RAMESH CHANDER BHASIN,NEW DELHI vs. ITO WARD - 53(5), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “E” : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.No.161/Del./2020 Assessment Year 2014-2015

Smt. Savita Bhasin, Wife The ITO, Ward – 53 (5), And L.R. of Shri Ramesh [ Chander Bhasin, 802, Civic Centre, vs. Tolstoy House, Tolstoy Marg, New Delhi – 110 001. New Delhi. PAN AACPB3843Q (Appellant) (Respondent) For Assessee : Shri R.S. Singhvi, C.A. For Revenue : Shri Jagdish Singh Dahiya, Sr. D.R.

Date of Hearing : 10.08.2020 Date of Pronouncement : 13.08.2020

ORDER PER BHAVNESH SAINI, J.M.

This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-35, Delhi, Dated 15.11.2019, for the A.Y. 2014-2015.

2 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 2. We have heard the Learned Representatives of both the parties through video conferencing and perused the material available on record.

3 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 5. On Ground No.1, assessee challenged the Orders of the authorities below in disallowing deduction, under section 54F of the I.T. Act, 1961, to the extent of Rs.4.40 crores.

4.1. The assessee challenged the said disallowance under section 54F before the Ld. CIT(A). The detailed written

4 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. submissions of the assessee is reproduced in the appellate order which reads as under :

“4.3.1. On this issue the appellant has made the following submissions:

(1) During the period under consideration, the Appellant had sold land at Village Harsaru, District Gurgaon on 08/12/2013 for a sale consideration of Rs.5,06,50,000/- and after deducting brokerage and indexed cost of the property, net Long-Term Capital Gain of Rs.4,90,35,219/- arose to him. Out of the sale proceeds, the Appellant invested an amount of Rs.50,00,000/- in eligible bonds so as to claim exemption u/s 54EC. The remaining amount of Rs.4,40,35,219/- had been deposited in the Capital Gain Account Scheme for claiming deduction u/s 54F since he had subsequently purchased (on 07-12-2015) a residential properly situated at PRN-022, Second Floor,

5 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. DLF Park Place, Gurgaon. Accordingly, the consideration received from the sale of land had been partly invested as per Section 54EC and the balance amount deposited in the Capital Gains Account Scheme which has further been invested in a residential house property as per Section 54F of the Act whereby the entire Capital Gains was claimed as exempt.

(2) As on 31, March 2013, the Appellant was the owner of two residential properties viz. 910/17 Defence Colony, Gurgaon and 1/601, Malibu Town, Gurgaon, both of which were owned jointly by him with his wife, Smt Savita Bhasin.

(3) In particular, the property bearing No. 1/601 Malibu Town, Gurgaon was purchased by the Appellant (jointly with his wife) by virtue of Conveyance Deed executed on 26.03.2007. The said property was purchased by the

6 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. previous owner through an Apartment Buyer’s Agreement No. 131 dated 25.01.1999 and the property was ultimately registered in the name of Appellant and his wife vide the above Conveyance Deed. The said property was given on rent which was duly disclosed in the respective hands in their returns of income filed.

(4) The Appellant sold his share in the property at Malibu Town, Gurgaon on 01/11/2013 i.e. before the sale of agricultural land on 09.12.2013 to his son, Shri Shwet Ketu Bhasin, living in USA, by virtue of an Agreement to Sell, executed on the same date, for a consideration of Rs.20,25,000/- discharged in the following manner: - Cash/Cheque Drawn on Amount (Rs.) Date No. Cash N.A. 25,000/- 25.10.2013 Union of Bank of India, SME Ch.No.32015781 Branch, 20,00,000/- 01.11.2013 Gurgaon.

7 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 5. As per the proviso to Section 54F of the Act in order to claim exemption in respect of Capital Gains arising from the transfer of a Long-Term Capital Asset, other than a house property, “an assessee should not own on the date of transfer of the original asset more than one residential house (other than the new house).

8 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 7. The Assessing Officer has, for the reasons and on the basis of the arguments listed above, proceeded to negate the existence of the said Agreement to Sell and thereby denied the deduction by holding the same to be a colorable device to avoid tax.

9 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. to take some time considering the fact that the Buyer was located abroad resulting in the related paperwork getting delayed.

10 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 11. It may be further submitted that the property in question i.e. the one in Malibu Town, the ownership of which has been the basis for the denial of exemption u/s 54F of the Act was jointly owned by the Appellant with his wife i.e he was only a co-owner in the said property which being the case the exclusion as envisaged in the proviso to Section 54 F of the Act shall not apply. The word “own" appearing in Section 54F of the Act includes only such residential house which is fully and wholly owned by one person and not a residential house owned by more than one person.

(a) Dr P.K. Vasanthi Rangarajan v. DCIT [(2012) 23 taxmann.com 299 Taxman 628 (Mad)]

11 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. (b) Commissioner of Income Tax-V vs., Kapil Nagpal [(2015) 63 taxmann. com 366 (Delhi)]

(c) Ashok G Chauhan v. Assistant Commissioner of Income Tax, Mumbai [(2019) 105 taxmann.com 204 (Mumbai-Trib)].

