ZAINUL ABEDIN GHASWALA,MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the assessee has been preferred against order dated 10.01.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds:

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by Hon'ble CIT (A) not being in accordance with the by Hon'ble CIT (A) not being in accordance with the by Hon'ble CIT (A) not being in accordance with the provisions of law deserves to be & may please be deleted. provisions of law deserves to be & may please be deleted. provisions of law deserves to be & may please be deleted. 2. Briefly stated, facts of the case are that the assessee is an y stated, facts of the case are that the assessee is an y stated, facts of the case are that the assessee is an individual and filed return of income for the year under filed return of income for the year under filed return of income for the year under consideration consideration consideration on on on 23.03.2017 23.03.2017 23.03.2017 declaring declaring declaring total total total income income income of of of Rs.11,84,37,909/-. The return of income filed by the assessee . The return of income filed by the assessee . The return of income filed by the assessee was selected for scrutiny a selected for scrutiny and statutory notices under the Income nd statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the Act, 1961 (in short ‘the Act’) were issued and complied with. In the Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment completed u/s 143(3) of the Act on 31.12.2018, the Ld. assessment completed u/s 143(3) of the Act on 31.12.2018, the Ld. assessment completed u/s 143(3) of the Act on 31.12.2018, the Ld. Assessing Officer disallowed the claim of the assessee for deduction Assessing Officer disallowed the claim of the assessee for deduction Assessing Officer disallowed the claim of the assessee for deduction u/s 54F of the Act against the capital gain on transfer of long term the Act against the capital gain on transfer of long term the Act against the capital gain on transfer of long term capital asset, on the ground that the assessee owned interest in n the ground that the assessee owned interest in n the ground that the assessee owned interest in more than one residential properties and therefore, he was not more than one residential properties and therefore, he more than one residential properties and therefore, he entitled for deduction u/s 54 entitled for deduction u/s 54F of the Act. The Ld. Assessing Officer of the Act. The Ld. Assessing Officer relied on the decision of the relied on the decision of the Hon’ble Karnataka High Court in the Hon’ble Karnataka High Court in the case of M.J. Siwani v. Commissioner of Income-tax [2015] 53 case of M.J. Siwani v. Commissioner of Income case of M.J. Siwani v. Commissioner of Income taxmann.com 318. taxmann.com 318. On further appeal, the Ld. CIT(A) uph On further appeal, the Ld. CIT(A) upheld the finding of the Assessing Officer. finding of the Assessing Officer.

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non-eligibility of deduction u/s 54F of the Act. The fact of the case eligibility of deduction u/s 54F of the Act. The fact of the case eligibility of deduction u/s 54F of the Act. The fact of the case as culled out from orders of lower authorities and submissions of as culled out from orders of lower authorities and submissions of as culled out from orders of lower authorities and submissions of the assessee are that the assessee that the assessee’s father late Shri Iqbal Ghaswala father late Shri Iqbal Ghaswala along with other five family members had inherited land being along with other five family members had inherited land being along with other five family members had inherited land being 142/148, Ghaswala Estate Jogeshwari (west) 142/148, Ghaswala Estate Jogeshwari (west), on which land on which land, all the six members constructed 6 flats (i.e. one flat each on their own as six members constructed 6 flats (i.e. one flat each on their own as six members constructed 6 flats (i.e. one flat each on their own as per their requirements whi per their requirements which were occupied by each owner namely ch were occupied by each owner namely Shri Mohd. Ali Suleman Ghaswalla (flat no. 201), Shri Sikander Shri Mohd. Ali Suleman Ghaswalla (flat no. 201), Shri Sikander Shri Mohd. Ali Suleman Ghaswalla (flat no. 201), Shri Sikander Suleman Ghaswalla (flat no. 202), Shri Abdul Rahim Ghaswalla (flat Suleman Ghaswalla (flat no. 202), Shri Abdul Rahim Ghaswalla (flat Suleman Ghaswalla (flat no. 202), Shri Abdul Rahim Ghaswalla (flat no. 301), Shri Munaf& Moinuddin Anwar Ghaswalla (legal heirs of no. 301), Shri Munaf& Moinuddin Anwar Ghaswalla (legal heirs of no. 301), Shri Munaf& Moinuddin Anwar Ghaswalla (legal heirs of late late shri shri Anwar Anwar Ghaswalla) Ghaswall a) (flat (flat no. no. 302), 302), Shri Shri Ilyas Ilyas &ZainulGhaswalla (legal heirs of late Shri Iqbal Ghaswalla) (flat no. &ZainulGhaswalla (legal heirs of late Shri Iqbal Ghaswalla) (flat no. &ZainulGhaswalla (legal heirs of late Shri Iqbal Ghaswalla) (flat no. 401) and Shri Abdul Suttar Suleman Ghaswala (flat no. 402). 401) and Shri Abdul Suttar Suleman Ghaswala (flat no. 402). 