Deduction u/s 54F cannot be denied merely on the ground that conveyance deed has not yet been registered
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Case Details: |
ITO vs. Smt. Swati Oberoi |
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Appeal No.: |
ITA No. 4150/Del./2018 |
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Order pronounced by: |
ITAT Delhi |
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Date of Order: |
30-07-2021 |
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In favour of: |
Assessee |
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Assessment Year: |
2015-16 |
Brief Facts:
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The assessee sold 50% share in a commercial property of Rs. 3.50 crores and has shown LTCG of Rs. 3.15 crores in the return of income out of which he claimed deduction u/s 54EC for Rs. 49.56 Lakhs and deduction u/s 54F for Rs. 2.66 crores. The assessee claimed to have invested an amount of Rs. 2.66 crores for purchasing a residential house from her parents. |
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The A.O. disallowed deduction claimed u/s 54F on failure of the assessee to furnish sale deed of the property and thereby made an addition of Rs. 2.66 crores under the head “Income from capital gains”. |
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The assessee made an appeal before Ld. CIT(A) where he got partial relief. Feeling aggrieved, the Revenue made an appeal before the Tribunal. |
Tribunal’s Observations:
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It is not in dispute that the assessee has brought in record agreement to sell, General Power of Attorney and possession letter dated 19.03.2015 along with details of payment made to her parents for purchase of property. However, the A.O. disallowed the deduction claimed u/s 54F on the sole ground that transfer of immovable property is complete only by way of registered sale deed. |
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Ld. CIT(A) has decided this issue in favour of the assessee by relying upon the decisions of the Hon’ble Supreme Court & Hon’ble High Courts in the cases of:
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The assessee has duly proved details of payment made by her to the vendee (her parents) and that the assessee has also provided on file photograph of the property along with electricity and water bills to prove her possession over the property, in our considered view for all intents and purposes and for the purposes of the Act, the assessee shall be construed as owner of the property. |
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In an identical issue in respect of allowance of depreciation u/s 32, The Hon’ble Supreme Court in case of Mysore Minerals Limited vs. CIT (1999) 239 ITR 775 (SC) held that: “the finding of fact arrived at in the case at hand was that though a document of title was not executed by the Housing Board in favour of the assessee, the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were actually used by the staff of the assessee. The assessee was entitled to depreciation in respect of the seven houses in respect of which the assessee had not obtained a deed of conveyance from the vendor although it had taken possession and made part payment of consideration.” |
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Coordinate Bench of the Tribunal in case of Charanjit Singh Atwal and Ors. Vs. ITO in ITA No. 276/Chd/2012 also dealt with the identical issue and decided the same in favour of the assessee in light of provisions contained in section 2(47) (v) (vi) of the Act as well as u/s 53 of the Transfer of Property Act by following the law laid down by Hon’ble Supreme Court in case of Surana Steel vs. DCIT 237 ITR 777 (SC). Non-registration of agreement cannot lead to the conclusion that provision of section 2(47)(v) is not applicable. Similar view has been taken by ITAT Cochin Bench of the Tribunal in case of G.Sreenivasan vs. DCIT 28 Taxmann.com 200 (Coch.) and ITAT Pune Bench in case of Mahesh Nemi Chandra Ganeshwade vs. ITO 21 Taxmann.com 136 (Pune). |
ITAT Ruling:
In view of the above observations, ITAT held that the benefit under section 54F of the Income Tax Act cannot be denied merely on the ground that conveyance deed has not yet been got registered particularly when the respondent is proved to be in possession of the property in question and has duly proved possession over the property by way of electricity and water charges bill. Therefore, the order of CIT(A) allowing deduction u/s 54F of the Act is precise and dismissed the appeal of the Revenue.
Read complete order: ITO vs. Smt. Swati Oberoi
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