Case Law Details
DCIT Vs. Shri Dawood Abdulhussain (ITAT Mumbai)
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.
Claim of the assessee that he 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.1, ‘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. 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.
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It appears that Hon ITAT has taken a very narrow view of ownership of a house property.When a joint owner of a house is entitled to claim deduction of house loan interest as if he/she is the absolute owner, it will be interesting to see what will be judgement of higher appellate authority i.e. high court or supreme court if the order is conteted
GREAT UPDATE BUT THE HEADING SAY – “Section 54/54F: Jointly owned house will not be considered in house property calculation” BUT IT IS ACTUALLY ON – “Section 54F: Jointly owned house will not be considered FOR DISALLOWANCE OF EXEMPTION U/S 54F WHILE CALCULATING CAPITAL GAINS”