401) and Shri Abdul Suttar Suleman Ghaswala (flat no. 402). According to assessee, all assessee, all the members are owing/occupying one the members are owing/occupying one flat each for which flat each for which they have been paying electricity bills n paying electricity bills. The assessee claimed to have filed those electricity bills before the assessee claimed to have filed those electricity bills before the assessee claimed to have filed those electricity bills before the Assessing officer coupled with confirmation letter coupled with confirmation letters from the owners from the owners of the other flats to the effect other flats to the effect that none of them had any right/or hat none of them had any right/or interest of whatsoever nature in interest of whatsoever nature in each other’s flats. However, the flats. However, the Assessing Officer disregarded the submission of the assessee and Assessing Officer disregarded the submission of the assessee and Assessing Officer disregarded the submission of the assessee and held that since the assessee own held that since the assessee owned six residential house properties six residential house properties though jointly , theref , therefore the conditions mentioned in section 54F of mentioned in section 54F of the Act are not fulfilled in this case not fulfilled in this case hence, the assessee is not , the assessee is not eligible for exemption for exemption u/s 54F of the Act. The Ld. Assessing Officer . The Ld. Assessing Officer relied on the decision of the Hon’ble Karnataka High Court in the relied on the decision of the Hon’ble Karnataka High Court in the relied on the decision of the Hon’ble Karnataka High Court in the

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case of M.J. Siwani (supra). The relevant facts of the case and the M.J. Siwani (supra). The relevant facts of the case and the M.J. Siwani (supra). The relevant facts of the case and the finding reproduced by the finding reproduced by the Assessing Officer is extracted as under: Officer is extracted as under:

“Further, the above issue is already a settled law in view Further, the above issue is already a settled law in view Further, the above issue is already a settled law in view of decision of Hon'ble Supreme Court of India in the case of decision of Hon'ble Supreme Court of India in the case of decision of Hon'ble Supreme Court of India in the case of M.J. Siwa of M.J. Siwani vs. Commissioner of Income-tax [2015] 53 tax [2015] 53 taxmann.com 318 wherein upholding the order of Hon'ble taxmann.com 318 wherein upholding the order of Hon'ble taxmann.com 318 wherein upholding the order of Hon'ble Karnataka High Court, Hon'ble Supreme Court of India Karnataka High Court, Hon'ble Supreme Court of India Karnataka High Court, Hon'ble Supreme Court of India held that: "Where assessee on date of sale of long "Where assessee on date of sale of long-term capital term capital asset owns more than one residential hou asset owns more than one residential house even jointly se even jointly with another person, benefit under section with another person, benefit under section 54F in respect of capital gain arising from sale of asset was to respect of capital gain arising from sale of asset was to respect of capital gain arising from sale of asset was to be rejected. " be rejected. " Facts of case M.J. Siwani vs. Commissioner of Income Facts of case M.J. Siwani vs. Commissioner of Income Facts of case M.J. Siwani vs. Commissioner of Income-tax (2015) were as under: (2015) were as under: 1. During relevant assessment year, as 1. During relevant assessment year, assessees sold their sessees sold their undivided interest in land. The assessee claimed undivided interest in land. The assessee claimed undivided interest in land. The assessee claimed deduction under sections 54 and 54F in respect of long deduction under sections 54 and 54F in respect of long deduction under sections 54 and 54F in respect of long- term capital gain arising from sale of land. term capital gain arising from sale of land. 2 The revenue authorities finding that assessee had sold 2 The revenue authorities finding that assessee had sold 2 The revenue authorities finding that assessee had sold undivided share in land and not undivided share in land and not land plus residential land plus residential house/apartments house/apartments house/apartments rejected rejected rejected assessee's assessee's assessee's claim claim claim for for for deduction under section 54. deduction under section 54. 3. As regards deduction under section 54F, revenue 3. As regards deduction under section 54F, revenue 3. As regards deduction under section 54F, revenue authorities having found that assessees were having two authorities having found that assessees were having two authorities having found that assessees were having two residential houses having one half share each there residential houses having one half share each there residential houses having one half share each therein on date of sale of land, rejected assessee's claim. date of sale of land, rejected assessee's claim. 4. The Tribunal, however, allowed assessee's claim for 4. The Tribunal, however, allowed assessee's claim for 4. The Tribunal, however, allowed assessee's claim for deduction under section 54F deduction under section 54F holding that 'a residential house, on date of sale of long holding that 'a residential house, on date of sale of long holding that 'a residential house, on date of sale of long term asset as mentioned in said section meant complete term asset as mentioned in said section meant complete term asset as mentioned in said section meant complete

