SUSHIL S. DESHPANDE,MUMBAI vs. ITO 16(1)(4), MUMBAI

All the three grounds which are interconnected, therefore, this ground disposed by this common order, reads as under:-

The Ld. AR submitted that the assessee has sold two shops and he purchased the shop on 25/11/2005. He lease this shop to Pratap Parelkar for 60 months for conducting a family restaurant and bar, copy of the leave and license agreement was executed between the party. It was agreed that the licensee was carry out all the necessary furniture and fixtures required for his business, at his own cost. Accordingly, the licensee made all furniture and fixtures and was doing his business. Within 14 months of the leave and license period the assessee wish to sell the shops and entered into sale agreement, copies of the sale agreement enclosed. Since this sale agreement was made just within 14 months. He wanted to reimbursement of all his furniture and fixture cost and according to this sale consideration of shops was fixed, Rs.40,00,000/- was directly paid to Pratap Parelkar and who has confirm the same. Therefore, while calculating the cost of furniture is on included in total consideration for agreement but same was given back to licensee who incurred the cost of the assessee. The Capital gain was computed the assessee has reduced the cost of furniture. Moreover, the long term capital gain on shop was re-investment in 4 Mr. Sushil S. Deshpande ITA No. 3601/M/2016 residential flat at Vallabha Darshan, Vile Parle. The assessee was joint owner of flat No. E/705 and 706 along with his wife. Thus, he was not the full owner of the flat. A share in the joint property should be regarded as a share only and not as an ownership co-owner is a part owner and a part of a house cannot be treated as one house and ownership of part house cannot be considered as the ownership of the one house. The assessee had a flat on Meghdoot, Vile Parle, but the same was demolished and was under re-development process. After re- development new flats received back. There was a right in this flat but not exist during the year. Therefore, if a flat was demolished the assessee has only right and assessee paid to receive the purchase. Therefore, the assessee’s claimed may be allowed.

The Ld. DR relied upon the order of Revenue Authorities. We have heard the rival contention of both the parties. Looking to the facts and circumstances of the case, we find that during the year the assessee has purchased two shops copy of the Pratap Parelkar for 60 months for conducting family restaurant and bar. As per the leave and license agreement it was agreed that the licensee was carried out all the necessary furniture fixtures required for his business at his own cost. The license was for 60 months but within 14 months the assessee sold this shop entered into sale agreement has to reimbursement all the furniture and fixtures cost and the original sale agreement specifically mention that the shop includes the furniture and fixture and according to that the shops sale consideration of the shops was fixed which reads as under: Shop No. Consideration for Consideration for Total Consideration Shop (Rs.) Furniture & (Rs.) Fixtures (Rs.) I 98,55,000/- 19,70,000/- 1,18,25,000/- II 1,01,45,000/- 20,30,000/- 1,21,75,000/- Total 2,00,00,000/- 40,00,000/- 2,40,00,000/- 5 Mr. Sushil S. Deshpande ITA No. 3601/M/2016

Therefore, it is also fact and record that 40,00,000/- was directly paid to Pratap Parelkar and same was confirm by him. Therefore, above cost of furniture is included in total consideration of agreement but same was given back to licensee who has incurred the cost of assets. Therefore, we are of the view that the assessee is entitle or Rs.40,00,000/- consideration for calculating the long term capital gain. Therefore, the assessee entitled for the same. In respect of Section 54F of the I.T. Act the assessee had taken contention before us that during the year the assessee was joint owner of flat No. E/705 and 706 along with his wife he was not full owner of the flat and share in joint property was regarded as share only and not the ownership. A part of house cannot be treated as one house and ownership of part house cannot be considered as ownership of one house. This fact is accepted by the Hon’ble Mumbai Tribunal in the case of Rasiklal N Satra, 98 ITD 335 reads as under: “Section 54F of the Income-tax Act, 1961 – Capital Gains – Exemption of, in case of investment in residential house – Assessment year 1998-99 – Whether word „own‟ appearing in section 54F 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 – Held, yes – Assessee claimed exemption under Sction 54F by investing capital gains in purchase of residential flat – Assessing Officer denied assessee‟s claim on ground that assessee was already a co-owner of another flat – Whether assessee not being absolute owner of another residential flat, exemption under Section 54F could be denied – Held, no.”