Monday, September 14, 2015

CASE LAW NEWER 'LAND MARKS'


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

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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

  1. CIT vs. Dr. P. S. Pasricha (Bombay High Court) 
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…
  1. CIT vs. Sambandam Udaykumar (Karnataka High Court) 
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…
  1. CIT vs. Syed Ali Adil (Andhra Pradesh High Court) 
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…
  1. CIT vs. V. R. Karpagam (Madras High Court) 
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 ›
  1. S. Uma Devi vs. CIT (ITAT Hyderabad) 
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…

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ADVOCACY X AGING X COMPETENCE

Lawyers-Fitness 

 


“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.


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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
Lawyers-FitnessThe 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)

Lawyers-Fitness(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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