In the light of the facts of the case as well as the judicial decisions referred above, it is held that the only reason the AO denied the exemption from long term capital gains u/s 54F was that the appellant on the date of transfer of the original asset had more than one residential house i.e. at Defense Colony Gurgaon and Malibu Town Gurgaon, although both were jointly owned with his wife Smt. Savita Bhasin. The reliance placed on the above judicial rulings brings out co-jointly owing a residential property cannot be treated as absolute ownership and thus, the deduction

12 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. u/s 54F cannot be denied. Infact it has also been observed that the harshness of the proviso of section 54F cannot be applied “unless and until there are materials to show that the assessee is the exclusive owner of the residential property.

Similarly, the jurisdictional Delhi High Court has held that the assessee was a mere co-owner in one of the residential properties, the claim of deduction u/s 54F could not be rejected.

The above Citation lead to the understanding that being a co-owner in one or more residential property does not disqualify and assessee from claiming the benefit of exemption u/s 54F of the Act.”

4.2. The Ld. CIT(A) considered the issue in detail and noted in his findings the properties held by the assessee on the date of the transfer and also reproduced the findings of the A.O. whereby A.O. has established the transaction as

13 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. ‘sham’ holding that assessee has adopted a colourable device to avoid the tax as is held in the case of Mc. Dowells & Co. Ltd., 154 ITR 148. The Ld. CIT(A) also relied upon Order of ITAT, Hyderabad Bench in the case of ITO vs., Ms. Apsara Bhavana Sai in ITA.No.557/Hyd/2012, Dated 13.09.2013 and reproduced the Order. The Ld. CIT(A) in view of the back ground of the circumstances of the case, confirmed the disallowance under section 54F of the I.T. Act. The decision of the Ld. CIT(A) in para-6 of the impugned order is reproduced as under :

“6. Decision 6.1. After perusal of the submission of the appellant, keeping in view the above findings of the Hon’ble Tribunal and findings of the AO the following facts emerge :-

14 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. inapplicable in respect of transfer of immovable property effected on or after the first day of July, 2002. 2. The cheque received by way of sale consideration for transfer of his 50% share of the property at Malibu Town by the appellant from his son is from the bank account jointly held by the appellant with his son Shri Shwet Ketu Bhasin residing in USA. It is also not established that the payment made from the account comprises of receipts/deposits made by Shri S.K Bhasin and not the appellant. 3. While the cheque payment of Rs.20,00,000/- is dated 01.11.2013 (i.e. before sale of original asset) but the cheque was factually credited on 21.12.2013 i.e. much after the date of transfer of original asset.

15 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 4. The transfer between the father and son was by way of unregistered Agreement to Sell, which in effect, became a self serving document. 5. The AO's enquiry u/s 133(6) confirmed, that the ownership as per records remained with the appellant and his wife and not his son as was claimed. 6. Even the maintenance bills of the property at Malibu Town were being raised and also paid by the appellant and not his son. 7. On being confronted with the findings, the appellant argued that he was covered by various case laws which were duly distinguished by the AO in his, order. 8. The A.O. also made confirmations u/s 133(6) from the tenant M/s Best Advertising. It was confirmed by the tenant that the entire rent had been paid to the appellant and his wife Smt. Savita Bhasin,

16 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. in advance. On being confronted by the AO, the appellant gave the argument that part of the rent was retained and the balance amount was returned. Further, that the remaining amount was reflected in the income tax return of his son (the new owner of the property). It was further verified by the AO whether the rent was returned to the tenant as claimed by the appellant. It was informed that neither was there any cancellation of the rent agreement nor any amount was returned to the tenant. Thus the appellant’s claim has been demolished one after the other and it is amply demonstrated that the entire exercise of transfer of property to his son was a feeble attempt to show that the appellant was not holding two properties at the time of transfer of original asset, which would have disqualified him for seeking exemption u/s

17 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 54F. Thus it is clear that the apparent is not real and given the surrounding circumstances, one is compelled to remove the blinkers being thrust upon the revenue to accept evidences, which are self serving and fail to Inspire confidence. 9. It is also noted that another eligibility requirement under section 54F is that the appellant should not purchase any residential house other than the new asset within a period of one year from the date of transfer of the original asset. The chart given in the assessment order shows that the appellant has invested in yet another property at Godrej Frontier, a posh residential scheme of luxury apartments in Gurgaon to the extent of Rs.89 lacs in 2015, in the immediately following year of sale of original-asset. The fact tiled no possession has been taken does not dilute the eligibility

18 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. requirement of the provisions. 6.2. Even otherwise going by the logic of the appellant, he could continue to invest in countless number of properties in joint names and exempt himself from the tax liability of capital gains by reinvesting in new properties in brazen violation of the provisions of the statute. This was not the intention of the legislature nor the spirit of the statute which intended to encourage people to invest in residential property, but in a restrictive way, therefore the cap of holding not more than one residential property. Some of the case laws relied upon by the appellant have been duly considered and discussed threadbare by the Hon’ble ITAT Hyderabad in the case of ITO vs. Ms. Apasara Bhavana Sai referred above. Accordingly, it is held that since the appellant was jointly owning more than one property at the time of sale and had also invested in yet another property in the following year, he is not entitled

19 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. for deduction under section 54F of the Act. Hence, the disallowance of Rs.4,40,35,219.50/- made by the AO is upheld and is hereby confirmed.”