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residential house and would not include shared interest dential house and would not include shared interest dential house and would not include shared interest in residential house. in residential house. On revenue's appeal to Hon'ble Karnataka High Court it On revenue's appeal to Hon'ble Karnataka High Court it On revenue's appeal to Hon'ble Karnataka High Court it was held as under: was held as under: "Section 54F provides that if the assessee has a "Section 54F provides that if the assessee has a "Section 54F provides that if the assessee has a residential house he cannot seek the benefit of long term residential house he cannot seek the benefit of long term residential house he cannot seek the benefit of long term capital gain. Under this provision, merely because, the apital gain. Under this provision, merely because, the apital gain. Under this provision, merely because, the words residential house are preceded by article 'a' would words residential house are preceded by article 'a' would words residential house are preceded by article 'a' would not exclude a house shared with any other person. Even not exclude a house shared with any other person. Even not exclude a house shared with any other person. Even if the residential house is shared by an assessee, his if the residential house is shared by an assessee, his if the residential house is shared by an assessee, his right and ownership in the house, right and ownership in the house, to whatever extent, is to whatever extent, is exclusive and nobody can take away his right in the exclusive and nobody can take away his right in the exclusive and nobody can take away his right in the house without due process of law. In other words, co house without due process of law. In other words, co house without due process of law. In other words, co- owner is the owner of a house in which he has share and owner is the owner of a house in which he has share and owner is the owner of a house in which he has share and that his right, title and interest is exclusive to the extent that his right, title and interest is exclusive to the extent that his right, title and interest is exclusive to the extent of his share and that he is the owner of the entire are and that he is the owner of the entire are and that he is the owner of the entire undivided house till it is partitioned. The andlogy applied undivided house till it is partitioned. The andlogy applied undivided house till it is partitioned. The andlogy applied by the Tribunal based on the judgment of the Supreme by the Tribunal based on the judgment of the Supreme by the Tribunal based on the judgment of the Supreme Court in Banarsi Dass Gupta (supra), wherein, the Court in Banarsi Dass Gupta (supra), wherein, the Court in Banarsi Dass Gupta (supra), wherein, the Supreme Court considered the provisions contained Supreme Court considered the provisions contained Supreme Court considered the provisions contained in section 32 of the Act, would not apply to the faces of the section 32 of the Act, would not apply to the faces of the section 32 of the Act, would not apply to the faces of the present case. The right of a person, may be one half, in present case. The right of a person, may be one half, in present case. The right of a person, may be one half, in theresidential house cannot be taken away without due theresidential house cannot be taken away without due theresidential house cannot be taken away without due process of law or it continues till there is a partition of process of law or it continues till there is a partition of process of law or it continues till there is a partition of such residential house. such residential house. Thus, the view expressed by the Thus, the view expressed by the Tribunal on this issue cannot be accepted. Thus, the Tribunal on this issue cannot be accepted. Thus, the Tribunal on this issue cannot be accepted. Thus, the order passed by revenue authorities rejecting assessee's order passed by revenue authorities rejecting assessee's order passed by revenue authorities rejecting assessee's claim was to be restored. (Para 26]* claim was to be restored. (Para 26]* Thus, High Court held that in terms of provisions of Thus, High Court held that in terms of provisions of Thus, High Court held that in terms of provisions of section 54F, where asse section 54F, where assessee on date of sale of long term ssee on date of sale of long term capital asset owns a residential house even jointly with capital asset owns a residential house even jointly with capital asset owns a residential house even jointly with another person, his claim for deduction of capital gain another person, his claim for deduction of capital gain another person, his claim for deduction of capital gain arising from sale of asset has to be rejected. arising from sale of asset has to be rejected.” 5. Before us, the Ld. Counsel of the assessee has relied on Before us, the Ld. Counsel of the assessee has relied on Before us, the Ld. Counsel of the assessee has relied on the following three decisions of the Tribunal, Mumbai Benchesto following three decisions of the Tribunal, Mumbai Benches following three decisions of the Tribunal, Mumbai Benches support that even if the assessee co support that even if the assessee co-owner is more than one house, owner is more than one house, since the fractional ownership in a property does not amounts to since the fractional ownership in a property does not amounts to since the fractional ownership in a property does not amounts to

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violating the conditions laid down u/s 54 of the Act, the assessee is violating the conditions laid down u/s 54 of the Act, the as violating the conditions laid down u/s 54 of the Act, the as entitled for deduction u/s 54 of the Act. entitled for deduction u/s 54 of the Act. :

5.1 Further, the assessee also relied on the decision of the Hon’ble Further, the assessee also relied on the decision of the Hon’ble Further, the assessee also relied on the decision of the Hon’ble Madras High Court in the case of Dr. P.K. Vasanthi Rangarajan v. Dr. P.K. Vasanthi Rangarajan v. Madras High Court in the case of CIT (2012) 252 CTR 0336. CIT (2012) 252 CTR 0336. The relevant finding of the Hon’ble The relevant finding of the Hon’ble Madras High Court is reproduced as Madras High Court is reproduced as under:

