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Facts
The appellant claimed deduction under Section 54F of the Income Tax Act for investment in residential units. The AO and CIT(A) denied this, stating the appellant owned six flats. The appellant contended he owned only one flat, with his brothers owning the others.
Held
The Tribunal held that the appellant is eligible for deduction under Section 54F. It was observed that the appellant is the owner of only one flat, and the other portions were occupied by his brothers. Previous decisions by the ITAT in similar cases of the appellant's brothers were relied upon.
Key Issues
Whether the appellant is eligible for deduction under Section 54F when ownership of multiple residential units is disputed, with the appellant claiming ownership of only one unit.
Sections Cited
54F, 154
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Income Tax Appellate Tribunal, Mumbai “D” Bench, Mumbai.
Before: Shri Pawan Singh (JM) & Shri Omkareshwar Chidara (AM)
The only issue to be adjudicated in this case is whether the appellant is eligible for the deduction under section 54F of the Income Tax Act. The Ld. AO and Ld. CIT(A) have denied the benefit claimed by the appellant stating that he is the owner of six flats and hence deduction under section 54F of the Act cannot be given. Ld. CIT(A) relied on the decision of M.J. Shiwani Vs. CIT (53 taxmnn.com 318 and upheld the addition made by the Ld. AO.
Aggrieved by the orders of the lower authorities, the appellant filed the appeal before the ITAT with following grounds of appeal :
1. The Hon'ble C1T(A) has erred in upholding the disallowance of exemption/deduction claimed u/s 54F of the IT. Act amounting to Rs, 2,23,59,000/- without appreciating the facts of the case as well law.
2. The Hon'ble CIT(A) has erred in not appreciating the fact that appellant was owner of one residential house only, and was not at all the co-owner of the other flats as has been alleged Assessing officer and Hon'ble CIT (A).
2 Mohammed Hanif Mohd Ali Ghaswala Legal Heir of Late Shri Mohdali Suleman Ghaswala
The Hon'ble CIT(A) has erred in misinterpreting the facts of the investment made by appellant that he had invested amount in 6 residential units along with 6 co-owners as against the fact being that appellant has actually invested an amount of Rs. 2.23,59.000 - in Flat no Flat no 302, Apns Ghar, Unit No 15, Andheri (West) as is evident from Para 5.1 of the CIT(A) Order.
4. The Hon'ble CIT(A) has erred in dismissing the appeal without having considered the appellant's submission dated 19/03/2024, and the facts placed on record vide said submissions,
5. The Hon'ble CIT(A) has erred in ignoring the fact not considering the fact placed on record vide submission dated 19/03/2024, that the issue under consideration was already decided by Jurisdictions bench of 1TAT in the-cases of other co-owners of five appellant.
6. The Hon'ble CIT (A) has erred in upholding the observations of the Ld. Assessing officer that the appellant had failed to produce any documents/ agreement so as to establish that he was owning one flat, only (and not 6 flats) without appreciating the feet that since the property ie. residential house owned by appellant (having inherited from his Jute father) being self constructed there could not be any agreement for purchase of flats.
The Hon'ble CIT (A) has erred in not considering/following the judicial pronouncements relied upon by the appellant including that of jurisdictional benches of Hon'ble ITAT without appreciating that the same were binding upon him.
The Hon'ble CIT (A) has erred in observing and also relying upon the decision in the case of MJ. Siveni v/s CIT (S3 toxmann.com 3I5) considering the same to be the pronouncement of Hon'ble Apex Court, without appreciating that the same was merely dismissal of SLP Sled against the decision of Hon'ble Kanataka High Court which does not attracts the doctrine of merger so as to stand substituted in place of order put in before It, nor would if be a declaration of law by the Supreme Court under Article 141 of the constitution, thereby misleading the facts of the case of MJ, Sivani v/s CIT (Supra)
The appellant craves leave to add, amend, alter and/or vary any of the grounds at the time-or before the hearing of this appeal,
The appellant therefore prays that the addition/disallowance made by the Ld. assessing officer & upheld by Hon'ble CIT (A) not being in accordance with the provisions of law deserves to be & way please be deleted.
3. During the proceedings before the ITAT, Ld. AR of the appellant has argued that appellant is not the owner of six flats and Ld. CIT(A) has not 3 Mohammed Hanif Mohd Ali Ghaswala Legal Heir of Late Shri Mohdali Suleman Ghaswala properly appreciated the facts. One flat was owned by each brother i.e. six portions were owned by six brothers. Moreover, Ld. CIT(A) has not considered the appellant’s submission dated 19.3.2024 and taken their submission dated 5.10.2021 only. Since Ld. CIT(A) did not take into consideration the submissions made by the appellant, the appellant has filed an application under section 154 of the I.T. Act requesting Ld. CIT(A) to consider their submission dated 19.3.2024 and pass an order afresh. This request is still pending before Ld. CIT(A). The next argument of Ld. AR is that the ITAT Mumbai has already adjudicated the same issue in the cases of the co-owners relating to very same land and gave relief to the brothers of the appellant. Subsequently, Ld. CIT(A) followed the Judgement of the ITAT in another brother’s case and decided the issue in favour of the appellant.
Ld. DR has filed written submission in which it was mentioned that the appellant failed to fulfill the conditions laid down under section 54F of the Act as he is the owner of more than one flat/joint owner of six flats and requested the Bench to confirm the orders of the lower authorities.
Perused the written submissions of Ld. AR and Ld. DR and after hearing the arguments of both parties, the issue is decided. From the copies of the orders passed by the ITAT in the cases of brothers of the appellant, it is observed that the appellants are eligible for deduction under section 54F of the Act because the appellants are not the owners of six flats. Relevant documents relating to electricity bill etc. filed by the appellant shows that they are the owners of one flat/portion and remaining five portions were occupied by other brothers. Hence, the appellant fulfilled the conditions relating to section 54F of the Act. The Mumbai ITAT in the cases of appellant’s brothers Mr. Zainul Abedin Ghaswala (ITA no. 545/Mum/2023 dated 22.5.2023 for A.Y. 2016-17) and Mr. Abdul Rahim Suleman Ghaswala (ITA no. 3177/Mum/2023 dated 1.1.2024) already held the issue in favour of the appellants adjudicating that they are entitled for deduction under section 4 Mohammed Hanif Mohd Ali Ghaswala Legal Heir of Late Shri Mohdali Suleman Ghaswala 54F of the Act. In these cases, the Bench relied on the decision of Madras High Court decision in the case of Dr. P.K. Vasanthi Rangarajan Vs. CIT (2012) 252 CTR 336, where it was held that fractional ownership is not the ownership. In similar circumstances, after considering the decision of M.J. Shivani relied on by Department, ITAT Mumbai has already held the issue in favour of the brothers of appellant. Respectfully following the decisions of the ITAT in the cases of appellant’s brothers, the issue is decided in favour of the appellant.
The appeal of appellant is allowed. Order pronounced in the open Court on 09/10/2025.