Income Tax Appellate Tribunal - Amritsar
Jiwan Parkash, Bathinda vs Department Of Income Tax on 19 February, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. A.D.JAIN, JUDICIAL MEMBER
AND SH. B.P.JAIN, ACCOUNTANT MEMBER
I.T.A. No.314(Asr)/2013
Assessment year:2006-07
PAN :AAOPP6875E
Income Tax Officer, vs. Shri Jiwan Parkash
Ward-1(1), Bathinda. S/o Sh. Amar Nath Aggarwal,
3038-A, Guru Kashi Marg,
Bathinda.
(Appellant) (Respondent)
Appellant by:Sh.Tarsem Lal, DR
Respondent by:Sh.P.N.Arora, Advocate
Date of hearing:29/01/2015
Date of pronouncement:19/02/2015
ORDER
PER B.P.JAIN, AM:
This appeal of the Revenue arises from the order of the CIT(A), Bathinda, dated 19.02.2013 for the assessment year 2006-07. The Revenue has raised following grounds of appeal:
"1. That the on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of :
i) Rs.30,00,000/- on account of disallowance of deduction claimed u/s 54F of the Income Tax Act, 1961 without taking into account the facts discussed in the order by the AO.2 ITA No.315(Asr)/2013
ii) The Ld. CIT(A) has mentioned relief of Rs.47,95,453/- in his order instead of Rs.30,00,000/- as added by the AO which is bad in the eye of law.
2. That it is prayed that order of the ld. CIT(A) be set aside and that of the AO be restored.
3. That the assessee craves leave to add or amend any grounds of appeal before the appeal is heard off or disposed off."
2. The brief facts of the case are that the assessee has claimed exemption u/s 54F of the Act, which was allowed by the AO. The Ld. CIT, Bathinda under section 263 of the Act observed that exemption u/s 54F of the Act, claimed by the assessee at Rs.30,00,000/- has wrongly been allowed by the AO without making requisite enquiries and as such the same, requires to be withdrawn. Accordingly, the AO vide letter dated 18.10.2010 issued a notice to the assessee and part of the said letter is reproduced in the AO's order at page 2 & 3 is as under:
"Para-3 :- You have claimed an exemption for Rs. 30 lacs u/s 54 on account of purchase of ½ share of residential plot in plot No.79, Sector 6, Panchkula from your brother, Sh. Hargobind Goyal on 20.01.2006. You were already the owner of the ½ share of the said plot. However, as per details available in Wealth Tax Return for the AY 2005-06 of Sh. Hargobind Goyal, he has incurred a total expenses of only Rs.70,512/- as cost of construction of his share of above plot whereas in your wealth tax return, cost of construction is Rs.36,17,312/- of your share. In the light of above information, you are required to substantiate your claim for exemption u/s 54F w.r.t. following points:-
a) Whether ½ of a single plot can be treated as on "independent residential house' for the purpose of claiming exemption u/s 54B?3 ITA No.315(Asr)/2013
b) Kindly substantiate the claim w.r.t. PUDA/HUDA rules.
Whether under those rules, sub division of a single plot is allowable into two independent units, with the boundaries of a single plot bearing a single plot number?
c) Since Sh.Hargobind Goyal spent only Rs.70,512/- on construction vis-à-vis amount spent by you more than 36 lacs, it casts a doubts as to whether the construction by Sh.Hargobind Goyal was of an independent residential. Substantiate your claim with documentary evidence.
d) You yourself have mentioned that you purchased ½ share of a Plot whereas section 54F entails the purchase of a residential house. Please support your claim for the applicability of section 54F in the light of above facts, when deduction u/s 54F is not available for purchase of a plot.
e) Purchase deed vide which you have purchased the said asset from your brother.
f. If purchase has been made by any other mode, kindly furnish the said documentary evidence and also produce the original for my perusal as it appears that the word 'Constructed' has been added afterwards in the 'agreement to sell' filed during the earlier assessment proceedings.