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residential house other than the one owned on the date of residential house other than the one owned on the date of residential house other than the one owned on the date of transfer of the original asset is chargeable under the head transfer of the original asset is chargeable under the head transfer of the original asset is chargeable under the head "income from house property". "income from house property". 13. As far as the present case i 13. As far as the present case is concerned, contrary to the s concerned, contrary to the contention of the assessee, the assessee as well as her contention of the assessee, the assessee as well as her contention of the assessee, the assessee as well as her husband had offered 50% share each in the clinic in the husband had offered 50% share each in the clinic in the husband had offered 50% share each in the clinic in the income tax assessment and had claimed depreciation income tax assessment and had claimed depreciation income tax assessment and had claimed depreciation thereon. So too 50% share in the property in the wealth tax thereon. So too 50% share in the property in the wealth tax thereon. So too 50% share in the property in the wealth tax proceedings is offered by the assessee and her husband. eedings is offered by the assessee and her husband. eedings is offered by the assessee and her husband. The note submitted to the Assistant Commissioner of The note submitted to the Assistant Commissioner of The note submitted to the Assistant Commissioner of Income Tax, City Circle 5(1), Madras, by the assessee Income Tax, City Circle 5(1), Madras, by the assessee Income Tax, City Circle 5(1), Madras, by the assessee discloses that the assessee owned 50% of the property in discloses that the assessee owned 50% of the property in discloses that the assessee owned 50% of the property in 828, Poonamallee High Road, Chennai, for 828, Poonamallee High Road, Chennai, for 828, Poonamallee High Road, Chennai, for use as residential property and 50% as clinic; so too for the residential property and 50% as clinic; so too for the residential property and 50% as clinic; so too for the property at Door No.828A, Poonamallee High Road, property at Door No.828A, Poonamallee High Road, property at Door No.828A, Poonamallee High Road, Chennai. The facts thus reveal that as joint owners of the Chennai. The facts thus reveal that as joint owners of the Chennai. The facts thus reveal that as joint owners of the property, the assessee and her husband had shown 50% property, the assessee and her husband had shown 50% property, the assessee and her husband had shown 50% share with reference to the clini share with reference to the clinic and the residential c and the residential portion in their respective returns. Thus, it is clear that as portion in their respective returns. Thus, it is clear that as portion in their respective returns. Thus, it is clear that as on the date of the transfer, the assessee did not own a on the date of the transfer, the assessee did not own a on the date of the transfer, the assessee did not own a residential house in her name only, the income from which residential house in her name only, the income from which residential house in her name only, the income from which was chargeable under the head "income from house was chargeable under the head "income from house was chargeable under the head "income from house property", to bring into operation, the proviso to ", to bring into operation, the proviso to Section ", to bring into operation, the proviso to 54F. The rejection of the claim for exemption would arise if . The rejection of the claim for exemption would arise if . The rejection of the claim for exemption would arise if only the property stands in the name of the assessee, only the property stands in the name of the assessee, only the property stands in the name of the assessee, namely, individual or HUF. Given the fa namely, individual or HUF. Given the fact that the ct that the assessee had not owned the property in her name only to assessee had not owned the property in her name only to assessee had not owned the property in her name only to the exclusion of anybody else including the husband, but the exclusion of anybody else including the husband, but the exclusion of anybody else including the husband, but in joint name with her husband, we agree with the in joint name with her husband, we agree with the in joint name with her husband, we agree with the submission of the learned senior counsel appearing for the submission of the learned senior counsel appearing for the submission of the learned senior counsel appearing for the assessee herein that u assessee herein that unless and until there are materials nless and until there are materials to show that the assessee is the exclusive owner of the to show that the assessee is the exclusive owner of the to show that the assessee is the exclusive owner of the residential property, the harshness of the proviso cannot residential property, the harshness of the proviso cannot residential property, the harshness of the proviso cannot be applied to the facts herein. Apart from that, 50% be applied to the facts herein. Apart from that, 50% be applied to the facts herein. Apart from that, 50% ownership is with reference to the clinic situated in ownership is with reference to the clinic situated in ownership is with reference to the clinic situated in the ground floor. As such, the entire property is not an ground floor. As such, the entire property is not an ground floor. As such, the entire property is not an exclusive residential property. Hence, we are inclined to exclusive residential property. Hence, we are inclined to exclusive residential property. Hence, we are inclined to agree with the assessee's contention that the joint agree with the assessee's contention that the joint agree with the assessee's contention that the joint ownership of the property would not stand in the way of ownership of the property would not stand in the way of ownership of the property would not stand in the way of claiming exemption under claiming exemption under Section 54F.