20 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. deemed to have been transferred on the date of Agreement Dated 01.11.2013, reference of which is also made in the registered Transfer Deed. He has submitted that assessee declared capital gain on account of the transfer of the property in reference and tax paid on the same as long term capital gains which have been accepted by the A.O. Wife of the assessee also sold her share in the property in reference which have been accepted by the Department under section 143(1) of the I.T. Act, 1961 and till date no action under section 147/148 have been taken. He has submitted that in the similar circumstances when claim of wife of assessee have been accepted, no different view should be taken by the Revenue Department. He has submitted that assessee was joint owner of the property with 50% and as such it cannot be considered as own residential property in terms of proviso to Section 54F of the I.T. Act. He has submitted that when sale consideration have been credited to the account of the assessee subsequently, it would not prove that transaction was sham. He has submitted that part of the advance rent was partly adjusted by the assessee and

21 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. remaining was shown as income by the son of the assessee in the return of income and all such facts are mentioned in the Agreement of Sale and the Sale Deed. Copy of the ITR and computation of income of son of assessee for A.Y. 2014- 2015 is also filed in support of the above contention. He has submitted that transfer of share in immovable property at Malibu Town, Sohna Road, Gurgaon by assessee to his son is valid transfer in terms of Section 2(47)(vi) read with Section 269UA of the I.T. Act and as such, A.O. was not justified in rejecting the claim of exemption under section 54F of the I.T. Act, 1961. Learned Counsel for the Assessee in support of his contention relied upon the following decisions :

22 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 08. Dr. Smt. P.K. Vasanthi Rangrajan vs. CIT [2012] 252 CTR 336 [Mad.]

5.1. Learned Counsel for the Assessee also filed written synopsis on record.

23 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. that the impugned amount was deposited in the Capital Gains Accounts Scheme for claiming deduction under section 54F of the I.T. Act and subsequently assessee made investment in residential property for claiming deduction under section 54F of the I.T. Act. The only dispute in appeal is – “Whether the transfer of property by assessee to his son vide Agreement to Sell Dated 01.11.2013 in respect of property of 1/601, Malibu Town, Gurgaon is valid transfer or not ? And Whether Joint ownership of property is also considered as residential house in the context of proviso to Section 54F of the I.T. Act, 1961. ? Section 54F of the I.T. Act, 1961 reads as under :

“Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.

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

24 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,—

(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ;

(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45:

25 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. Provided that nothing contained in this sub-section shall apply where—

(a) the assessee,—

(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or

(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or

(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and

(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".

Explanation.—For the purposes of this section,—

"net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received

26 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

(2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed.

(3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain

27 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such new asset is transferred.

(4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme

28 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :

Provided that if the amount deposited under this sub- section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,—

(i) the amount by which—

(a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1),

Exceeds

29 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and

(ii) the assessee shall be entitled to withdraw the un- utilised amount in accordance with the scheme aforesaid.”

8.1. Section 2(47)(vi) and Explanation-2 to this Section reads as under :

“(47) “transfer", in relation to a capital asset, includes, (i) --- (ii) --- (iii) --- (iv) --- (iva) --- (v) ---

30 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.

[Explanation 1] – For the purposes of sub-clauses (v) and (vi), immovable property shall have the same meaning as in clause (d) of section 269 UA.]

[Explanation 2.—For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, direct)} or indirectly, absolutely or conditionally, voluntarily or involuntarily by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or

31 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. flowing from the transfer of a share or shares of a company registered or incorporated outside India;]”.

8.2. Section 269UA of the I.T. Act, 1961, which are referred to agreement for transfer would mean – “An agreement whether registered under the Registration Act or not, for the transfer of any immovable property”. Section 47 of the Registration Act, 1908 provides as under :

“Time from which registered document operates. – A registered document shall operate from the time which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration.”

8.3. Considering the facts of the case in the light of above provisions and material on record, it is clear that assessee was joint owner of property at 1/601, Tower-1, Malibu Town, Sohna Road, Gurgaon, with his wife having 50% share each, which was purchased vide Conveyance Deed Dated 26.03.2007 (PB-1). The said property was leased-out to M/s. Basic 4 Advertising Pvt. Ltd. On 01.11.2013 assessee entered into an Agreement to Sell for

32 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. transferring his share in this property to his son Mr. Shwet Ketu Bhasin for a consideration of Rs.20,25,000/- which was mentioned in the agreement. The security deposit received from the tenant and rent receivable from 01.11.2013 will be transferred to the transferee/purchaser. Copy of the agreement is filed at PB-20 and is also reproduced in the assessment order. The assessee also filed copy of the ITR of his son at pages 26 to 29 of the PB for the assessment year under appeal to show that rent from the aforesaid property have been shown as taxable income and tendered for taxation. It is not in dispute that thereafter assessee sold the land at Gurgaon and claimed as exempt under Sections 54EC and 54F of the I.T. Act, 1961. The assessee also claimed that at the time of sale of the land, assessee was having only one residential house at House No.910, Defence Colony, Gurgaon. The A.O. has not brought any evidence on record that the Agreement to Sell was not acted upon by the parties and that the entire sale consideration have not been transferred along with possession. It is also not in dispute that the Agreement to

