UPDATE
CIT vs. B. S. Shantakumari (Karnataka High Court)
S. 54F is a beneficial provision & must be
interpreted liberally. It does not require that the
construction of the new residential house has to be
completed, and the house be habitable, within 3 years of the
transfer of the old asset. It is sufficient if the funds
are invested in the new house property within the time
limit
The essence of s. 54F is to ensure that assessee who
received capital gains would invest same by constructing a
residential house and once it is established that
consideration so received on transfer of his Long Term
capital asset has invested in constructing a residential
house, it would satisfy the ingredients of Section 54F If
the assessee is able to establish that he had invested the
entire net consideration within the stipulated period, it
would meet the requirement of Section 54F and as such,
assessee would be entitled to get the benefit of Section
54F of the Act
...
CIT vs. Kapil Nagpal (Delhi High Court)
House property – ‘purchase’, ‘ownership’, registered deed
..
Xcerpt
S. 54: To constitute purchase of new house, a registered sale deed
is not necessary. Suspicion, howsoever strong, cannot partake the character of
evidence < For the purpose of attracting the provisions of Section 54 of the IT Act, it is not necessary that the Assessee should become the owner of the property. Section 54 of the said Act speaks of purchase. Moreover, the ownership of the property may have different connotation in different statutes. It is wrong to hold that for the purpose of applicability of Section 54, registration of document is imperative >
In light of the decision of the Supreme Court in CIT v. Podar Cements (P) Limited [1997] 226 ITR 625 (SC), CIT v. T.N. Aravinda Reddy (1979) 120 ITR 46 and Balraj v. CIT (2002) 254 ITR 22 (Del), in order to constitute purchase for the purpose of Section 54 and Section 54F of the Act it is not necessary that there should be registered sale deed. This Court in Balraj v. CIT (supra) noticed the decisions in Mysore Minerals Ltd. v. CIT (1999) 239 ITR 775 (SC) and CIT v. R.L. Sood (2000) 245 ITR 727 (Del) and held that “for the purpose of attracting the provisions of Section 54 of the IT Act, it is not necessary that the Assessee should become the owner of the property. Section 54 of the said Act speaks of purchase. Moreover, the ownership of the property may have different connotation in different statutes.” It was concluded that the Tribunal in that case “went wrong in holding that for the purpose of applicability of Section 54, registration of document is imperative.” In Dr. P.K. Vasanthi Rangarajan v. CIT (2012) 252 CTR 336 the Assessee and her husband were co-owners to the extent of 50% share in a building that had a clinic and a residential house. It was held that since the entire property was not an exclusive residential property and 50% of the ownership was with reference to the clinic on the ground floor, the harshness of the proviso to Section 54 F cannot be applied “unless and until there are materials to show that the Assessee is the exclusive owner of the residential property.”
(ii) In the present case, as pointed out by the CIT (A), the sale deed does show that what was purchased by the Appellant (Assessee herein) is an agricultural land. Khasra Girdawri also clarifies that while there is a kothi, i.e., house on Khasra No. 76 (purchased by the Assessee’s father), the land in Khasra Nos. 75 and 90 purchased by the Assessee was used only for agricultural purpose. The explanation by the Assessee that only the rental income from letting out the constructed portion property was being shared between him and the father in the ratio of 15%: 85% appears to be a plausible one. Unless there is document to show that the Assessee was a co-owner of the said building to the extent of even 15%, there cannot be an inference in that regard. As explained by Umacharan Shaw & Bros v. CIT (1959) 37 ITR 271 (SC) suspicion howsoever strong cannot partake the character of evidence. The evidence produced by the Assessee showed that the house was purchased by him on 10th April 2007 within the time allowed under Section 54F of the Act, after making payment and by obtaining the possession thereof. A substantial part of the consideration of Rs. 2 crores was paid on the date of the agreement to sell itself. The balance payment of Rs. 22 lakhs was made on 17th April 2007 when the possession was handed over. The conclusion that the house was in fact purchased on 10th April 2007 within the time allowed under Section 54F of the Act stands supported by the documents placed on record by the Assessee. The Court is satisfied that the prior to 10th April 2007 the Assessee was not the owner of another residential house and therefore the exemption under Section 54 read with Section 54F of the Act could not be denied to him.
Q
(i) In view of the decision of the Supreme Court in CIT v. Podar Cements (P) Limited [1997] 226 ITR 625 (SC), the Assessee could claim exemption on the basis of the agreement to sell only without it being registered. The agreement to sell showed that a substantial
ITA 609/2014 Page 10 of 15
payment of Rs. 2 crores was made on the date of the agreement itself. The balance payment of Rs. 22 lakhs was made on 17th April 207 and the possession was simultaneously handed over to the Appellant.