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5.2 Before us, the Ld. Counsel of the assessee submitted that Before us, the Ld. Counsel of the assessee submitted that Before us, the Ld. Counsel of the assessee submitted that where there are different views of non where there are different views of non-jurisdictional High Court jurisdictional High Court , then one favourable to the assessee ha one favourable to the assessee has to be followed. The Ld. to be followed. The Ld. Counsel of the assessee relied on the decision of the Hon’ble l of the assessee relied on the decision of the Hon’ble l of the assessee relied on the decision of the Hon’ble Supreme Court in the Supreme Court in the case of CIT v. Vegetable Products Ltd. 88 Vegetable Products Ltd. 88 ITR 0192. Further, the Tribunal in the case of Further, the Tribunal in the case of ITO v. Upkar Retail ITO v. Upkar Retail Pvt. Ltd. ITAT ‘B’ Bench Ahmedabad ITA No. 2237/Ahd/2014 Pvt. Ltd. ITAT ‘B’ Bench Ahmedabad ITA No. 2237/Ahd/2014 Pvt. Ltd. ITAT ‘B’ Bench Ahmedabad ITA No. 2237/Ahd/2014 relying on the decision of the Hon’ble Supreme Court in the case of relying on the decision of the Hon’ble Supreme Court in the case of relying on the decision of the Hon’ble Supreme Court in the case of CIT v. Vegetable Products Ltd. (supra) CIT v. Vegetable Products Ltd. (supra), which was followed by the which was followed by the Tribunal in the case of Tej International Pvt. Ltd. v. DCIT [(2000) 69 Tribunal in the case of Tej International Pvt. Ltd. v. DCIT [(2000) 69 Tribunal in the case of Tej International Pvt. Ltd. v. DCIT [(2000) 69 TTJ 650 (Del)], held that in case of conflict in t held that in case of conflict in the decision of the he decision of the non-jurisdictional High Court jurisdictional High Court, the view which is favourable to the the view which is favourable to the assessee should be followed. The relevant finding of the assessee should be followed. The relevant finding of the assessee should be followed. The relevant finding of the Tribunal(supra) is reproduced as under: is reproduced as under:

“4. As to what should be the view to be taken in these 4. As to what should be the view to be taken in these 4. As to what should be the view to be taken in these circumstances, i. circumstances, i.e. when there are conflicting decisions of e. when there are conflicting decisions of Hon'ble Courts above and when we donot have the benefit of Hon'ble Courts above and when we donot have the benefit of Hon'ble Courts above and when we donot have the benefit of the guidance by Hon'ble jurisdictional High Court, we find the guidance by Hon'ble jurisdictional High Court, we find the guidance by Hon'ble jurisdictional High Court, we find guidance from the decision of a co guidance from the decision of a co-ordinate bench in the case ordinate bench in the case of Tej International Pvt Ltd Vs D of Tej International Pvt Ltd Vs DCIT [(2000) 69 TTJ 650 (Del)] CIT [(2000) 69 TTJ 650 (Del)] wherein the coordinate bench has, inter alia, observed as wherein the coordinate bench has, inter alia, observed as wherein the coordinate bench has, inter alia, observed as follows:- 6. We have considered the rival submissions and 6. We have considered the rival submissions and 6. We have considered the rival submissions and perused the records. It is not in dispute that two High perused the records. It is not in dispute that two High perused the records. It is not in dispute that two High Courts, namely, Gauhati High Court and Karnataka Courts, namely, Gauhati High Court and Karnataka Courts, namely, Gauhati High Court and Karnataka High Court, have expressed conflicting views regarding Court, have expressed conflicting views regarding Court, have expressed conflicting views regarding levy of interest under levy of interest under sections 234B and and 234C on deemed income under deemed income under section 115J. Hon'ble Gauhati . Hon'ble Gauhati High Court has opined that when legal fiction is to be High Court has opined that when legal fiction is to be High Court has opined that when legal fiction is to be created for an obvious purpose, full effect to it should created for an obvious purpose, full effect to it should created for an obvious purpose, full effect to it should be given. Quoting Lord Asquith who said, "the statute be given. Quoting Lord Asquith who said, "the statute be given. Quoting Lord Asquith who said, "the statute

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says that you must imagine a certain state of affairs, it says that you must imagine a certain state o says that you must imagine a certain state o does not say that having done so, you must cause or does not say that having done so, you must cause or does not say that having done so, you must cause or permit your imagination to boggle when it comes to permit your imagination to boggle when it comes to permit your imagination to boggle when it comes to inevitable corollaries of that state of affairs", Hon'ble inevitable corollaries of that state of affairs", Hon'ble inevitable corollaries of that state of affairs", Hon'ble Gauhati High Court has held that there is no statutory Gauhati High Court has held that there is no statutory Gauhati High Court has held that there is no statutory exception excluding the op exception