33 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. Sell dated 01.11.2013 was ultimately culminated into Registered Transfer Deed dated 27.06.2018 and as such, there is no question to doubt the Agreement to Sell because the property in question was transferred through Agreement to Sell and later on fortified by the Registered Purchase Deed in which all the facts of the Agreement to Sell and the transaction between the parties along with transfer of share consideration have been mentioned. According to Section 49 of the Registration Act, 1908 - “A registered document shall operate from the time which it would have commenced to operate, if no registration thereof had been require or made and not from the time of its registration”. Therefore, the Registered Purchase Deed shall operate legally from the date of agreement i.e., 01.11.2013. Thus, the conditions of Section 2(47)(vi) read with Section 269UA of the I.T. Act, 1961 are satisfied in the present case. The assessee, thus, complied with the conditions of Section 54F of the I.T. Act that he does not own more than one residential property at the time of claiming exemption under section 54F of the I.T. Act. The

34 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. ITAT, Mumbai Bench in the case of Ashwin C. Jariwala vs., ITO (supra) held as under : “Admittedly, the conveyance deed was executed on 31- 3-2008 and the same was registered under the Registration Act on 1-7-2008. On a perusal of the conveyance deed, it is noticed that the possession of the property was also given to the buyers on 31-3-2008 and the assessee along with other co-owners have received the entire consideration before 31-3-2008. Hence, the contentions of the assessee that the impugned property has been transferred during the year relevant to the assessment year 2008-09 is correct and hence the Assessing Officer was not justified in assessing the same in assessment year 2009-10. The revenue submitted that the registration of deed on 1/7/2008 was only a formality and upon the registration of the deed, the conveyance would date back to the date of execution of the deed. The contentions of the assessee that the registration of the conveyance deed relates back to the date on which the

35 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. agreement for sale was executed in favour of the buyer by the owner is correct. In view of the above, the capital gain, if any, is assessable in assessment year 2008-09 only. [Para 6]” 8.4. The ITAT, Ahmedabad Bench in the case of Amitkumar Ambalal Shah vs., ITO (supra) held as under :

“The transaction of transfer of property would relate to the date when the sale-deed was executed, sale consideration was paid and possession was handed over but not on date when document was presented before the Registrar for registration of the sale-deed. [Para 5.3]”.

8.5. The ITAT, Delhi B-Bench, Delhi in the case of M/s. Elegant Infraworld P. Ltd., vs., ITO (supra), considering an identical issue held in paras 5 to 7.2 as under :

“5. Learned Counsel for the Assessee on Ground No.1 submitted that provisions of Section 2(47)(vi) of the I.T. Act are applicable in this case. The date of transfer

36 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. of property should be taken as 30.01.2009 when Agreement to Sell was executed between the parties and possession of the property was handed-over to the purchaser, subject to part-payment through banking channel. Therefore, no capital gain arises in the assessment year under appeal because the transaction took place in preceding A.Y. 2009-2010. He has submitted that in the Sale Deed the advance money received at the time of Agreement to Sell have been mentioned which supports the claim of the assessee. He has also referred to Agreement to Sell which copy is filed at page-17 of the paper book and possession letter dated 30.01.2009 (PB-20). Learned Counsel for the Assessee in support of his contention relied upon the following decisions:

(i) Judgment of Hon’ble Jurisdictional Allahabad High Court in the case of Chandra Prakash Jain vs. ACIT (2014) 270 CTR 192 (Alld.), in which it was held as under :

37 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi.  “Section 2(47) is definition clause pertaining to transfer in relation to capital asset. The Act being a special Act which consists of specific definition clause in context of capital assets the general principles of transfer as contained in the Transfer of Property Act, 1882 shall not be applicable. It is well settled that Legislature can for the purposes of a special Act provide an artificial definition. Further more than the definition being an inclusive definition it had to be given an expensive meaning. [Para 16].  In the present case, there is no applicability of section 2(47)(v). Sub-section (v) applies to the transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of the contract. The possession having not been transferred by the agreement dated 7-9-1991, there is no applicability of section 2(47)(v).

38 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi.  The assessees were full owner of the property. By agreement dated 7-9-1991, the assessees transferred their right of owner-ship in favour of purchasers. The Tribunal has noted that no further transaction after agreement dated 7/9/1991 took between the assessees and purchasers and that was the only transaction, on the basis of which purchasers sold two shops in the year 1995 and obtained possession in the year, 1998 and carried out all developments. The agreement dated 7-9-1991 was thus, clearly covered by the definition under section 2(47)(vi). [Para 21]  Further, there is no illegality in the Tribunal's proceeding to examine the case in the light of section 2(47)(vi). All the facts being on record whether transaction is covered by section 2(47) (v) or 2(47)(vi) was well within the domain of the Tribunal while deciding the appeal filed by the department. Thus, the submission of assessee

39 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. that a new case was made out by the Tribunal cannot be accepted. [Para 26].  In view of the aforesaid, the Tribunal was fully justified in holding that agreement of sale dated 7/9/1991 amounts to transfer of capital assets by virtue of section 2(47)(vi).”

