TMI Blog2020 (5) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions can be charged to income-tax. Therefore, to find out whether there is any profit or gain chargeable to tax u/s 45(1), the provisions of both the sections are to be read together. Section 54F cannot be read in isolation. Tribunal the AO / CIT(A) was not justified in denying the exemption of capital gain to the minors, which was invested in capital gain accounts scheme (CGAS). We direct the AO to allow exemption with regard to the capital gain earned and invested on behalf of both the minors in CGAS. Denial of exemption u/s 54F - AO denied the exemption u/s 54 to the assessee by taking view that the assessee is owner of more than one residential house on the date of transfer of shares from which the assessee earned LTCG - HELD THAT:- The entire benefit/gain earned by assessee was invested in CGAS. The assessee further claimed that neither the possession of the asset was given nor conveyance deed was executed. Thus, interest in the asset was transferred. We have noted that there is no clarity about the facts whether the assessee owned any other residential house or not, in the order of AO as well as CIT(A). Therefore, we deem it appropriate to restore this issue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of income the assessee computed long term capital gain on sale of shares of ₹ 3,17,86,086/- and a residential house for ₹ 60,40,636/- and claimed exemption u/s 54 54F of ₹ 3,27,96,082/- and exemption of ₹ 50,00,000/- u/s 54EC. The case was selected for scrutiny. During the assessment the assessee was asked as to why exemption u/s 54F be not denied to the assessee as the assessee owned more than two residential houses on the date of sales of shares. The assessee filed its reply dated 09-10-2015. In the reply the assessee stated that he has purchased two flats in the year 2015 when living with his father at Sion and wanted to shift to a new premise. However, he could not shift to new premises as his father s health deteriorated and he could not leave him alone at Sion. The two flats purchased in 2015 were in the same compound which can be considered as one property. Both the flats were never occupied that intended to be occupied single unit and should be considered as a single unit for allowability of deduction u/s 54F. The assessee submissions of assessee was not accepted by AO and rejected claim of assessee u/s 54F of ₹ 2,66,82,526 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,27,60,000/- STCL -1,03,510/- LTCG net STCL 3,16,82,572/- Benefit u/s 54 EC claimed : allowed 50,00,000/- Benefit u/s 54F(investment in CGAS) 2,62,82,572/- Income chargeable under the head capital gain Nill Benefit u/s 54F denied 2,66,82572/- Assessee s LTCG 2,66,82572/- In case of Aditya Shah (Minor Child) Particulars Aditya Shah (Minor Child) AY No. of shares Amounts Rs. Date of acquisition From AY 1987-88 to 1995-96 60,000 3,24,642/- (indexed cost) Details of sales AY 2013-14 42,000 1,09,20,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 478,73,288/- Income chargeable under the head capital gain Nil Benefit u/s 54F denied 478,73,288/- Assessee s LTCG 478,73,288/- B- Details of long term capital gain on sales of Mutual Funds of minors Particulars Aditya Natisha Total Sales value - ₹ 20,77,464/- 24,28,578/- 45,06,042/- Indexed cost ₹ 20,36,498/- 23,96,624/- 44,33,123/- LTCG ₹ 40,966/- 31,954/- 72,920/- Date of purchase 12.04.2010. 23.04.2010 Date of sale 05.12.2012 05.12.2012 Period of holding 2 years 2 years Benefits claimed u/s 54F (investment in CGAS) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in Govind Rohira 95 ITD 77 and Madanlal Bassi 88 ITD 557 and Rajiv Goyal 81 ITD 379. The ld. AR for the assessee submits that in view of the facts explained and the case law relied by him; the ground No. 1.1 1.2 are liable to be allowed. 7. On the other hand the ld. DR for the revenue supported the order of the lower authorities. The Ld. DR further submits that when the assessee himself is not eligible for exemption u/s 54, how the same could be given to the minor children, whose income is required to be clubbed with his income. The lower authorities have rightly disallowed the claim of exemption. In support of his submissions the ld. DR for the revenue relied on the decision of Delhi Tribunal in ITO Vs Subash Chandra Wadhwa 366 TTJ 075/ 2001(6) TMI-ITAT Delhi. 8. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. During the assessment the AO clubbed the income / capital gain of both the minors with the assessee without considering the facts that the minors income was invested in capital gain accounts scheme (CGAS). The ld CIT(A) affirmed the action of the AO by taking view that section 64(1A) of the Act st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GAS. In the result the ground No. 1.1 1.2 are allowed. 11. Ground No. 2 relates to denial of exemption u/s 54F of the Act to the assessee. The ld. AR for the assessee submits that the AO denied exemption u/s 54 on the ground that the assessee is the owner of more than one residential house on the date of transfer of shares from long term capital gain arose. However, the fact is that the builder has not made conveyance of the property to the assessee or to the society (not form at that point of time). The Ld.AR of the assessee submits that he has filed copy of the agreement between assessee and builder. Thus, the assessee has not acquired title to the property which can be considered as ownership. Besides that the properties are jointly held which is evident from the copy of agreement which is placed on record. Such general holding is not exclusively ownership and does not breach the claim of exemption u/s 54F. In support of his submission, the Ld.AR of the assessee relied upon the decision of Hon ble Supreme Court in Alipati Ventaramaih 57 ITR 185 (SC); Gujarat High Court in Ushaben Jayantilal Sodhan 93 taxmann.com 453 (Guj (HC), decision of Tribunal in Rasiklal Satra (98 ITD 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d flat no. 1601/1602 in Mayflower on 16.12.2007. The dates of occupation of certificate of all the flats are 22.07.2009. The flat no. 1601 was sold on 06.12.2012 and Mayflower flats were sold on 01.12.2012. The period of holding for all the flats were claimed for five years and the assessee claimed LTCG of ₹ 25,41,264/- and 34,99,372/- respectively. The entire benefit/gain earned by assessee was invested in CGAS. The assessee further claimed that neither the possession of the asset was given nor conveyance deed was executed. Thus, interest in the asset was transferred. We have noted that there is no clarity about the facts whether the assessee owned any other residential house or not, in the order of Assessing Officer as well as ld. CIT(A). Therefore, we deem it appropriate to restore this issue to the file of Assessing Officer to decide the issue afresh. The assessee is also directed to bring all the facts with clarity before Assessing Officer. Needless to order that before passing the order, the Assessing Officer shall grant opportunity of hearing to the assessee and pass order in accordance with law. Hence, this ground of appeal is allowed for statistical purpose. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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