Para-4:- During the said financial year, you became of the sole prop. of the Firm M/s. K.B. Concrete Fabs. You took over all the assets of the firm including a plot No.190, Industrial Area, Panchkula which was later on sold to your brother. Sh. Hargobind Goyal for a sum of Rs.48 lacs in the capacity of the proprietor, thus showing a capital gain of Rs. 33 lacs. Please explain as to why the provisions of section 45(4) should not be applied in this case and the sum of Rs.48 lacs minus (cost of construction + cost of indexation) be charged as capital gain in the hands of the firm. Also, if so being the case, why should the exemption u/s 54F w.r.t. said capital gain may not be revoked as this a available only to an Individual/HUF and not a firm." 4 ITA No.315(Asr)/2013
3. The assessee submitted the explanation to the said letter, which is reproduced in AO's order at pages 3 & 4 and for the sake of convenience is reproduced as under:
Para-3: "That S/Sh. Jiwan Parkash and Hargobind Goyal has purchased Plot No.79, Sector 6, Panchkula jointly as co-owners and have made construction thereon jointly, though the major amount has been spent by Sh. Jiwan Parkash on the construction of house. Till major amount has been spent by Sh. Jiwan Parkash on the construction of house. Till 31.03.1995, Sh.Hargobind Goyal has spent Rs.70,512/- and Sh. Jiwan Parkash has spent only Rs.17,900/- on construction of house on the said plot. Thereafter, the construction expenses were incurred by Sh.Jiwan Parkash. In view of above, it is clear that both the co-owners have constructed the house jointly though the expenses incurred by one co-owner is on the higher side but it will not effect that Sh.Hargobind Goyal does not have any share/interest in the house constructed on Plot no.79, Sector 6, Panchkula. The said house has been sold through an agreement to sell to Sh.Jiwan Parkash on consideration as settled by both the co- owners keeping in view the expenditure incurred by each co-owner. It is further submitted as under to substantiate our claim for exemption u/s 54F with respect to the following points:
a) Purchase for other part of the house from the co-owner is entitled for exemption u/s 54F as held by that Hon'ble Supreme Court in the case of CIT vs. T.N. Aravinda Reddy (1979) 120 ITR 46.
b) There is no division of plot or house but the house is owned by both S/Sh. Jiwan Parkash and Hargobind Goyal as co-owners.
c) As explained above, merely because one of the co-owner has spent more money on the construction of house, does not effect that the other co-owner has not interest in the house constructed on the plot.5 ITA No.315(Asr)/2013
d) These are undisputed facts that it is a constructed house as apparent from the wealth tax return filed by both the co-owners and necessary record is already on record. Therefore, the exemption u/s 54F has rightly been claimed.
e) The purchase has been made only through an agreement to sell and no registered deed has been executed.
f) As explained above and other material placed on record in the shape of wealth tax return, it is a constructed plot. At the time of sale/purchase, generally word 'Plot No.' is used."
4. The AO vide para 3.3 has withdrawn exemption claimed u/s 54F of the Act. The said finding of the AO in para 3.3 is reproduced hereinbelow for the sake of convenience:
"3.3 "The reply of the assessee has duly been considered. Perusal of the assessment record reveals that the assessee has claimed an exemption of Rs.30,00,000/- u/s 54F of the Act on account of purchase of half share in the residential Plot No.79, Sector 6, Panchkula from his brother Sh.Hargobind Goyal on 20.01.2006 for a consideration of Rs.30,00,000/-. It is seen that the assessee was already owner of half share in Plot no.79, Sector 6, Panchkula and as per the provisions of section 54F(10, the exemption is available in the case of purchase/construction of a residential house. As per the details available in the wealth tax return of Sh.Hargobind Goyal for the AY 2005-06, he incurred total expenditure of Rs.70,512/- only as cost of construction on his half share of the said plot and as per the details available in the wealth tax return of the assessee for the AY 2004-05, an amount of Rs.36,17,312/- has been shown as incurred on the construction of half share of above said plot. From the above, it can safely be concluded that such a vide difference in the cost of construction and the nominal amount incurred for construction by Sh. Hargobind Goyal, is an indication that the constructed area belonging to Sh. Hargobind Goyal was not an independent constructed residential house. It also appears that the word 'constructed' has been added in the agreement to sell afterwards, enabling the assessee to claim exemption u/s 54F as the said 6 ITA No.315(Asr)/2013 exemption otherwise would not have been available for purchasing a plot. Moreover, the assessee himself has mentioned the word 'plot' in his return while claiming exemption u/s 54F. Further, there is no evidence on record which shows that there were two separate houses on plot No.79, Sector 6, Panchkula, one belonging to Sh.Hargobind Goyal and the other belonging to the assessee. This is further strengthened that sub-division is not allowed within the boundary of a single plot by the Urban Devlopment Authorities. All these facts show that the asset purchased by the assessee is not an independent residential house but only ½ share in the plot No.79, Sector 6, Panchkula has been purchased and for all practical purposes, the entire property was already owned by the assessee and Sh.Hargobind Goyal was a co-owner in name only. The case law relied upon by the assessee is not relevant here as in that case, the property of HUF was partitioned and one of the coparcener purchased the share of other coparceners after the partition of HUF, and in this way, purchase of new asset took place but in the case under consideration, no new asset was purchased by the assessee. In view of the above, the assessee is not entitled for claim of exemption of Rs.30,00,000/- u/s 54F of the Act which has been allowed to him at the time of original assessment. Accordingly, the same is withdrawn."
