TMI Blog2012 (7) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee, thereby allowing the appeal - in favour of assessee. - Tax Case (Appeal) No.1435 of 2005 - - - Dated:- 6-7-2012 - MRS.JUSTICE CHITRA VENKATARAMAN, MR.JUSTICE K.RAVICHANDRABAABU, JJ. For appellant : Mrs.Nalini Chidambaram Senior Advocate for Mr.C.V.Rajan For respondent : Mr.T.Ravikumar Standing Counsel for Income Tax JUDGMENT CHITRA VENKATARAMAN, J. The assessee is on appeal as against the order of the Income Tax Appellate Tribunal, raising the following substantial questions of law, relating to the assessment year 2000-2001: (i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that handing over of possession of the property under consideration by the appellant to the developer in September 1999 for development of the property under the development agreement would fall within the purview of Section 2(47)(v) of the Income Tax Act, 1961 and therefore transfer for the purpose of assessment of capital gains took place in the previous year relevant to the assessment year 2000-01? (ii) Whether on the facts and in the circumstances of the case the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale deed dated 10.2.2000, registered on 17.2.2000 in favour of M.Lakshmipathi, sale deed dated 27.3.2000 registered in 6.4.2000 in favour of Ananthanarayanan and Ruchira Narayanan and sale deed dated 5.7.2000 registered on 12.7.2000 in favour of Kalaiarasi Udayashankar. 4. In the returns filed for the assessment year 2001-02, the assessee claimed the benefit of exemption as provided for under Section 54F of the Income Tax Act. The said claim was sought to be rejected by the Assessing Authority on the ground that persons who own a residential house as on the date of transfer, would not be entitled to the exemption under Section 54F. The assessee being the owner of the residential house already, the proviso to Section 54F, as it then stood, would disentitle the assessee from claiming the benefit for investing the capital gains in yet another house property. Apart from the denial of exemption in the assessment for the assessment year 2001-02, in the assessment for the assessment year 2000-01, the Assessing Officer viewed that as the assessee/appellant had parted with the possession of the property to the developer on 26.5.1999, the capital gains arising out of the transfer should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 45(1) for the assessment year 2000-01 and the substantial performance of the contract by the handing over of the completed flats was relevant to decide the issue. Aggrieved by this, the present appeal has been preferred by the assessee. 6. Learned senior counsel appearing for the assessee, even though raised a ground with reference to Clause (v) of Section 2(47) of the Income Tax Act and Section 53A of the Transfer of Property Act as regards the part-performance of the agreement and the assessment of capital gains in the assessment year 2000-2001, however, she confined her arguments to the applicability of Section 54F only. Similarly, even though a question was raised that it was only a case of exchange; hence, Clause (v) of Section 2(47) would have no relevance herein, yet, in the course of arguments, she submitted that the case be considered as regards the grounds raised as to the compliance of the conditions under Section 54F alone and that the other grounds, particularly with reference to the transaction being an exchange and hence Section 2(47)(v) is not relevant, is not pressed. Recording the said statement, the present case is considered from the angle of applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with somebody else under a joint ownership or as a co-owner therein, the ownership in a status other than that of individual/HUF would not result in the denial of exemption. In this connection, she placed reliance on the decisions reported in [2011] 330 ITR 309 (Vipin Malik (HUF) v. Commissioner of Income-tax) and [2009] 312 ITR 40 (Prakash Vs. Commissioner of Income-tax), wherein, the Delhi High Court and Bombay High Court have taken the view that so long as the assessee individual does not own a residential house in his name as on the date of transfer, the benefit of Section 54F could not be denied to the said individual assessee and the nature of holding of the property are important factors to be considered in the case. 8. As far as the findings of the Assessing Authority that investing in four flats would disentitle the claim of exemption, learned senior counsel placed reliance on the unreported decision of this Court in T.C.No.656 of 2005 dated 4.1.2012, which, in turn, followed the decision of the Karnataka High Court reported in [2011] 331 ITR 211 (Commissioner of Income-tax Vs. Smt.K.G.Rukminiamma) and [2009] 309 ITR 329 (Commissioner of Income-tax Vs. D. Ananda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where the assessee owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within a period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset." 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the residential property, the harshness of the proviso cannot be applied to the facts herein. Apart 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. 14. In the decision reported in [2011] 330 ITR 309 (Vipin Malik (HUF) v. Commissioner of Income-tax), the Delhi High Court considered a case of a claim for exemption under Section 54F. The facts are that the assessee, a Hindu Undivided Family, sold agricultural lands in September, 1995, giving rise to long-term capital gains. Vipin Malik, a member of the HUF, is stated to have purchased a flat in the joint names along with his mother and thus the assessee HUF claimed exemption under Section 54F. The Delhi High Court pointed out that the assessee had already invested in the flat much prior to the sale of the agricultural land; hence, the assessee could not be granted the benefit of exemption. Further, the assessee could not be said to have constructed a re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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