TMI Blog2004 (6) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... has been benefited by the eviction of the tenant." 2. During the year under consideration, the assessee earned long term capital gain of Rs. 5,87,48,102 on sale of shares. The assessee claimed exemption under section 54F for an amount of Rs. 3,54,86,459 against the said long term capital gain. The benefit under section 54F is claimed in lieu of having invested the sale consideration of shares for acquisition of a residential house known as "Shaktivilla", 14 Laburnum Road, Gamdevi, Mumbai. The said residential house was previously owned by the brother of assessee, Shri Suresh A. Kotak. The residential house comprised of ground floor plus two floors. The second floor was occupied by the brother of assessee, Shri Suresh A. Kotak. The ground and first floor were occupied by the tenants namely Shri Atul Chandrasing Seth and Smt. Nirmala Merchant respectively. The assessee vide purchase deed dated 30th March 1994 purchased 1/2 undivided share of the above-mentioned residential house from his brother for a consideration of Rs. 6,00,000. After purchasing undivided 1/2 share, the assessee paid Rs. 1.60 crore to Smt. Nirmala Merchant and Rs. 2.85 crores to Shri Atul Chandrasing Seth vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Venkataraman [1982] 137 ITR 846 and RM Arunachalam v. CIT [1997] 227 ITR 222(SC). In the decision of Apex Court, the decision of Gujarat High Court in the case of CIT v. Daksha Ramanlal [1992] 197 ITR 123 has been affirmed. The Assessing Officer who was party before CIT(A) also took the alternative plea that in case the payment made to tenant is treated as cost of acquisition or improvement cost, the entire payment aggregating to Rs. 4.45 crores made by the assessee should not be fully allowed as cost of asset as the assessee is owner of Vi share and thus it was pleaded that proportionate payment to the extent of share of assessee should be considered. The CIT(A) did not accept such plea on the ground that share in the property purchased by the assessee was not restricted to 1/2 share of built up area. The property encompasses within itself even the area on which there was no construction and there was some open area, where there could be construction at a future date. The assessee by virtue of 1/2 share in the property was entitled to such benefits attached to the said property. Therefore, the CIT(A) allowed the claim of assessee in full. The revenue is aggrieved, hence in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, as per purchase Deed, was the owner of 1/2 share of the residential house. The payment made by assessee was for the purpose of vacating ground floor + 1st floor, therefore, he pleaded that if the payments made by assessee to tenants are considered eligible for exemption under section 54F, the same should be restricted proportionately to 1/2 share pertaining to the assessee. 5. On the other hand, Shri F.V. Irani, Learned Counsel appearing on behalf of the assessee contended that according to the decisions in the case of Daksha Ramanlal and RM Arunachalam, the amounts paid by assessee to tenants are cost of acquisition. He contended that by purchasing 1/2 share from his brother, the assessee had acquired the right of Landlord. Section 54F is a beneficial section, unless assessee got actual right of enjoyment of the property purchased, the purchase cannot be said to be completed. It was only after getting the property vacated from tenants, the assessee could enjoy the ownership of the house. Therefore, he contended that the payment made by assessee to tenants should be treated to be cost of acquisition or cost of improvement to the title of asset according to the above-menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f residential house. 10. In our opinion, the question that whether or not the payments made to tenants is "cost of acquisition" of residential house is irrelevant for deciding the controversy in the present appeal. The term "the cost of acquisition of asset and cost of any improvement" thereto finds place in section 48(ii) which is reproduced below: "48(iii) the cost of acquisition of the asset and the cost of any improvement thereto." Section 48 describes the mode of computation of income chargeable under the head "capital gain". Thus this term is relevant only for computation of income arising out of capital gain relating to any asset. In the present case, it is not the question that how to compute capital gain but the question is limited to the extent that whether payments made to tenants come within the ambit of the word "purchased" as it finds place in section 54F. Section 54F(1) is reproduced below: "54F(1)[Subject to the provisions of sub-section (4) where, in the case of an assessee being an individual or a Hindu undivided family]. The capital gain arises from the transfer of any long-term capital asset, not being a residential house, and the assessee has, within a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts interpretation should be as per wordings of the section. In the case of IPCA Laboratory v. Dy. CIT [2004] 266 ITR 521, the Hon'ble Supreme Court while interpreting incentive provision observed as under at page 522 of the report:- "11. We are unable to accept the submission of Mr. Dastur. Undoubtedly section 80HHC has been incorporated with a view to providing incentive to export houses. Even though a liberal interpretation has to be given to such a provision the interpretation has to be as per the wordings of this section. If the wordings of the section are clear then benefits, which are not available under the section, cannot be conferred by ignoring or misinterpreting words in the section." Thus, if the wordings of section are clear, then benefits which are not available under the section cannot be conferred by ignoring or misinterpreting words in the section. The term "cost of acquisition and cost of improvement" are not mentioned in section 54F, therefore, section 54F cannot confer the benefit sought for by the assessee. Thus even by liberal interpretation, the benefit sought for by the assessee cannot be conferred upon. 11. An asset (particularly immovable asset) can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case as the same relates to computation of capital gain for the purpose of levy of income tax. In the present case, there is no dispute regarding computation of capital gain income. 15. The decisions of Tribunal relied upon by the Learned Counsel of assessee also do not have any relevance to the facts of present case for the reason that the amount claimed by assessee in the said cases under section 54F were the amounts given to the co-owners of the residential houses, who had legal title over the property. In the present case, payments are not made to the owners of the residential house but to the tenants of residential house. 16. In view of the above factual and legal position, we find that the Assessing Officer had rightly allowed exemption under section 54F for a sum of Rs. 6,00,000. The learned CIT(A) is wrong in holding that payments made to tenants are also eligible for exemption under section 54F. We have decided the main ground in favour of revenue, therefore, though it is not necessary for us to adjudicate alternative plea as the same will be academic but yet on this also we do not see any sound reasoning in the order of CIT(A), whereby the alternate plea of A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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