5. The Ld. CIT(A) deleted the addition made by the AO and held that the assessee is entitled to exemption u/s 54F of the Act by holding that the observations of the AO are not correct as there is no division of plot but it is a single unit owned by both the co-owners. Though one co-owner has spent lesser amount than the amount spent by the other co-owner but otherwise both are having ½ share each in the house constructed on plot No.79, Sector 6, Panchkula, as apparent from the wealth tax returns filed by both the co- owners in the earlier years i.e. much before the date of transfer of his share by Sh. Hargobind Goyal to assessee. The Ld. CIT(A) relied upon the 7 ITA No.315(Asr)/2013 decision of the Hon'ble Supreme Court, in the case of CIT vs. T.N. Arvinda Reddy (1979) 120 ITR 46.
6. The Ld. JCIT (DR), Mr. Tarsem Lal submitted that during the course of hearing of this case on 29.01.2015, Sh.P.N.Arora, advocate had relied upon a judgment of the Hon'ble Gujarat High Court in the case of CIT vs. Chandanben Magan Lal reported at 245 ITR 182. In the said decision, the Hon'ble Gujarat High Court has not considered the judgment of the Hon'ble Supreme Court in the case of Seth Banarsi Dass Gupta vs. CIT reported at 166 ITR 783 where the Hon'ble Supreme Court, has held that a fractional owner is entitled to depreciation and following this decision of the Hon'ble Supreme Court, in the case of ITO vs. Rasik Lal N. Satra reported in 98 ITD 335 where the Tribunal has held that a fractional owner is not entitled to exemption u/s 54F. The Ld. DR further stated that in the agreement to sell, it was the plot which had been purchased by the assessee as is obvious from last para of page 1 of the agreement to sell. Therefore, there was no house property which was purchased by the assessee. Therefore, he prayed that the appeal of the department may kindly be allowed.
7. The Ld. counsel for the assessee, Mr. P.N. Arora relied upon the submissions made before the AO that of the Ld. CIT(A) and the decision of 8 ITA No.315(Asr)/2013 the Ld. CIT(A). He relied upon the decision of the Hon'ble Supreme Court, in the case of CIT vs.T.N. Arvinda Reddy (supra) and the decision of the Hon'ble Gujrat High Court, in the case of CIT vs. Chandanben Magan Lal, reported in (2000) 245 ITR 82 (Guj.).
8. We have heard the rival contentions and perused the facts of the case. The disallowance in the present case by the AO was mainly made on the premise that there are two portions of the plot - one belonging to Sh.Hargobind Goyal and other to the assessee. The area belonging to Sh.Hargobind Goyal is not a constructed house but petty construction has been done, whereas the construction has been done by the assessee by spending huge amount. Accordingly, the AO at page 4 - 5 of his order observed that nominal amount incurred for construction by Sh.Hargobind Goyal, is an indication that the constructed area was not belonging to Sh.Hargobind Goyal, was not an independent constructed residential house and accordingly there were not independent two houses - one belonging to Sh. Hargobind Goyal and other belonging to the assessee. Therefore, the asset purchased by the assessee is not an independent residential house but only half share in plot No.79, Sector 6, Panchkula and for all practical purposes, the entire property was already owned by the assessee and Sh.Hargobind Goyal was a co-owner in name only.