excluding the operations of section 115J section 115J of the Act. Hon'ble Karnataka High Court, on the other the Act. Hon'ble Karnataka High Court, on the other the Act. Hon'ble Karnataka High Court, on the other hand, has held that the words 'for the purposes of this hand, has held that the words 'for the purposes of this hand, has held that the words 'for the purposes of this section' section' in in Explanation Explanation to section to section 115J(1A) are 115J(1A) relevant and cannot be construed to extend beyond the relevant and cannot be construed to extend beyond the relevant and cannot be construed to extend beyond the computation of liability to tax. In the opinion of the computation of liability to tax. In the opinion of the computation of liability to tax. In the opinion of the Hon'ble Karnataka High Court, when a deeming fiction Hon'ble Karnataka High Court, when a deeming fiction Hon'ble Karnataka High Court, when a deeming fiction is brought under the statute, it is to be carried to its is brought under the statute, it is to be carried to its is brought under the statute, it is to be carried to its logical logical conclusions conclusions but but without without creating creating further further deeming fiction so as to include other provisions of the deeming fiction so as to include other provisions of the deeming fiction so as to include other provisions of the Act which are not made specifically applicable. It is Act which are not made specifically applicable. It is Act which are not made specifically applicable. It is thus evident that views of these two High Courts are in thus evident that views of these two High Courts are in thus evident that views of these two High Courts are in direct conflict with each other. Clearly, therefore, there direct conflict with each other. Clearly, there direct conflict with each other. Clearly, there is no meeting ground between these two judgments is no meeting ground between these two judgments is no meeting ground between these two judgments and we are also usable to accept the suggestion that and we are also usable to accept the suggestion that and we are also usable to accept the suggestion that we can follow earlier decisions of this Tribunal, or such we can follow earlier decisions of this Tribunal, or such we can follow earlier decisions of this Tribunal, or such views, whichever seem more reasonable of one of views, whichever seem more reasonable of one of views, whichever seem more reasonable of one of these High Courts. these High Courts. 7. It may be ment 7. It may be mentioned that some Benches of the ioned that some Benches of the Tribunal have either taken independent view on the Tribunal have either taken independent view on the Tribunal have either taken independent view on the issue in this appeal or have later on followed Hon'ble issue in this appeal or have later on followed Hon'ble issue in this appeal or have later on followed Hon'ble Gauhati High Court, referred to above. However, with Gauhati High Court, referred to above. However, with Gauhati High Court, referred to above. However, with the latest judgment of Hon'ble Karnataka High Court the latest judgment of Hon'ble Karnataka High Court the latest judgment of Hon'ble Karnataka High Court in Kwality Bis in Kwality Biscuits Ltd.'s case (supra) the situation is cuits Ltd.'s case (supra) the situation is materially different. In the hierarchical judicial system materially different. In the hierarchical judicial system materially different. In the hierarchical judicial system that we have, better wisdom of the Court below has to that we have, better wisdom of the Court below has to that we have, better wisdom of the Court below has to yield to higher wisdom of the Court above and, yield to higher wisdom of the Court above and, yield to higher wisdom of the Court above and, therefore, one a authority higher than this Tribunal therefore, one a authority higher than this Tribunal therefore, one a authority higher than this Tribunal has expressed an opinion on that issue, we are no as expressed an opinion on that issue, we are no as expressed an opinion on that issue, we are no longer at liberty to rely upon earlier decisions of this longer at liberty to rely upon earlier decisions of this longer at liberty to rely upon earlier decisions of this Tribunal even if we were a party to them. Such a High Tribunal even if we were a party to them. Such a High Tribunal even if we were a party to them. Such a High Court being a non Court being a non- jurisdictional High Court does not jurisdictional High Court does not alter the position as laid down by Hon'ble Bombay alter the position as laid down by Hon'ble alter the position as laid down by Hon'ble High Court in the matter of High Court in the matter of CIT v. Godavari Devi CIT v. Godavari Devi Saraf [1978] 113 ITR 589 (Bom.). Therefore, we do not [1978] 113 ITR 589 (Bom.). Therefore, we do not consider it permissible to rely upon the earlier consider it permissible to rely upon the earlier consider it permissible to rely upon the earlier decisions of this Tribunal even if one of them is by a decisions of this Tribunal even if one of th decisions of this Tribunal even if one of th

