CPT V24P7-Art1 (Content).pmd - Taxmann

to agree with the assessee’s contention
that the joint ownership of the property
would not stand in the way of claiming
exemption under section 54F”.
The High Court distinguished: (a) the decision
of the Delhi High Court in the case of Vipin
Malik (HUF) v. CIT [2009] 183 Taxman 296
wherein it was held that in order to claim
exemption under section 54F of the Act the
residential house, which is purchased or
constructed, has to be in the name of the same
assessee whose agricultural land was sold, and
(b) the decision of the Bombay High Court in
the case of Prakash v. ITO [2008] 173 Taxman
311 wherein it was held that when the purchase
of a new property is made in the name of
adopted son by an assessee, even if made with
a clear intention to transfer the property to his
adopted son, the assessee would not be entitled
to exemption.
The High Court went on to hold as under in
para 16 of its order-
“As far as the present case is concerned,
the purchase of the property was by the
individual in her own name and the
property held by her as on the date of
transfer, stood in the joint names of the
assessee and her husband. A reading of
section 54F clearly points out that the
holding of the residential house as on the
date of transfer has relevance to the status
of the assessee as an individual or HUF.
On the admitted fact that the assessee
herein, as an individual, does not own
any property in the status of an individual
as on the date of transfer, we have no
hesitation in accepting the case of the
assessee, thereby allowing the appeal”
With regard to other issue of allowing exemption
on investment made in four flats by the assessee,
the High Court had no difficulty in accepting
such contention of the assessee, as it placed
its reliance on the decision of the Karnataka
High Court in the case of CIT v. Smt. K.G.
Rukminiamma [2011] 196 Taxman 87/[2010] 8
taxmann.com 121 wherein it was held that
‘four residential flats constituted “a residential
house” for the purpose of exemption under
section 54 of the Act’.
WHY THIS DECISION IS A SHAKY ONE?
3. The Madras High Court in this case seems
to have overlooked the fact that it is required
that “the assessee had to be the owner of the
property in her name only to the exclusion of
anybody else including the husband” in order
to attract the disentitlement as stated in proviso
to section 54F of the Act, by not considering
the three principles that have emerged from
the decision of the Supreme Court in the case
of Kochkunju Nair v. Koshy Alexander [1999] 3
SCC 482 so far as co-owners are concerned.
The following are those three principles-
1. right to possession
2. right to enjoy
3. right to dispose
The Supreme Court observed that all the three
essentials are satisfied even in the case of coowners.
It has also been observed that all coowners
would have equal rights and coordinate
interest in the property, though their shares
may be either fixed or indeterminate. It has
been held that every co-owner has a right to
enjoyment and possession equal to that of
the other co-owner or co-owners. It has also
been held that each co-owner has, in theory,
in every infinitesimal portion of the subjectmatter
and each has a right, irrespective of the
quantity of his interest, to be in possession of
every part and parcel of the property, jointly
with others.
So, the observations - that unless and until
there are materials to show that the assessee
is the exclusive owner of the residential
property, the harshness of the proviso cannot
be applied to the facts herein – made by the
High Court appear to be too wide in the light
of the decision of the Supreme Court in the
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