9 ITA No.315(Asr)/20138.1. The wealth tax returns were on record before the AO as well as before the Ld. CIT(A) with regard to both co-owners i.e. Sh.Hargobind Goyal and the assessee. The co-owner Sh.Hargobind Goyal has declared ½ share in the house constructed at plot No.79, Sector 6, Panchkula and accordingly, the assessee has declared ½ share in the house constructed at plot No.79, Sector 6, Panchkula. It is undisputed fact and has not been controverted by the AO or by the Ld. DR during the arguments or in the written submission placed on record. The department, therefore, has accepted in the wealth tax returns, the half share of house constructed in the Plot No.79, Sector 6, Panchkula in the hands of both the co-owners. Therefore, in our view the amount spent by one co-owner is lesser and by other co-owner is more for making the disputed house does not make any difference. The finding of the AO that Sh. Hargobind Goyal is the co-owner in the name of co-owner only and actually property is owned by the assessee in toto before the said purchase of share mentioned hereinabove is without any basis and any material on record. In fact Sh. Hargobind Goyal is the co-owner of the house property constructed in the plot No.79, Sector 6, Panchkula of half share and accordingly, the assessee was co-owner of the half share of the said property. Whether half share purchased by the co-owner can be treated as an investment liable for exemption u/s 54F of the Act, is a question to be 10 ITA No.315(Asr)/2013 answered by us. In this regard, the Ld. DR, Mr. Tarsem Lal relied upon the decision of the Hon'ble Supreme Court, in the case of Seth Banarsi Dass Gupta vs. CIT reported in 166 ITR 783, which was followed by the ITAT (Mumbai Bench) in the case of ITO Vs. Rasik Lal N. Satra reported in 98 ITD 335. First of all, we deal with the decision of the Hon'ble Supreme Court, in the case of Seth Banarsi Dass Gupta vs. CIT (supra). How the said decision can be made applicable to the present facts and circumstances of the case. The relevant facts and the decision in the case of Seth Banarsi Dass Gupta vs. CIT (supra) are reproduced for the sake of convenience as under:
" This appeal is by certificate and is directed against the judgment of the High Court of Allahabad. The assessee and his five brothers constituted a Hindu joint family. The relevant assessment year is 1953-54, corresponding to the accounting period ending on 30th June, 1952. The joint family owned, inter alia, a sugar factory at Bijnore. In 1930, there was a partition in the family and the members of the erstwhile joint family constituted themselves into a partnership firm which took over the sugar factory and operated the same. In the year 1944, Sheo Prasad, one of the brothers, who was a partner of the firm instituted a suit in the Lahore High Court for dissolution of the firm. Partition of the country followed and after the parties shifted over to India, a fresh suit was instituted at Bijnore for purposes of partition. The properties were putin charge of a receiver appointed by the Court. So far as the sugar factory was concerned, the arrangement was that at five yearly rests, an auction was to be held confined to the partners and the highest bidder would be given lease to operate the factory for that period under the receiver. On 16th July, 1948, Sheo Prasad transferred his 1/6 share to Banarsi Dass at a stated valuation of Rs. 4,50,000. On 3rd May, 1950, another brother, Devi Chand, leased out his 1/6th share to Banarsi Dass on an annual payment of Rs. 50,000. On 13th July, 1950, yet another brother, Kanshi Ram, similarly leased out his 1/6th share to Banarsi Dass for 11 ITA No.315(Asr)/2013 a similar sum. In 1951, Kanshi Ram sued for cancellation of the lease. On 6th April, 1954, the dispute was compromised and the lease was terminated. Kanshi Ram undertook to pay to Banarsi Dass at the rate of Rs. 16,000 for the first three years and at the rate of Rs. 10,000 for the subsequent two years. Devi Chand's 1/6th share was also returned on mutual arrangement and he agreed to pay a sum of Rs. 39,000 odd annually to Banarsi Dass for the lease period. During the assessment proceedings, the nature of these receipts came to be debated--the assessee maintained that these were in the nature of a capital receipt in lieu of the leasehold interest and the ITO maintained that those were revenue receipts. In due course, the Tribunal ultimately upheld the view of the Revenue.