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Special Bench. It will be wholly inappropriate to choose Special Bench. It will be wholly inappropriate to choose Special Bench. It will be wholly inappropriate to choose views of one of the High Courts based on our views of one of the High Courts based on our views of one of the High Courts based on our perceptions about reasonableness of the respective perceptions about reasonableness of the respective perceptions about reasonableness of the respective viewpoints as such an exercise will de facto amount to viewpoints as such an exercise will de facto amount to viewpoints as such an exercise will de facto amount to sitting in judgment over the views of sitting in judgment over the views of the High Courts the High Courts something diametrically opposed to the very basic something diametrically opposed to the very basic something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, principles of hierarchical judicial system. We have to, principles of hierarchical judicial system. We have to, with our highest respect of both the Hon'ble High with our highest respect of both the Hon'ble High with our highest respect of both the Hon'ble High Courts, adopt an objective criterion for deciding as to Courts, adopt an objective criterion for deciding as to Courts, adopt an objective criterion for deciding as to which of the Hon'ble High C which of the Hon'ble High Court should be followed by ourt should be followed by us. 8. We find guidance from the judgment of Hon'ble 8. We find guidance from the judgment of Hon'ble 8. We find guidance from the judgment of Hon'ble Supreme Court in the matter of Supreme Court in the matter of CIT v. Vegetable CIT v. Vegetable Products Ltd Products Ltd. [1973] CTR (SC) 177 : [1972] 88 ITR 192 . [1973] CTR (SC) 177 : [1972] 88 ITR 192 (SC) Hon'ble Supreme Co (SC) Hon'ble Supreme Court has laid down a principle urt has laid down a principle that "if two reasonable constructions of a taxing that "if two reasonable constructions of a taxing that "if two reasonable constructions of a taxing provision are possible, that construction which favours provision are possible, that construction which favours provision are possible, that construction which favours the assessee must be adopted. This principle has been the assessee must be adopted. This principle has been the assessee must be adopted. This principle has been consistently followed by the various authorities as also consistently followed by the various authorities as also consistently followed by the various authorities as also by the Ho by the Hon'ble Supreme Court itself. In another n'ble Supreme Court itself. In another Supreme Court judgment, Petron Engg. Construction Supreme Court judgment, Petron Engg. Construction Supreme Court judgment, Petron Engg. Construction (P.) Ltd. &Anr. v. CBDT &Ors Ltd. &Anr. v. CBDT &Ors. [1988] 75 CTR (SC) 20 : . [1988] 75 CTR (SC) 20 : [1989] 175 ITR 523 (SC), it has been reiterated ITA [1989] 175 ITR 523 (SC), it has been reiterated ITA [1989] 175 ITR 523 (SC), it has been reiterated ITA No.2237/Ah No.2237/Ahd/2014 Assessment Year: 2011 d/2014 Assessment Year: 2011-12 that the above principle of law is well established and there the above principle of law is well established and there the above principle of law is well established and there is no adopt about that. Hon'ble Supreme Court had, is no adopt about that. Hon'ble Supreme Court had, is no adopt about that. Hon'ble Supreme Court had, however, some occasion to deviate from this general however, some occasion to deviate from this general however, some occasion to deviate from this general principle of interpretation of taking statute which can principle of interpretation of taking statute which can principle of interpretation of taking statute which can be construed as exception to this general rule. It has construed as exception to this general rule. It has construed as exception to this general rule. It has been held that the rule of resolving ambiguities in been held that the rule of resolving ambiguities in been held that the rule of resolving ambiguities in favour of tax payer does not apply to deductions, favour of tax payer does not apply to deductions, favour of tax payer does not apply to deductions, exemptions and exceptions which are allowable only exemptions and exceptions which are allowable only exemptions and exceptions which are allowable only when plainly authorised. This exception, laid down in when plainly authorised. This exception, laid down when plainly authorised. This exception, laid down Littman v. Barron 1952 (2) AIR 393 and followed by Littman v. Barron 1952 (2) AIR 393 and followed by Littman v. Barron 1952 (2) AIR 393 and followed by apex Court in apex Court in Mangalore Chemicals & Fertilizers Ltd. Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commr. of CCT v. Dy. Commr. of CCT [1992] Suppl. (1) SCC 21 [1992] Suppl. (1) SCC 21 and Novopa India Ltd. v. CCE & C Novopa India Ltd. v. CCE & C 1994 (73) ELT 769 1994 (73) ELT 769 (SC), has been summed up in the words of Lord Lohen, (SC), has been summed up in the words of Lord Lohen, (SC), has been summed up in the words of Lord Lohen, "in case of ambiguity, a taxing statute should be "in case of ambiguity, a taxing statute should be "in case of ambiguity, a taxing statute should be construed in favour of a tax construed in favour of a tax-payer does not apply to a payer does not apply to a provision giving tax provision giving tax-payer relied in certain payer relied in certain cases from a section clearly imposing liability". This exception, in a section clearly imposing liability". This exception, in a section clearly imposing liability". This exception, in