(ii) Order of ITAT, Chennai A-Bench, Chennai in the case of ITO, Ward-V(1), Chennai vs. Mrs. P.A. Sarala (2015) 154 ITD 168 (Chennai-Trib.), in which it was held as under :

“Where in terms of development agreement, assessee handed over physical possession of property to builder allowing it to enjoy 60 per cent of land in lieu of 40 per cent of constructed area, it was to be concluded that transfer took place in year in which said agreement was entered into.

Where in terms of development agreement, assessee obtained multiple flats in lieu of cost of 60 per cent of land allotted to builder, still her

40 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. claim for deduction under section 54F was to be allowed.”

(iii) Order of ITAT, Ahmedabad B-Bench, Ahmedabad in the case of Smt. Sapnaben Dipakbhai Patel vs. ITO, Ward-10(1), Ahmedabad (2016) 73 taxmann.com 288 (Ahmedabad – Trib.), in which it was held as under :

41 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. ownerships without transfer of title would come within the ambit of section 2(47)(v) of the Act. The whole scheme for introduction of clauses (v) and (vi) in section 2(47) of the Act was that the capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law.

(iv) Judgment of Hon’ble Delhi High Court in the case of CIT-XVI vs. Ram Gopal (2015) 372 ITR 498 (Del.). in which it was held as under :

42 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi.  This Court, in the decision as Gulshan Malik v. CIT [2014] 223 Taxman 243/43 taxmann.com 200 (Delhi) had the occasion to, consider what amounted to acquisition of a capital asset - though in the context of a claim that capital gains had accrued due to the sale of the property. The Court was of the opinion that 'capital asset' has been defined in extremely wide terms. A reference to section 2(47), which defines 'transfer', and particularly its second Explanation to clauses (v) and (vi) made it clear that possession, enjoyment of property as well any interest in any of transferable capital asset was included within the ambit of 'capital asset'. The Court held importantly that even booking rights or rights to purchase the apartment or to obtain its letter was also capital asset. [Para 5]

43 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi.  In the present case the question is not whether the assessee sold the booking rights and was, therefore, entitled to benefit of capital gains. It is, rather, whether his entering into the transaction and acquiring a property amounted to his acquiring a capital asset. In the light of the definitions of 'capital asset' under section 2 (14) and 'transfer' under section 2(47) as discussed in Gulshan Malik (supra), this Court has no doubt that the assessee's contentions were merited. [Para 6]

(v) Judgment of Hon’ble Madras High Court in the case of CIT, Salary Circle, Chennai vs., S.R. Jeyashankar (2015) 373 ITR 120 (Madras), in which it was held as under :

“Where assessee had entered Into an agreement with builder for purchase of undivided share of land and construction, date of allotment of undivided share in land was to be adopted as date

44 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. of acquisition for computing capital gain instead of date of sale deed.”

5.1. Learned Counsel for the Assessee, therefore, submitted that no capital gain could be computed in assessment year under appeal because the transfer took place on 30.01.2009.

45 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. (47) “transfer” in relation to a capital asset, includes,— (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock- in-trade of a business carried on by him, such conversion or treatment;] [or]

(iva) the maturity or redemption of a zero coupon bond; or]

(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or

(vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement

46 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.

[Explanation 1].—For the purposes of sub-clauses (v) and (vi) “immovable property” shall have the same meaning as in clause (d) c section 269UA.]

[Explanation 2.—For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed to have always include disposing of or parting with an asset or any interest therein, creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;]”

47 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 7.1. Learned Counsel for the Assessee relied upon sub-clause (vi) to Section 2(47) of the I.T. Act which provides transfer in relation to capital asset in respect of any transaction by way of any agreement or any arrangement or in any other manner whatsoever which has the effect of transfer or enabling the enjoyment of any immovable property. The immovable property has been referred to as per Section 269UA of the I.T. Act which are referred to agreement for transfer would mean an agreement whether registered under the Registration Act or not for the transfer of any immovable property. According to Explanation-2 to Section 2(47) of the I.T. Act, the transfer would include and shall deemed to have always included disposing of or parting with an asset or any interest therein or creating interest in any asset in any manner whatsoever directly or indirectly, absolutely or conditionally, voluntarily or involuntarily by way of an agreement or otherwise. In the present case, the assessee has entered into an Agreement to Sell dated 30.01.2009 (PB-17) with M/s.

