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2016 (9) TMI 68 - ITAT DELHI

2016 (9) TMI 68 - ITAT DELHI - [2016] 51 ITR (Trib) 305 - Disallowance on account of loss from house property - joint ownership with the wife - assessee claimed that the installments towards the repayment of the loan taken from bank for purchase of the property were paid by him only not by his wife - Held that:- Nothing is brought on record to substantiate that the wife of the assessee made any contribution towards purchase of the house under consideration or the income from that house was asses .....

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w of the matter the impugned order is set aside on this issue and the AO is directed to allow the claim of the assessee. - Disallowance of the short term capital loss - Held that:- In the former part of this order it has already been observed that the assessee made the entire payments for purchasing the house property and the name of his wife was entered only for the security purposes. Therefore, the ld. CIT(A) was not justified in restricting the short term capital loss claimed by the asses .....

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ed in this appeal: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of ₹ 1,57,839/- made by A.O. being 50% loss from house property. (ii) That the disallowance has been confirmed without properly appreciating the facts of the case and ignor .....

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n facts and in law in disallowing the whole of short term capital loss amounting to ₹ 1,25,550/- despite giving a finding that assessee is only a 50% owner of the said property. 5. The appellant craves leave to add, amend or alter any of the grounds of appeal. 3. Ground Nos. 1 & 5 are general in nature so do not require any comment on our part. 4. Vide Ground Nos. 2(i) & (ii), the grievance of the assessee relates to the confirmation of disallowance of ₹ 1,57,839/- made by th .....

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e the AO was that all the installments of housing loan were paid by the assessee out of his taxable income and that the said property was purchased in joint name with his wife for family safety purposes but the whole investment was made by the assessee himself, therefore, he had claimed the income from house property in his hands and claimed deduction u/s 24(1)(vi) of the Income Tax Act, 1961 (hereinafter referred to as the Act). However, the AO restricted the loss from the house property to 50% .....

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ntal income from the House 1-401, SPS Residency, Vaibhav Khand Indrapuram, Ghaziabad. Purchase of flat was funded by the appellant. However, the house was registered in jointly with his spouse. The wife's name was added as a precautionary or safety measure, that is, in order to retain to ownership or smooth transfer of ownership in the case of any mishappening with appellant. The appellant has funded the property purchase as is evident from his bank statement while wife is just a co-owner. N .....

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s wife Ritu Mittal, but that was only for increasing the loan amount. By making the wife coapplicant in loan, income of all applicants was considered by the bank and assessee could get the higher loan than the eligibility in his individual name. It is clearly evident from the bank statement that the EMI of loan repayment has been made by assessee from his income chargeable to tax. Wife of assessee Smt. Ritu Mittal has not contributed even a single penny towards repayment of loan. Since the loan .....

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dingly, vide this office notice dated 09.09.2014 the assessee was required to give reasons as to why the rental income as well as deduction be not restricted to 50% being one half percent of owner of the property. In response to this, the assessee vide written submission filed on 31.10.2014 stated that all the installment of housing loan are paid by the assessee, 100% from his taxable income during the year and also he has purchased the said property in joint name with his wife only for family s .....

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gal owner of the property. It is further pertinent to mention here that Smt. Ritu Mittal is also earning income in his individual capacity and also filing her returns of income ". The above said disallowance has been made by the ld. A.O. only on the ground that the wife of assessee is also co-owner in the property and assessee is only 50% legal owner of the property. 25. The action of the Id. A.O. is against the facts on record as well as the position of taw. The Ld. A.O. has erred in appre .....

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as not examined whether the wife has contributed any amount toward the purchase of house from the details submitted to her. She has simply slated that the assessee should be owner of the property and Smt. Ritu Mittal, wife, is also earning the Income. The Ld. AO has erred to consider the appellant as 50% owner in total disregard to the provisions of Income from house property u/s 22 to 27 of the Income Tax Act, 1961. The Ld. AO has erred not to consider provisions of section 27(1) that in absenc .....

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e apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred; Your honour, the Ld. AO, based on the details furnished during the assessment proceedings has not come out in the assessment order that any consideration was paid by the spouse for purchase of house. On this count as well, the assumption of 50% ownership of spouse is against the statutory provisions. 7. The reliance was placed on the following case laws: CIT Vs Podar C .....

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o Industrial Corporation Ltd. (1981) 127 ITR 97 (All.) 8. The ld. CIT(A) after considering the submissions of the assessee observed that as per the provisions of Section 22 of the Act, the ownership of a property is a condition precedent for levy of tax and the word owner in Section 22 of the Act is related with the taxability of the income from house property and not with the interest of a person in the property. He further observed that in the present case, the loan had been taken by the asses .....

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could not have been denied because she was co-borrower of the amount on the bank and her ownership over the property was by virtue of loan and her registration and that the mere fact of EMI were paid by the husband would not disentitle her domineer over the property. He, therefore, sustained the disallowance made by the AO. The reliance was placed on the following case laws: R.B. Jodha Mal Kuthiala Vs CIT (1971) 82 ITR 520 (SC) Kaur Singh Vs CIT (1983) 144 ITR 756 (P&H) Biraj Mohan Biswal Vs .....

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ee and his wife Smt. Ritu Mittal. It was further submitted that the ld. CIT(A) ignored all the submissions made by the assessee who categorically stated that the property was registered jointly as a precaution/safety measures. However, the purchase had been funded entirely by the assessee, which was evident from the bank statement and the wife of the assessee was just a co-owner who did not contribute even a single penny for the purchase of the property. It was stated that as per the provisions .....

