TMI Blog2020 (8) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... property is paid by her out of the joint/her individual bank account and we have seen that she was having sufficient own funds in that joint bank account received as her share in sale proceeds of the shares and this claim is accepted by CIT (A) also in her case and that order of CIT (A) has attained finality because the appeal of revenue against this order of CIT (A) got dismissed by the tribunal because of low tax effect. We delete the disallowance of the assessee s claim for deduction u/s 54F made by the AO and confirmed by CIT (A). - Decided in favour of assessee. - ITA No. 1040/Bang/2018 - - - Dated:- 25-8-2020 - Shri A. K. Garodia, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shree Nitish Ranjan, C. A. For the Revenue : Smt. R. Premi, Addl. CIT DR ORDER PER ARUN KUMAR GARODIA, A. M.: This appeal is filed by the assessee and the same is directed against the order of learned CIT(A) 10 Bengaluru dated 10.01.2018. 2. The assessee has raised several grounds but Learned AR of the assessee submitted that as per these grounds, this is the only effective grievance of the assessee that the AO and CIT (A) were not just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging to his wife. He pointed out that although the purchase of new residential was before the sale of house and this is not the case of the revenue that this property is not eligible for deduction u/s 54F and the only objection of the revenue as per Para 5.2 of the order of CIT (A) is this that the assessee has also purchased another residential property at 180, NGEF Quarters, Binnamangala I Stage, Bangalore on 11.06.2012 in joint name with his wife Smt. Alka Dev and therefore, the proviso (ii) to section 54F becomes applicable and no deduction u/s 54F is allowable. He pointed out that payment for this second residential property is made from this joint account only in which the wife of the assessee also deposited 50% of sale proceeds of shares ₹ 480,84,057/- and she has claimed deduction u/s 54F for purchase of the second property at the cost of ₹ 299,47,500/- paid from this joint account No. 1604 and her individual bank account No. 2724 as per the details available on page 143 of the paper book and for deposit of ₹ 20 lacs in Capital Gain Account Scheme made from the same joint Account No. 1604. He pointed out that copy of scrutiny assessment order in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al property at 183, Binanmangala, 2nd Stage, Bangalore in joint name of Smt. Alka Dev and her husband Shree Anil Dev is fully owned by her husband Shree Anil Dev. He submitted that therefore, deduction u/s 54F should be allowed to the present assessee Shree Anil Dev also in respect of residential property at 183, Binanmangala, 2nd Stage, Bangalore in joint name of Smt. Alka Dev and her husband Shree Anil Dev and admitted to be fully owned by Shree Anil Dev. As against this, learned DR of the revenue supported the orders of the lower authorities. 4. We have considered the rival submissions. We find that para 5.2 of the impugned order of CIT (A) is very much relevant because as per this para only, he has discussed and decided this issue about allowability of deduction u/s 54F. Hence, we reproduce this para for ready reference. This reads as under:- 5.2 Deduction u/s 54F The appellant has claimed Investment from capital gains to the residential property at 183, Binnamangala, rd Stage, Bangalore and has claimed deduction u/s 54F. However, within one year the appellant has purchased another residential property at 180, NGEF Qtrs. Binnamangala. The claim of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery clear that the appellant cannot buy another house within one year if he wants to avail deduction u/s 54F of the Act. But he has violated the provision by purchasing another house. In this regard, the observation of the AO is as under: The assessee has taken an alternative claim that his name is added as a joint purchaser in the sale deed of purchase of property made by his wife dated 11/6/2012, only for the purpose of safety and family security. This submission is not acceptable. The assessee is one of the directors in the company and has individual sources of income in the form of salary, rental income and as On date is the owner of 3 residential properties. The assessee's submission regarding safety and family security in such a situation is totally not acceptable. The sale deed shows both the names as joint owners. And both the parties will be a part of all/ any legal proceedings on this property and even for sale of this property in future. It cannot be sold only on the whims and fancies of Mrs. Alka Dev, his spouse. The name as coowner on the sale deed specifies that both the persons have an equal share in the property. From the above, it is very clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed has both appellant and her spouse name it is to be noted that as relied upon by the appellant on Karnataka high court decision in 2011(9) TMI 161, Director of Income-tax, International Taxation Bangalore Versus Mrs. Jennifer Bhide case, the property should be considered as belonging only to the appellant. It provides as follows: Exemption u/s 54 or 54EC - whether the husband of the assessee, by inclusion of his name as joint owner in the property, would become 50% owner of the said property and whether the assessee would not be eligible for exemption of the entire investment made by her. - Held that:- The source for acquisition of the property and the bonds is the sale consideration. It is not. in dispute. Once the sale consideration is utilized for the purpose mentioned under sections 54 and 54EC, the assessee is entitled to the benefit of those provision. As the entire consideration has flown from the assessee and no consideration has flown from her husband, merely because either in the sale deed or in the bond her husband's name is also mentioned, in law he would (70t have any right. The assessee cannot be denied the benefit of deduction - Decided in favor of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of purchase, wife was a foreign citizen and could not have purchased any property in India without RBI permission, accordingly holds that entire L TCG has to be assessed in the hands of husband only. The above- mentioned case is not applicable to the appellant case, as in the above cited case the title deed did not contain the spouse name at all. The wife being a foreign citizen could not have owned such a property in her name as per RBI guidelines. Though appellants were informed about the joint contribution but the title deed itself did not have spouse name at all. Therefore, the ITAT has made the judgment against the appellant. Further, As per the explanation provided by the appellant against the decision and explanation relied by the AO, I direct the AO to consider the Chennai property as a Commercial property and not a residential property and also direct the AO to allow the deduction claimed U/s 54F as the condition for claiming exemption under section 54F that the appellant should not own more than one residential house on the date of transfer is very much satisfied and also the investment made by the appellant's husband in property at #183, Binnamangala ii St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) to section 54F, this proviso will get triggered if the assessee purchases any residential house other than the new asset within a period of one year after the date of transfer of the original asset. To say that a property is purchased by a person, mere inclusion of his or her name in the purchase deed is not enough because this may happen for various reasons including this reason also that the other person who is really purchasing the property wanted to include the name of his relative in the purchase deed for some emotional issues. This action will no doubt give rise to some ownership rights on the property in question to that second person but such rights may not be on this account that the second person has purchased the property. For purchasing the property, a person has to pay consideration and if both persons named in the purchase deed says that such consideration is paid in its entirety by any one of them only, then the purchase of property is by that person who paid the consideration in spite of this fact that some ownership rights are created in favour of the other person also, who did not pay the consideration because his name is also included in the purchase deed. 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