Kusum Sahgal Vs ACIT (ITAT Delhi)
Joint Ownership Not a Bar for 54F—Assessee Owning Only Fractional Shares Eligible for Full Deduction; AO & CIT(A) Orders Set Aside
Assessee filed return declaring Rs.66.14 crores & claimed long-term capital gains exemption u/s 54F on investment of Rs.21.28 crores in a residential unit at “The Camellias”, DLF, Gurgaon, arising from sale of shares of Quality Needles Pvt Ltd. AO denied deduction u/s 54F on the ground that Assessee jointly owned more than one residential property on the date of transfer & further disallowed share-transfer expenses. CIT(A) deleted the share-transfer expense disallowance but upheld denial of exemption u/s 54F.
Before Tribunal, Assessee contended that her earlier assets consisted of (i) a commercial unit at Rajendra Place, (ii) agricultural land at Mehrauli governed by DLR Act which did not constitute residential ownership, & (iii) only one residential property jointly owned at Jaypee Greens. It was argued that fractional co-ownership does not amount to “owning a residential house” for the purposes of the proviso to s.54F(1). Reliance was placed on Madras High Court ruling in Dr. P.K. Vasanthi Rangarajan & ITAT decisions including Raman Chawla, Sheriar Phirozsha Irani, Mukesh Vakharia & Zainul Abedin Ghaswala.
Department contended that even joint ownership attracts the bar in the proviso. However, Tribunal noted that no contrary judgment of jurisdictional High Court supports the Revenue & by rule of judicial preference, favourable non-jurisdictional High Court view should be applied where conflict exists, as held in Vegetable Products.