One more question that arose was the admissibility of a claim of expenditure being payment of interest on a loan taken for purchase of shares in the sugar factory. The ITO had allowed the claim of Rs. 75,211. The AAC gave notice to the assessee and disallowed the same. The Tribunal reversed the finding of the AAC in regard to the admissibility of the claim. Then, the assessee as also the Revenue applied to the Tribunal to refer the case to the High Court. As far as relevant, the following questions were referred for the opinion of the High Court under s. 66(1) of the Act at the instance of the assessee :
"(1) Whether, on the facts and in the circumstances of the case, the sums of Rs. 16,000 and Rs. 39,262 received from Kanshi Ram and Devi Chand, respectively, were assessable as income of the assessee ? (2) Whether, on the facts and in the circumstances of the case, depreciation is allowable on the 1/6th share in S.B. Sugar Mills, Bijnore, which the assessee had acquired from Seth Shiv Prasad ?"
So far as the first question was concerned, the High Court referred to the arrangement entered into by the parties as also the terms of compromise and referred to certain decisions and came to the conclusion that the sum of Rs. 16,000 received as a part of the total sum of Rs.68,000 constituted an assessable receipt. On the same reasoning, the High Court held that the amount of Rs. 39,262 received from Devi Chand was also liable to tax.
So far as the other question was concerned, the High Court Held (1971) 81 ITR 170, 176 (All) :
12 ITA No.315(Asr)/2013
"The question, however, remains whether the assessee is entitled to claim depreciation on the ground that it has acquired 1/6th share in the S.B. Sugar Mills. It is to be noted that the assessee does not claim to be full owner of the property. All that the assessee claims is 1/6th share in S.B. Sugar Mills.
The assessee claims allowance under cl. (vi) of sub-s. (2) of s. 10 of the Indian IT Act, 1922. Clause (vi) is :
'In respect of depreciation of such buildings,machinery, plant or furniture being the property of the assessee......' In order to qualify for an allowance under cl. (vi), the assessee has to make out that the building, machinery, plant or furniture is the property of the assessee. Mr. Shanti Bhushan appearing for the assessee urged that cl. (vi) is attracted even where an assessee owns a fractional share in the machinery. On the other hand Mr. Brij Lal Gupta appearing for the Department urged that ownership of a fractional share in machinery does not attract cl. (vi). The point is not free from difficulty."
The High Court ultimately came to hold : "In order to qualify for an allowance under cl. (vi), the claimant must make out that the machinery is the property of the assessee.That test is not satisfied by the present assessee. The assessee does not claim to be the full owner of the machinery in question. All that is claimed for the assessee is 1/6th share in the machinery. Such a fractional share will not suffice for granting an allowance for depreciation under s. 10(2)(vi) of the Act."
8.2. The Hon'ble Supreme Court after the decision of the Hon'ble High Court of Allahabad held at page 788 & 789, which for the sake of convenience is reproduced hereunder:
"This appeal is by certificate from the judgment of the Allahabad High Court. The assessee is the sugar mill which during the relevant assessment year 1960-61 corresponding to the 13 ITA No.315(Asr)/2013 accounting period ending 30th June, 1959, was in the hands of a Court receiver. The sugar mill was being assessed as an AOP. Banarsi Dass, a partner, had 1/6th share therein. He had acquired under a deed of exchange dt. 16th July, 1948, 1/6th share of Sheo Prasad in exchange of shares held by Banarsi Dass in Lord Krishna Sugar Mills valued at Rs. 4,50,000. In this assessment year, the receiver claimed that for the purposes of computing the depreciation allowance, the written down value of the business assets be enhanced so as to reflect the sum of Rs. 4,50,000 in place of 1/6th share representing the share of Sheo Prasad. Similar claim had been raised by Banarsi Dass in his own assessment. The ITO rejected the claim and such rejection has been upheld throughout. We have already turned down the claim of Banarsi Dass. This claim has, therefore, to be rejected. We may additionally point out that under the scheme of the Act, it is the assessee who alone is entitled to maintain such claim of depreciation and it would indeed be difficult, within the framework of the scheme contained in the statute, to maintain a separate value of a part of the asset to work out depreciation. The book value as shown must be applicable to the entire assets of the firm including the 1/6th share which Sheo Prasad had given to Banarsi Dass. The claim has rightly been rejected in the forums below including the High Court. The appeal has no merit and is dismissed. Parties will bear their own costs."