UQ
Related Judgements
S. 54 provides
that if an assessee has LTCG on transfer of a residential house and he
purchases or constructs a residential house within the specified period then
the amount appropriated towards the new house shall be deducted from the LTCG.
The assessee sold a house and used the…
S. 54F is a
beneficial provision for promoting the construction of residential house &
requires to be construed liberally for achieving that purpose. The intention of
the Legislature was to encourage investments in the acquisition of a
residential house and completion of construction or occupation is not the
requirement…
The expression “a
residential house” in s. 54 (1) has to be understood in the sense that the
building should be of residential nature and “a” should not be understood to
indicate a singular number. Where an assessee had purchased two residential
flats, he is entitled to exemption u/s…
The above-said
amendment to Section 54F of the Income Tax Act, which will come into effect
only from 01.04.2015, makes it very clear that the benefit of Section 54F of
the Income Tax Act will be applicable to constructed, one…Read more ›
If the assessee
has invested the money in construction of residential house, merely because the
construction was not complete in all respects and it was not in a fit condition
to be occupied within the period stipulated, that would not disentitle the
assessee from claiming the benefit under section…
<<<<<<
ADVOCACY X AGING X COMPETENCE
“S. 54: To constitute purchase of new house, a registered
sale deed is not necessary. …….”
The stated proposition that has been favourably opined on by the court, if
viewed independently, to say the least has been too widely stated to be
uniformly followed in all situations. Without having to necessarily discuss the
case law, and its merits or otherwise of the view the court has taken – which
may perhaps be endorsed for other reasons,- in any view, the correctness of
reliance placed on inter alia the SC judgment in Podar Cements case is prima
facie debatable. For, in that case, the point of issue was centred on the concept
of ‘DEEMED ownership’ within the meaning of the law; not on ‘ownership’ as
such, which is of direct relevance to the scheme of taxation of CGT (or its
exemption) as per the applicable enactment herein.
For a discussion and an attempted analysis of the SC case, with a view to
provoking more thoughts, attention may be invited to the published write-ups on
the website of Taxguru.com, so also elsewhere.
Perhaps, anyone can hope for enlightenment and clarity on
the indicated controversy in the possible further proceedings before the SC.
The stated proposition that has been favourably opined on by the court, if viewed independently, to say the least has been too widely stated to be uniformly followed in all situations. Without having to necessarily discuss the case law, and its merits or otherwise of the view the court has taken – which may perhaps be endorsed for other reasons,- in any view, the correctness of reliance placed on inter alia the SC judgment in Podar Cements case is prima facie debatable. For, in that case, the point of issue was centred on the concept of ‘DEEMED ownership’ within the meaning of the law; not on ‘ownership’ as such, which is of direct relevance to the scheme of taxation of CGT (or its exemption) as per the applicable enactment herein.
For a discussion and an attempted analysis of the SC case, with a view to provoking more thoughts, attention may be invited to the published write-ups on the website of Taxguru.com, so also elsewhere.
>>>>>
AG vs. Shiv Kumar Yadav (Supreme Court)
Law Commission and the Bar Council of India should consider whether Advocates should be tested for fitness and competence to argue matters
The interest of justice may suffer if the counsel conducting the trial is
physically or mentally unfit on account of any disability. The interest of the
society is paramount and instead of trials being conducted again on account of
unfitness of the counsel, reform may appear to be necessary so that such a
situation does not arise. Perhaps time has come to review the Advocates Act and
the relevant Rules to examine the continued fitness of
an advocate to conduct a criminal trial on account of advanced age or other
mental or physical infirmity, to avoid grievance that an Advocate who conducted
trial was unfit or incompetent. This is an aspect which needs to be looked into by the concerned authorities
including the Law Commission and the Bar Council of India (Image Credit: Hindustan Times)
(ii) The interest of justice may suffer if the counsel conducting the trial
is physically or mentally unfit on account of any disability. The interest of
the society is paramount and instead of trials being conducted again on account
of unfitness of the counsel, reform may appear to be necessary so that such a
situation does not arise. Perhaps time has come to review the Advocates Act and
the relevant Rules to examine the continued fitness of an advocate to conduct a
criminal trial on account of advanced age or other mental or physical
infirmity, to avoid grievance that an Advocate who conducted trial was unfit or
incompetent. This is an aspect which needs to be looked into by the concerned
authorities including the Law Commission and the Bar Council of India.An ECHO>
Ø
The Narendra Modi-led government could soon get
down to chopping off the bureaucratic deadwood. It instructed all departments
on Monday to identify civil servants of doubtful integrity in the 50-55 age
bracket who should be booted out to raise the probity bar in governance.
Ø
The departments have been told to invoke
Fundamental Rule (56 J) that empowers the government to
compulsorily retire employees after they put in 30 years of service, if they are suspected to be corrupt or ineffective.
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