INCOME TAX OFFICER v. RASIKLAL N. SATRA
[Citation -2005-LL-0919-2]

Citation 2005-LL-0919-2
Appellant Name INCOME TAX OFFICER
Respondent Name RASIKLAL N. SATRA
Court ITAT
Relevant Act Income-tax
Date of Order 19/09/2005
Assessment Year 1998-99
Judgment View Judgment
Keyword Tags income chargeable to tax • joint ownership • owner of house • status of aop • capital gain • sale deed • benami
Bot Summary: In reply, the assessee contended that he was not an independent owner of the house and exemption can be denied only where assessee is absolute owner of the house. The gist of the arguments of the assessee s counsel is that shared interest in the property does not amount to ownership of a residential house in terms of s. 54F. According to him, a co- owner of a house cannot be said to be an owner of a house. In view of this definition, we hold that flat at Sion, Mumbai, was a residential house since assessee along with his family was living in that house. In our opinion, it must mean a complete residential house and would not include shared interest in a residential house. Where a house is jointly owned by two or more persons, none of them can be said to be the owner of that house. The word own would not include a case where a residential house is partly owned b y one person or partly owned by other person(s). 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 i s fully and wholly owned by assessee and consequently would not include a residential house owned by more than one person.


K.C. Singhal, J.M.: only issue arising in this appeal relates to assessee s claim for exemption under s. 54F of IT Act, 1961 ( Act ). Briefly stated, facts are that assessee declared capital gain of Rs. 6,68,698 on sale of shares and claimed exemption under s. 54F by investing same in purchase of residential flats at Vashi, Navi Mumbai. In course of assessment proceedings, it was noticed by AO that assessee was co-owner of flat in Sion (West), Mumbai. Accordingly, assessee was asked to explain as to why exemption under s. 54F be not denied. In reply, assessee contended that he was not independent owner of house and exemption can be denied only where assessee is absolute owner of house. He also filed details of purchase of house which showed that he along with his wife had purchased house on 13th April, 1994 for total consideration of Rs. 3,05,000 out of which assessee had invested Rs. 1,60,000 and balance amount was invested by his wife. copy of sale deed also showed that it was being purchased in joint ownership. However, AO did not accept contention of assessee since in his view, assessee could be said to be owner of house at Sion (Mumbai) on date of sale of original asset. Accordingly, he denied claim of assessee under s. 54F. On appeal, it was contended before learned CIT(A) that shared interest i n property does not amount to ownership of property. Reliance was placed on following decisions: (i) CIT vs. T.N. Aravinda Reddy (1979) 12 CTR (SC) 423: (1979) 120 ITR 46 (SC); (ii) Shiv Narain Chaudhari vs. CWT 1977 CTR (All) 149: (1977) 108 ITR 104 (All); (iii) Smt. Kulwanti D. Alreja vs. ITO (Bom); (iv) Abdul Rahman vs. CIT (1944) 12 ITR 302 (Lahore). learned CIT(A) accepted contention of assessee and consequently allowed claim of assessee. Aggrieved by same Revenue is in appeal before Tribunal. Both parties have been heard at length. gist of arguments of assessee s counsel is that shared interest in property does not amount to ownership of residential house in terms of s. 54F. According to him, co- owner of house cannot be said to be owner of house. He also drew our attention to provisions of s. 26 of Act to point out property owned by co- owners is to be assessed in status of "association of persons" (AOP) unless their shares are definite and ascertainable. He argued that such shares are not defined in present case and as such, no part of house can be said to be owned by assessee. It is case of joint ownership where income chargeable to tax has to be assessed in status of AOP only. In support of his arguments, he relied on various judgments as 216 ITR 367 (Bom) (sic), CIT vs. P.V. Narasimhan (1990) 81 CTR (Mad) 141: (1990) 181 ITR 101 (Mad), B.B. Sarkar vs. CIT (1982) 26 CTR (Cal) 13: (1981) 132 ITR 150 (Cal) and CIT vs. Laxmidas Devidas (1937) 5 ITR 584 (Bom). On other hand, learned Departmental Representative has relied on order of AO. Rival submissions have been considered carefully. question for our consideration is whether, on facts, assessee can be said to be owner of residential house vis-a-vis flat at Sion, Mumbai. case law referred to by assessee s counsel is not on point of issue before us and, therefore, we proceed on basis of language employed by legislature. word "residence", as per Stroud s Judicial Dictionary, means place where individual or his family eat, drink and sleep. So residential house would mean building or part of building where one can eat, drink and sleep. Here, we may clarify that house is not being equated with building since building may comprise of many houses. So house means independent unit where one can eat, drink and sleep. In view of this definition, we hold that flat at Sion, Mumbai, was residential house since assessee along with his family was living in that house. only question remains as to whether assessee can be said to be owner of that residential house. legislature has used word "a" before words "residential house". In our opinion, it must mean complete residential house and would not include shared interest in residential house. Where property is owned by more than one person, it cannot be said that any one of them is owner of property. In such case, no individual person on his own can sell entire property. No doubt, he can sell his share of interest in property but as far as property is considered, it would continue to be owned by co-owners. Joint ownership is different from absolute ownership. In case of residential unit, none of co-owners can claim that he is owner of residential house. Ownership of residential house, in our opinion, means ownership to exclusion of all others. Therefore, where house is jointly owned by two or more persons, none of them can be said to be owner of that house. This view of ours is fortified by judgment of Hon ble Supreme Court in case of Seth Banarsi Dass Gupta vs. CIT (1987) 64 CTR (SC) 142: (1987) 166 ITR 783 (SC), wherein, it was held that fractional ownership was not sufficient for claiming even fractional depreciation under s. 32 of Act. Because of this judgment, legislature had to amend provisions of s. 32 w.e.f. 1st April, 1997 by using expression "owned wholly or partly". So, word "own" would not include case where residential house is partly owned b y one person or partly owned by other person(s). After judgment of Supreme Court in case of Seth Banarsi Dass Gupta (supra), legislature could also amend provisions of s. 54F so as to include part ownership. Since legislature has not amended provisions of s. 54F, it has to be held that word "own" in s. 54F would include only case where residential house i s fully and wholly owned by assessee and consequently would not include residential house owned by more than one person. In present case, admittedly house at Sion, Mumbai, was purchased jointly by assessee and his wife. It is nobody s case that wife is benami of assessee. Therefore, said house was jointly owned by assessee and his spouse. In view of discussions made above, it has to be held that assessee was not owner of residential house on date of transfer of original asset. Consequently, exemption under s. 54F could not be denied to assessee. order of learned CIT(A) is, therefore, upheld. In result, appeal of Revenue stands dismissed. *** INCOME TAX OFFICER v. RASIKLAL N. SATRA
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