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IT was not a case of joint ownership and as the property having vested in the custodian in Pakistan, the assessee was not owner of the property, and hence was not entitled to the loss. On the contrary, the said case supports the assessee s case because in that case, it has been held that the property vested in the person who is the owner in its own right and does not go with the title of the property and in the case of Kaur Singh Vs CIT (supra), the facts were that the brothers purchased the pro .....

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e made by the AO. The reliance was placed on the following case laws: CIT Vs Podar Cements Pvt. Ltd. (1997) 226 ITR 625 (SC) ACIT Vs C.K. Malik (2004) 89 ITD 245 (Ald. Trib) CIT Vs Ajit Kumar Roy (2002) 252 ITR 468 (Cal.) 10. In his rival submissions the ld. DR strongly supported the orders of the authorities below and reiterated the observations made therein. 11. I have considered the submission of both the parties and carefully gone through the material available on the record. In the present .....

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ad made the payment of ₹ 2,62,200/- on 15.12.2009, ₹ 3,50,000/- on 31.12.2009 and ₹ 3,00,000/- on 31.01.2010 for the house at Indrapuram. The assessee also claimed that the installments towards the repayment of the loan taken from bank for purchase of the property were paid by him only not by his wife. 12. On a similar issue the Hon ble Supreme Court in the case of CIT Vs Podar Cements Pvt. Ltd. (supra) held as under: Though under the common law 'owner' means a person w .....

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(supra) held in paras 6 & 7 as under: 6. In CIT v. Podar Cement (P.) Ltd. (1997) 141 CTR (SC) 67 : (1997) 226 ITR 625 (SC), their Lordships have considered the question as to whether for the purpose of ownership, the registration is necessary to consider the income in the hands of the purchaser or the seller, their Lordships observed as under : "We are conscious of the settled position that under the common law, 'owner' means a person who has got valid title legally conveyed to .....

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nd realities and further having regard to the object of the Act, namely, to tax the income in the hands of real owner, their Lordships have taken the view that the owner is the person who is entitled to receive income from the property in his own right. 7. On the same analogy when the entire investment was made by the assessee and simply the flat is in the name of wife of the assessee. In such case, the income from that property should be taxed in the hands of the assessee and not in the hands o .....

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e fund. If such consideration is paid out of separate funds belonging to them respectively then such persons will be entitled to interest in such property in proportion to the shares of the consideration which they respectively advanced. The last requirement of section is that in the absence of evidence as to the interest in the funds to which they were respectively entitled or as to the shares which they respectively advanced such persons shall be presumed to be equally interested in the proper .....

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e the AO has clearly spelt out the shares of the investment made by the assessee and his family members. 15. In the present case also nothing is brought on record to substantiate that the wife of the assessee made any contribution towards purchase of the house under consideration or the income from that house was assessable in her hands also. Furthermore, this claim of the assessee that the entire investment was made by him and installments towards term loan were paid has not been rebutted. Ther .....

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tes to the disallowance of the short term capital loss amounting to ₹ 1,25,550/-. 17. The facts related to this issue in brief are that the AO during the course of assessment proceeding noticed that the assessee during the year under consideration had sold his house property but in the return of income filed on 09.12.2012, no capital gain had been shown but in the revised return, the assessee had claimed short term capital loss from the property and also filed copies of the purchase & .....

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aim with documentary evidence. 18. In response, the assessee submitted that no income from capital gain was earned, he, therefore, forgot to show in the original return. It was further stated that the renovation of the said flat was made by raising loan from the bank, in support of the said claim, the assessee filed copies of bills for renovation as well as the brokerage paid. The AO observed that all the payments for renovation were made in cash during the period of December 2009 and January 20 .....

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same flat from which he was earning rental income for total sales consideration of ₹ 43,75,000/-. Apart from the cost of acquisition of ₹ 38,06,550/-, assesses also incurred renovation expenses on the said flat amounting to ₹ 6,50,000/-. On sale of said flat assesses claimed STCL of ₹ 1,25,550/-, however Ld. A.O. disallowed loss because she didn t find the cash paid verifiable from the withdrawn made from bank. Your Honour, it may kindly be noted that the Ld. A.O. had now .....

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ee with his wife Smt. Ritu Mittal. Intt income from the said FDR was taken by assessee in his ITR and TDS on the intt was also deducted on PAN of assessee as evident from the computation of income and form 26AS. Funds used for investment were solely pertain to the assessee, therefore sale proceeds also pertain to the assessee only. Sale proceed was used to make FDR in the joint name, but since the funds were belong to assessee, therefore he disclosed intt income in his ITR and the same was nowhe .....

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copy of bills of expenses is also placed at page no 55-69 of paper book. Date on the bills of expenses is of the month of Dec 09, Jan & Feb 2010 as it is evident from the copy of bills. Assessee has also withdrawn cash from bank during the period of Dec, 09 and Jan 10. Your Honour, it may be appreciated that the petty contractor as per practice take money in cash. And sometime they have to be paid in advance for getting the work to be done on priority. Contention of Ld. Assessing officer tha .....

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educted while making bill (page no. 68 of paper book). Assesses is a salaried person and working in corporate sector, it is not possible for him to visit the bank frequently for withdrawing cash. Therefore during the course of renovation work he withdraws cash from bank in lump sum on 3-4 dates and paid the contractors accordingly. Further Ld. Assessing officer disallowed STCL of ₹ 1,25,550/- whereas the expenditure on renovation is of ₹ 6,50,000/-. From the disallowance it seems tha .....

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against the provision of law and thus disallowance made is liable to be deleted. 20. The ld. CIT(A) after considering the submissions of the assessee observed that the property was in the joint ownership of the assessee and his wife, therefore, the loss would also be apportioned in equal proportion. He, therefore, reduced the disallowance by 50%. 21. Being aggrieved the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and furth .....

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