48 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. Archit Steel (P) Ltd., in which it is provided that assessee is absolute owner of the impugned property and assessee has agreed to sell the same to M/s. Archit Steel (P) Ltd., subject to total consideration of Rs.3.72 crores against which assessee has received a sum of Rs.2.75 crores vide cheque 216304 Dated 30.01.2009 and balance amount to be paid at the time of execution of the sale deed. It is also mentioned in the Agreement to Sell that actual physical and peaceful possession of the impugned property has been delivered by the assessee to M/s. Archit Steel (P) Ltd., Copy of the possession letter dated 30.01.2009 is also filed which confirmed that assessee has handed-over physical possession of the impugned property to the purchaser at the time of execution of the Agreement to Sell. The assessee later on executed two sale deeds registered on 01.06.2009 in favour of purchaser and in the sale deed it is mentioned that advance of Rs.2.75 crores was already given by the purchaser to the assessee. These facts are not in dispute. It would, therefore, prove that

49 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. there was an Agreement to Sell between assessee and the purchaser which is having the effect of transferring the right and enjoyment in the immovable property in favour of the purchaser. The assessee had entered into an Agreement to Sell and handed-over possession of the impugned property to the purchaser would amount to disposed-of or parted with the asset with all interest therein in favour of the purchaser. According to definition of Section 269UA it is not necessary that Agreement to Sell should be registered. Therefore, provisions of Section 2(47)(vi) of the I.T. Act are satisfied in the case of the assessee. It is well settled law that entries in the books of account are not determinative criteria to deny the relief to the assessee if the assessee entitled to relief as per law. The Hon’ble Supreme Court in the case of Sutlej Cotton Mills Ltd., vs. CIT , West Bengal (1979) 116 ITR 1 (SC) has held as under :

“It is now well settled that the way in which entries are made by an assessee in his books of account is not determinative of the question whether the assessee has

50 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. earned any profit or suffered any loss. The assessee may, by making entries which are not in conformity with the proper principles of accountancy, conceal profit or show loss and the entries made by him cannot, therefore, be regarded as conclusive one way or the other. What is necessary to be considered is the true nature of the transaction and whether in fact it has resulted in profit or loss to the assessee.”

7.2. Merely showing the property in question as his assets in the balance sheet as on 31.03.2009 would not disentitle the assessee from relief because the part consideration was received on 30.01.2009 and other legal formalities of execution of sale deed shall have to be done in future and as such under the Civil Law title would remain in the name of assessee unless the sale deed is executed. However, it is not relevant while applying the provisions of Section 2(47)(vi) of the I.T. Act. The part-payment of sale consideration by cheque at the time of entering into an Agreement to Sell would show that Agreement to Sell is not an afterthought. The A.O.

51 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. did not make any enquiry from the O/o. Stamp Collector to dispute the claim of assessee of purchase of the stamps genuinety. In sale deed Dated 01.06.2009, it is mentioned that possession is handed-over to the purchaser at the time of sale deed which was taken adverse by the authorities below to deny relief to the assessee. However, we may note that such usual writings are made by the Deed Writers in the documents without knowing the contents of the Agreement to Sell. Since the Agreement to Sell and the possession letter clearly mentioned that possession of the property in question have been handed-over to the purchaser, therefore, subsequent mentioning of possession in the sale deed would be of no consequence. The explanation of assessee is also supported by the fact that substantial payment was made at the time of execution of the Agreement to Sell by way of cheque, otherwise, the purchaser would not make substantial payment without taking possession of the impugned property. Assessee has also filed copies of the invoice and ledger

52 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. account at page Nos. 22 and 23 of the paper book to show that expenditure were incurred by the purchaser for improvements after taking possession which also support explanation of assessee that possession of the impugned property was handed-over by way of an Agreement to Sell (supra). The Agreement to Sell is not required to be registered as per Section 2(47)(vi) of the I.T. Act because the conditions of this provision are satisfied in the present case. The decisions relied upon by the Learned Counsel for the Assessee squarely apply to the facts and circumstances of the case, particularly decision of Hon’ble jurisdictional High Court in the case of Shri Chandra Prakash Jain vs. ACIT (supra) to prove that the transfer of impugned property was completed on 30.01.2009 on the day of execution of Agreement to Sell and handing-over possession to the purchaser. Therefore, the transfer in relation to capital asset have completed on 30.01.2009 which pertain to preceding A.Y. 2009-2010, therefore, no capital gain could be assessed in assessment year under appeal i.e., 2010-

53 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 2011. Considering the totality of the facts and circumstances of the case noted above, we set aside the Orders of the authorities below and delete the entire addition. Ground No.1 of appeal of Assessee is accordingly allowed.”

8.6. The Hon’ble Karnataka High Court in the case of CIT vs., A. Suresh Rao (supra) held as under :

“A number of judgments show that even in the absence of a registered deed of transfer, if the transaction in question demonstrates the intention of the parties that after paying the entire consideration agreed upon, the purchaser enjoys the property, the fact that the transaction is not completed by execution of the registered sale deed, makes no difference in the eye of law for the purpose of taxes. If the revenue is entitled to collect tax on such capital gains, even in the absence of a registered document, on the same analogy, the assessee, who is liable to pay the capital gains, is also entitled to the exemption granted under the very Act on

54 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. such capital gains. That is precisely what the Apex Court has said in Smt. Saroj Aggrawal v. CIT [1985] 156 ITR 497/23 Taxman 76 that facts should be viewed in natural perspective, having regard to the compulsion of the circumstances of a case. Too hyper- technical or legalistic approach should be avoided in looking at a provision which must be equitably interpreted and justly administrated. The Courts should place an interpretation making a benevolent arid justice oriented inference and the facts must be viewed in the social milieu of a country. [Para 15]”