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the present case, has no application. The rule of the present case, has no application. The rule of the present case, has no application. The rule of resolving ambiguity in favour of the assessee does not resolving ambiguity in favour of the assessee does not resolving ambiguity in favour of the assessee does not also apply where the interpretation in favour of also apply where the interpretation in favour of also apply where the interpretation in favour of assessee assessee assessee will will will have have have to to to treat treat treat the the the p provisions p unconstitutional, as held in the matter of unconstitutional, as held in the matter of State of M.P. State of M.P. v. Dadabhoy v. Dadabhoy's New ChirmiryPonri Hill Colliery Co. Ltd. 's New ChirmiryPonri Hill Colliery Co. Ltd. AIR 1972 (SC) 614. Therefore, what follows is that in AIR 1972 (SC) 614. Therefore, what follows is that in AIR 1972 (SC) 614. Therefore, what follows is that in the peculiar circumstances of the peculiar circumstances of the case and looking to the case and looking to the nature of the provisions with which we are the nature of the provisions with which we are the nature of the provisions with which we are presently concerned, the view expressed by the presently concerned, the view expressed by the presently concerned, the view expressed by the Hon'ble Karnataka High Court in the case of Kwality Hon'ble Karnataka High Court in the case of Kwality Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. case (supra), which is in favour of Biscuits Ltd. case (supra), which is in favour of Biscuits Ltd. case (supra), which is in favour of assessee, deserves to be followed b assessee, deserves to be followed by us. We, y us. We, therefore, order the deletion of interest under sections therefore, order the deletion of interest under therefore, order the deletion of interest under 234B and 234C in this case. 5. In view of the above discussion, quite clearly, even whe 5. In view of the above discussion, quite clearly, even whe 5. In view of the above discussion, quite clearly, even when the decision of Hon'ble non the decision of Hon'ble non-jurisdictional High Courts are in jurisdictional High Courts are in conflict with each other, the only objective criteria which conflict with each other, the only objective criteria which conflict with each other, the only objective criteria which followed by us is to take a view favourable to the assessee. followed by us is to take a view favourable to the assessee. followed by us is to take a view favourable to the assessee. Hon'ble Calcutta High Court's decision in the case of Asian Hon'ble Calcutta High Court's decision in the case of Asian Hon'ble Calcutta High Court's decision in the case of Asian Financial Services Ltd (supra), therefore, is required to be ervices Ltd (supra), therefore, is required to be ervices Ltd (supra), therefore, is required to be followed by us. Respectfully following the same, we uphold followed by us. Respectfully following the same, we uphold followed by us. Respectfully following the same, we uphold the conclusions arrived at by the learned CIT(A) and reject the conclusions arrived at by the learned CIT(A) and reject the conclusions arrived at by the learned CIT(A) and reject the grounds raised by the Revenue. the grounds raised by the Revenue.” 5.3 In view of the binding precedent In view of the binding precedents referred abov referred above, we find that decision of the Hon’ble Madras High Court is in favour of the decision of the Hon’ble Madras High Court is in favour of the decision of the Hon’ble Madras High Court is in favour of the assessee and not a single decision t a single decision of the Jurisdictional High Court of the Jurisdictional High Court , which isadverse to the assessee, which isadverse to the assessee, has been referred by the Ld. DR has been referred by the Ld. DR and therefore decision of the Madras High and therefore decision of the Madras High Court being favourable to Court being favourable to the assessee, the claim of deduction u/s 54 he claim of deduction u/s 54F of the Act need to of the Act need to allowed, as there is no material to show that assessee is exclusively no material to show that assessee is exclusively no material to show that assessee is exclusively owner of the other five residential properties/flats which are owner of the other five residential properties/flats which are owner of the other five residential properties/flats which are occupied by the other family mem occupied by the other family members. The grounds of appeal of the assessee are accordingly allowed. assessee are accordingly allowed.

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Order pronounced in the open Court on nounced in the open Court on 22/05/2023. /05/2023. Sd/- Sd/- Sd/ (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT Mumbai; Dated: 22/05/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai