. 23 of the Act may be deleted: 2. The Ld. CIT(A) (NFAC) erred in confirming the addition made of Rs. 10,43,158/- u/s. 23 of the Act as deemed rental income [Rs.14.90.227/-before standard deduction @30%) without appreciating that- a) office premises at Masjid Bunder is owned by Appellant (90.90% share) and her husband (9.10% share); b) the said office premises is used for business purposes by both i.e. the Appellant and her husband: c) the quantum of income earned from using the office premises and the head under which the same is offered to tax by Appellant could not be ground to conclude that office premises not used for business purposes; and hence the addition made of Rs. 10,43,158/- as deemed let out value u/s. 23 of the Act is unjustif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee's name is mentioned only as the 'Second Owner' for which the assessee contends to be an error crept in the registered agreement. The ld. AO further held that the assessee has failed to furnish documentary evidences such as bank statement to show that the payment for purchase of old property was made by the assessee and not her husband and has also failed to furnish copy of purchase and sale agreement of the old property to establish the mode of payment. The ld. AO made an addition/disallowance of Rs. 1,30,30,729/- u/s. 54 of the Act for the same. Further, the ld. AO also made an addition of Rs. 10,43,158/- on the annual let out value of the office premises located at Juhu lane u/s. 23(1) of the Act after considering the fair rental value of office located in the neighborhood as available in the website www.magicbricks.com and determined total income of the assessee at Rs. 1,46,19,990/-. 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 30.05.2024 dismissed the appeal filed by the assessee on the ground that the assessee has failed to substantiate her case by cogent documentary evidences. 5. The assessee is in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The assessee is said to have purchased a property at Flat No. 701 in Building No. 1 of The Gulshan Villa Premises Co-Operative Society Limited for a consideration of Rs. 35,00,000/- which aggregates to Rs. 36,50,000/- including stamp duty and registration charges which the assessee claims that the same was reflected in the assessee's balance sheet for F.Y. 2006-07 to 2010-11. Thereafter, the property was sold on 22.11.2021 for a sale consideration of Rs. 1,90,00,000/- and the capital gain was arrived at Rs. 1,30,30,729/- after reducing the indexation cost. It is observed that the assessee along with her husband had purchased a property in Flat No. 1102, B Wing, 11th Floor, Waterford Building in Kailashpuri Co-operative Housing Society Limited for a total consideration of Rs. 2,31,00,000/- out of which the assessee's investment is said to be Rs. 1,76,00,000/-. The reason for denial of the claim of deduction u/s. 54 by the lower authorities is that the assessee has purchased the old property along with her husband where she has failed to establish that the sale consideration was paid by her and not her husband. Also, there has been a sale of two residential houses by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use. If as per the contention, the old property belongs to the assessee and the sale consideration received out of the transfer was invested by the assessee in the new property, the assessee is entitled to claim deduction u/s. 54 to the extent of her investment in the new residential property. The ld. AO has also not brought on record any fact to show that the assessee has sold more than one property and merely because the assessee's husband has transferred his other property, which detail is not before us, it cannot be said that the assessee has transferred two properties. Even otherwise, assuming that the old property which was sold belonged to the assessee's husband then the assessee's husband was entitled to claim the entire benefit u/s. 54, though the property was purchased jointly. In the present case in hand, it is not the case of the revenue that both the assessee and her husband has claimed benefit u/s. 54 twice for the entire sale consideration but it is a case where they have claimed proportionately to the extent of investment made by either of them in the purchase of the new property. Pertinently, courts have taken a liberal view with regard to the claim of Section 54 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exemption. 11. We also find judgments of other High Courts giving benefit of Section 54F(1) of the Act when the house of the assessee is purchased jointly with his wife. In the case of CIT v. Natarajan [2006] 287 ITR 271/ 154 Taxman 399 (Mad.), though this case was decided in relation to Section 54 of the Act, the said Section is pari materia of Section 54F(1) of the Act. Likewise, the Punjab & Haryana High Court in the case of CIT v. Gurnam Singh [2010] 327 ITR 278/[2008] 170 Taxman 160 took the same view while discussing the provisions of Section 54 of the Act which is again pari materia of Section 54F(1) of the Act." 10. From the above, it is evident that benefit u/s. 54 cannot be denied merely because the property was purchased jointly in the name of the assessee and her husband, where in case of property held jointly the capital gain shall be calculated for each owner in accordance with the funding and allocation of shares of the house properties for claiming tax benefits. We find justification in allowing ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us, challenging the impugned addition. 13. The ld. AR for the assessee contended that merely because the assessee has earned a meager income as commission income does not entitle the ld. AO to come to a conclusion that the office premises is not used as business premises. The ld. AR further stated that the ld. AO has erroneously considered a different location for determining the ALV and has also not taken into consideration the judicial precedents which has held that only the municipal rentable value should be considered for determining the ALV of the property. The ld. AR relied on the following decisions: a. CIT v. Tip Top Typography [2014] 368 ITR 330 (Bom) b. CIT v. Moni Kumar Subha [2011] 333 ITR 38 (Del.)(FC) c. Smt. Kokilaben D. Ambani v. CIT [2010] 323 ITR 104 (Bom.) 14. The ld. DR on the other hand controverted the said fact and stated that the assessee has failed to furnish any documentary evidences to establish the fact that the said property was used by the assessee and her husband for their business purposes. The ld. DR relied on the order of the lower authorities. 15. After considering the rival submissions, it is observed that the assessee has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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