8.7. In view of the above facts, it is clear that assessee entered into genuine transaction of sale and purchase of the impugned property through Agreement to Sell which was later on supported by Registered Purchase Deed and the rent from the impugned property have been later on offered for taxation by the son of the assessee. Since it is not in dispute that part of the rent is received by assessee and subsequently part of the rent have been offered for taxation by the son of the assessee which fact is

55 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. also mentioned in the Agreement to Sell, if there is some minor irregularity in making a reply to the notices issued by A.O. would be of no consequence. If the cheque received by assessee as sale consideration on account of sale of the impugned property is credited to his account later on, is of no consequence because ultimately the property is transferred through Registered Deed and the sale consideration have passed on to the assessee. If the ownership was recorded for maintenance purpose in the name of assessee, it is not relevant for satisfying the conditions of Section 2(47)(vi) of the I.T. Act, 1961. Thus, whatever objections have been raised by the authorities below, were no relevant to discard the explanation of assessee which is supported by the documentary evidences on record, genuineness of which, have not been doubted by the authorities below. The claim of assessee is also supported by the fact that assessee paid the capital gains tax on sale consideration of impugned property which have been accepted by the A.O. Similarly, the part of the share of wife of the assessee was also transferred and according to

56 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. Learned Counsel for the Assessee in the case of wife of assessee the return have been accepted on identical facts under section 143(1) of the I.T. Act, 1961 and no re- assessment proceedings have been initiated till date. The A.O, therefore, bound to follow the rule of consistency in the matter as well. In view of the above facts it is clear that assessee transferred the capital asset to his son with all rights, title, interest and enjoyment in the impugned immovable property through Agreement to Sell and Registered Transfer Deed, subject to consideration, therefore, assessee would not be having more than one residential house at the time of claiming exemption from capital gains and as such, A.O. was not justified in rejecting the claim of exemption under section 54F of the I.T. Act.

8.8. Learned Counsel for the Assessee further contended alternatively that even if it is assumed that assessee continued to be owner of the property at Malibu Town, Gurgaon, assessee was joint owner of the property with 50% share and as such, cannot be considered as own

57 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. residential house in terms of proviso to Section 54F of the I.T. Act, 1961. Learned Counsel for the Assessee submitted that proviso (a)(i) to Section 54F seeks to cover only those residential properties of which assessee is exclusive owner which is inconformity with intention and spirit of Section 54F of the I.T. Act. He has submitted that assessee having only 50% of share in the impugned property, therefore, assessee would be entitled for exemption under section 54F of the I.T. Act on sale of land. Learned Counsel for the Assessee in support of his contention relied upon the following decisions.

8.8.1. The Order of ITAT, Delhi A-Bench, Delhi in the case of Amit Gupta vs., ACIT (supra), in which it was held as under :

“Section 54F of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house (Ownership of one property) - Assessment year 2006-07 - Where assessee did not exclusively own second property but he was having 50 per cent share jointly with another

58 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. person, assessee was entitled for exemption under section 54F [In favour of assessee]”.

8.8.2. The Order of ITAT, Mumbai Bench in the case of Ashok G. Chauhan vs., ACIT, Mumbai (supra), in which it was held as under :

“Where Assessing Officer rejected assessee's claim for deduction under section 54F on ground that at time of sale of capital asset, assessee was owner of more than one residential house properties, in view of fact that one residential property was co-jointly owned in name of assessee and his wife and he could not be treated as 'absolute owner' of said property, deduction under section 54F could not be denied to him.”

8.8.3. The Order of ITAT, Mumbai F-Bench, Mumbai in the case of DCIT vs., Shri Dawood Abdulhussain Gandhi, Mumbai (supra), in which in paras 7, 8 and 9 held as under :

59 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. “7. We have further deliberated on the claim of the assessee that as ne was not the absolute owner of the aforesaid properties, i.e. Tara Manzil and Noor Manzil, but was only a co-owner having fractional ownership in the said respective properties, therefore, the precondition of being the owner of more than one residential house, other than the new asset, on the date of transfer of the original asset was not satisfied. We find substantial force in the contention of the Ld. A.R and are of the considered view that as the assessee on the date of making of an investment in a residential house with Oberoi Construction Pvt. Ltd., viz. Oberoi Splendour, Building No.l, ‘C’ Wing, Mumbai, was vested with only a fractional ownership in the aforementioned properties, i.e. 25% in Tara Manzil and 20% in Noor Manzil, therefore, it can safely be concluded that the assessee was not the owner of more than one residential house on the aforesaid relevant date. We may herein observe that the term owns more than one residential house used in the proviso of Sec.