8.3 From the reading of the judgment in the case of Seth Banarsi Dass Gupta vs. CIT (SC) (supra), we are of the view that the Hon'ble Supreme Court while confirming the decision of the Hon'ble Allahabad High Court has held that in order to qualify allowance of depreciation, the assessee has to make out that machinery is the property of the assessee and the assessee does not claim to the full ownership of the machinery in question. All that is claimed for the assessee is 1/6th share in the machinery. Such a fractional share will not suffice for granting an allowance for depreciation under 14 ITA No.315(Asr)/2013 section 10(2)(vi) of the Act. It is with this background that fractional machinery owned by a person cannot be subject matter of allowance of depreciation, whereas in the present case facts are different and cannot be made applicable in the present facts and circumstances of the case. 8.4. As regards the decision in the case of ITO vs. Rasiklal N. Satra (supra) decided by the ITAT, Mumbai Bench, is with respect to the proviso under section 54F of the Act, where the assessee is not entitled to exemption on account of purchase house u/s 54F of the Act, if assessee already owns more than one residential house on the date of transfer of a new asset. In the case of Shri Rasiklal N.Satra (supra), the assessee was co-owner of flat in Mumbai and therefore, on this premise it was held by the ITAT, Mumbai that assessee was not co-owner of the residential house on the date of transfer of the original asset. The facts in the case of Shri Raskilal N. Satra (supra) are different to the present facts and circumstances of the case and therefore, the same is also not applicable.
8.5. As regards the arguments made by the Ld. DR at page 1 of the agreement to sell, it has been referred as 'plot no.' and therefore, it is not a house. Such mentioning of the plot at page 1 of the agreement to sell between two-owners does not prove wealth tax return as wrong, which have been accepted by the Department where both the co-owners have declared 15 ITA No.315(Asr)/2013 the house as co-owned in their respective wealth tax returns. It is a undisputed fact on record before both the authorities below. Therefore, this argument and submission of the Ld. DR cannot help the revenue and is rejected.
8.6. Moreover, as against the decision of the ITAT Mumbai Bench, in the case of Rasiklal N. Satra (supra), the Ld. counsel for the assessee has the benefit of the decision of the Hon'ble Supreme Court in the case of CIT vs. T.N. Aravinda Reddy (1979) 120 ITR 46, where the facts of the case are that four brothers, members of a coparcenary, partitioned their family properties. The eldest brother sold his own house and acquired the common house from the rest of the three brothers who executed three release deeds for a consideration of Rs.30,000/- each, adjusted towards the extra share (Jeshtabhaga) agreed to be given to the eldest by the next three. The question arose before the Hon'ble Supreme Court whether these release deeds did amount to purchase of the house u/s 54F of the Act, whereas the Hon'ble High Court, has answered in favour that it is a purchased house u/s 54F of the Act and each release deed is a transfer of realsor's share for consideration to the releasee. It was held by the Hon'ble Supreme Court that had this been taken from non-fraternal owners of shares or from one stranger-owner, plain spoken people would have called it a purchase. Why, 16 ITA No.315(Asr)/2013 should legalese be allowed to play this linguistic distortion? The Hon'ble Court, relied upon the English decision in the case of Upjohn J., in Bobshaw Brothers Ltd. vs. Mayer (1956) 3 All ER 833, 835.
8.7. The said decision of the Hon'ble Supreme Court, in the case of CIT vs. T. N. Arvinda Reddy (supra) is applicable in the present facts and circumstances of the case and our decision hereinabove. In the present case also there is one co-owner, the assessee has purchased a house from the other co-owner, his own brother and therefore, the assessee is entitled to the benefit u/s 54F of the Act.
