Gifting of property will entitle assessee to claim exemption u/s 54 if left with only one

Brief of the Case

ITAT Delhi held in case of ITO v Shri Sameer Jasuja the property has been gifted by the person to his wife, then Assessee will entitled to the exemption u/s 54F if he is left with one property. It further held that section 64(1)(iv) will not operate to nullify gift and would operate only to club income in the hands of donor assessee.

Facts of the Case

In the present facts there were two issues:-

• The AO made the disallowance regarding the account of F&O transaction in foreign currency.
• The second disallowance was made under the exemption u/s 54F by holding that the Assessee was the owner of more than one property.

Order of the CIT(A)

• The ld. CIT(A), in his order mentioned about the agreement of the assessee with the finance companies and bank statements from where the payments have been made to the brokers. The appellant has entered into these F&O transactions during the year. In respect of the various transactions entered into by the appellant he has incurred loss of Rs.2,32,10,575/- and earned profit of Rs. 1,94,37,302/-. Thus there is an actual loss of Rs.37,73,273/- during the year in such transactions. It is not a notional entry which has been passed on the last day of the financial year and represents the value as per the market value on 31st March. It is a running account whereby profit and loss are being incurred on settlement day and amount being debited and credited on account of loss or the profit as the case may be.
• The ld. CIT(A) while going through the gift deed, observed that the appellant has conveyed all rights and privileges whatsoever of the said property forever and has not kept any right with him. It has been further stated in the gift deed that the donee will be the exclusive and absolute owner and that the donee shall enjoy the property with absolute rights including the exclusive unrestricted right to sell or transfer the said property. Therefore, observation of the Assessing Officer in the assessment order that the appellant continues to be the beneficial owner is not correct.

Contention of the Revenue