60 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 54F(1) has to be strictly construed and accorded its literal meaning, which thus would not bring within its sweep a partial and fractional ownership of a property. We are of the considered view that if the legislature in all its wisdom would had sought to even bring a partial or fractional ownership of a residential house also within the gamut of the disqualification contemplated under the aforesaid statutory provision, viz. Sec. 54F(1), then, it would had specifically provided for the same. However, as the partial or fractional ownership of a residential house does not find a place in the set of circumstances where an assessee is precluded from claiming deduction under Sec. 54F, therefore, going by the rule of strict literal interpretation, such a disqualification cannot be read by us in the said statutory provision. We find that a similar view had been taken by a coordinate bench of the Tribunal in the case of The Income Tax Officer Vs. Shri Rasiklal N. Satra (2006) 98 ITD 335 (Mum), wherein the Tribunal while deliberating on the entitlement of the assessee

61 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. towards claim of deduction under Sec. 54F had distinguished a joint ownership as against an absolute ownership of a residential property, by observing as under :

“7. The only question remains as to whether assessee can be said to be the owner of that residential house. The legislature has used the word "a" before the words "residential house". In our opinion, it must mean a complete residential house and would not include shared interest in a residential house. Where the property is owned by more than one person, it cannot be said that any one of them is the owner of the property. In such case, no individual person on his own can sell the entire property. No doubt, he can sell his share of interest in the property but as far as the property is considered, it would continue to be owned by co-owners. Joint ownership is different from absolute ownership. In the case of residential unit, none of the co-owners can claim that he is

62 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. the owner of residential house. Ownership of a residential house, in our opinion, means ownership to the exclusion of all others. Therefore, where a house is jointly owned by two or more persons, none of them can be said to be the owner of that house. This view of ours is fortified by the judgment of the Hon’ble Supreme Court in the case of Seth Banarsi Dass Gupta vs. CIT (1987) 64 CTR (SC) 142 : (1987) 166 ITR 783 (SC), wherein, it was held that a fractional ownership was not sufficient for claiming even fractional depreciation under s. 32 of the Act. Because of this judgment, the legislature had to amend the provisions of s. 32 w.ef. 1st April, 1997 by using the expression "owned wholly or partly". So, the word "own" would not include a case where a residential house is partly owned by one person or partly owned by other person(s). After the judgment of Supreme Court in the case of Seth Banarsi Dass Gupta (supra), the legislature could

63 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. also amend the provisions of s. 54F so as to include part ownership. Since the legislature has not amended the provisions of s. 54F, it has to be held that the word "own" in s. 54F would include only the case where a residential house is fully and wholly owned by assessee and consequently would not include a residential house owned by more than one person. In the present case, admittedly the house at Sion, Mumbai, was purchased jointly by assessee and his wife. It is nobody’s case that wife is benami of assessee. Therefore, the said house was jointly owned by assessee and his spouse. In view of the discussions made above, it has to be held that assessee was not the owner of a residential house on the date of transfer of original asset. Consequently, the exemption under s. 54F could not be denied to assessee. The order of the learned CIT(A) is, therefore, upheld.”

64 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 8. We have given a thoughtful consideration to the facts of the case and are of the considered view that the case of the assessee before us does not fall within the sweep of the disqualification contemplated in the proviso of Sec. 54F(1) for two reasons, viz. (i) the properties, i.e. Tara Manzil and Noor Manzil were not residential properties but commercial properties; and (ii) that the assessee was not the absolute owner of the aforesaid properties, but rather, was only a fractional owner of the same. We thus are of the considered view that for the aforesaid reasons, it can safely be concluded that the observations of the CIT(A) do not suffer from any infirmity. We thus in the backdrop of our aforesaid observations and finding ourselves as being in agreement with the view taken by the coordinate bench of the Tribunal in the case of Shri Rasiklal N. Satra (supra), therefore, uphold the order of the CIT(A).

65 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. 8.8.4. Judgment of Hon’ble Madras High Court in the case of Dr. Smt. P.K. Vasanthi Rangaraj vs., CIT (supra), in which the Hon’ble High Court held as under :

“Joint ownership of a second property is no bar to exemption on transfer of individual property - Merely because assessee jointly owned another property on date of transfer of asset, its claim for exemption under section 54F could not be rejected in respect of capital gains earned from transfer of her individual property.”

8.9. Considering the facts of the case in the light of above Judgments it is clear that assessee was having only 50% share in the impugned residential property which was sold to the son of the assessee. Therefore, the above Judgments squarely apply to the facts and circumstances of the case and A.O. cannot deny exemption under section 54F of the I.T. Act, 1961, to the assessee. The alternate contention of Learned Counsel for the Assessee is allowed. Considering the above discussion, we are of the view that assessee has genuinely transferred the impugned property

66 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi. in Malibu Town, Sohna Road, Gurgaon, to his son and satisfied the conditions of Section 54F of the I.T. Act. Thus, assessee would be entitled for exemption/deduction under section 54F of the I.T. Act. In view of the above, we set aside the Orders of the authorities below and delete the addition and direct the A.O. to allow exemption under section 54F of the I.T. Act to the assessee. In view of the above the other contentions of assessee regarding use of the impugned property for commercial purpose and consequential grounds are left with academic discussion only. We do not propose to decide the same. Ground No.1 of the appeal of the Assessee is allowed.

Order pronounced in the open Court.

Sd/- Sd/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi, Dated 13th August, 2020 VBP/-

67 ITA.No.161/Del./2020 Smt. Savita Bhasin L.R. of (wife) Shri Ramesh Chander Bhasin, New Delhi.

Copy to

// BY Order //

Assistant Registrar : ITAT Delhi Benches : Delhi.