8.8. Reliance has also been placed by the ld. counsel for the assessee in the case of CIT vs. Chandanben Magan Lal (Guj) (supra), where the facts of the case are as under:
"The legislature has provided that if the house property which is sold was used for residential purpose by the assessee or his parent and from the long-term capital gain earned another house property is purchased for the assessee's residence, subject to the provisions of the section, the capital gain should not be taxed. When the Act enables an assessee to get exemption from payment of tax in respect of purchase or construction of a residential house, purchase or construction of a portion of the house, should also enable the assessee to claim the exemption. It is possible that a person may not be in a position to purchase the whole residential house at a time and in the circumstances an assessee might purchase a portion of the house or more interest in the share in the house. In the instant case, 15 per cent of undivided share in the house property was purchased by the assessee from her husband and her son. It is a settled legal position that when there is a doubt about the meaning of any statutory provision, the provision is to be understood in the sense in which it 17 ITA No.315(Asr)/2013 can harmonise with the subject of the enactment and the object which the legislature has in view. In view of the said principle, it is very clear that when the legislature has desired to give exemption to an assessee who is selling his residential house so as to purchase another residential house, one cannot interpret the provision in a manner which would disentitle the assessee to claim the exemption under the section merely because the assessee could not purchase the residential house in toto and the assessee purchased only a portion of the house. In the circumstances, the Tribunal was right when it came to the conclusion that merely because the assessee had purchased 15 per cent of undivided share in a residential house, the assessee cannot be disentitled from making a claim for exemption under the provisions of section 54.- CIT vs. Tikyomal Jasanmal (1971) 82 ITR 95 (Guj.): TC 22R.261 applied.
Simply because the assessee was residing in a residential house which was purchased by the assessee, the Revenue cannot be permitted to say that the assessee cannot claim exemption under the provisions of s. 54. Sec.54 nowhere states that a residential house which is purchased by the assessee so as to enable the assessee to get exemption under the provision of s. 54 should not be the one in which the assessee was residing. It would be absurd to give such an interpretation so as to disentitle an assessee from getting an exemption if the assessee purchases the house property wherein he was residing prior to the purchase. When the section does not put any such embargo, it would be absolutely against the settled principles of interpretation of statute to read such an intention of the legislature so as to deprive an assessee from getting an exemption under the provisions of s. 54. In such a case, if there is a bona fide purchase, the Revenue cannot be permitted to say that the assessee is not entitled to exemption under the provisions of s. 54 merely because the assessee was residing in the house which was purchased by the assessee. In the instant case, it is an admitted fact that the assessee had purchased interest in the house property which was also used by her for residence. What one has to see is whether a residential house has been purchased. It is immaterial whether the assessee was using the said house before it was purchased by the assessee. As the section is so clear and as the section does not put any embargo, the view expressed by the ITO that the assessee was not entitled to exemption because she purchased interest in the property which was being used 18 ITA No.315(Asr)/2013 by her as her residence prior to the purchase cannot be accepted. The Tribunal has rightly set aside the said finding by coming to the conclusion that the assessee was entitled to exemption though the said residential house was used by her as her residence along with her family members before interest in the said property was purchased by her so as to avail exemption under the provisions of s. 54. Conclusion:
Purchase of a portion of the house property or some interest in the house property is sufficient for claiming exemption u/s 54; simply because assessee was residing in the residential house which was purchased by her even before the purchase claim for exemption cannot be denied."
8.9. The said decision of the Hon'ble Gujrat High Court, in the case of CIT vs. Chandanben Magan Lal, is applicable in the present facts and circumstances of the case since in the present case, the assessee had purchased the house from his brother the co-owner of the house and therefore, is entitled to exemption u/s 54F of the Act. The argument of the Ld. DR that Hon'ble Gujrat High Court (supra) has not considered the decision of the Hon'ble Supreme Court in the case of Seth Banarsi Dass Gupta (supra) has no relevance and cannot help the revenue in view of our findings hereinabove. In the facts and circumstances of the case, we do not find any infirmity in the order of the Ld. CIT(A) who has rightly deleted the disallowance/deduction made u/s 54F of the Act by the AO. Thus, all the grounds of the Revenue are dismissed.
10. In the result, the appeal of the Revenue in ITA No.314(Asr)/2013 is dismissed.
19 ITA No.315(Asr)/2013
Order pronounced in the open court on 19th February, 2015.
Sd/- Sd/-
(A.D.JAIN) (B.P. JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 19th February, 2015
/SKR/
Copy of the order forwarded to:
1. The Assessee:Sh.Jeewam Parkash, Bathinda.
2. The ITO Ward 1(1), Bathinda.
3. The CIT(A), Bathinda.
4. The CIT, Bathinda.
5. The SR DR, ITAT, Amritsar.
True copy
By order
(Assistant Registrar)
Income Tax Appellate Tribunal,
Amritsar Bench: Amritsar.