The Pr. Commissioner Of Incometax -Central -1 v. Lata Goel

$~101*IN THE HIGH COURT OF DELHI AT NEW DELHI %Date of Decision: 30.04.2025 +ITA 127/2025 & CM No.25518/2025 THE PR. COMMISSIONER OF INCOMETAX -CENTRAL -1.....AppellantThrough:Mr. Ruchir Bhatia, Adv. Versus LATA GOEL Through:None. .....Respondent CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J. (Oral) 1.The Revenue has filed the present appeal under Section 260A of theIncome Tax Act, 1961 [Act] impugning an order dated 25.09.2024[impugned order] passed by the Income Tax Appellate Tribunal inITA No.3426/Del/2019 in respect of Assessment Year 2011-12. 2.The impugned order is a common order passed by the learned ITAT inITA No.3426/Del/2019 and ITA No.5892/Del/2015. However, as statedabove, the present appeal arises from ITA No.3426/Del/2019, which waspreferred by the Assessee against an order dated 18.03.2019 passed by theCommissioner of Income Tax (Appeals)-24 [CIT(A)]. The said appeal, inturn, was filed against an assessment order dated 29.12.2017, passed by theAssessing Officer under Section 147 read with Section 143(3) of the ITA 127/2025Page 1 of 10 Act. 3.The subject matter of controversy in the appeals before the learnedITAT centres around the Assessee’s claim for deduction under Section 54F ofthe Act. 4.The Assessee filed her return of income for AY 2011-12 on 31.12.2011,declaring an income of ₹70,87,301/-. The Assessee also claimed a deduction of ₹90 crores under Section 54F of the Act asserting that the consideration received from the sale of shares of FIITJEE Ltd. — an unlisted company, thegains from which would otherwise be chargeable to tax as capital gains —was invested in acquiring a residential house property bearing the address E-27, Vasant Vihar, New Delhi [the new asset]. 5.On 17.12.2012, a search and seizure operation was carried out underSection 132 of the Act on persons constituting the FIITJEE Group. TheAssessee was also one of the persons searched. Thereafter, the AO issued anotice dated 13.08.2013 under Section 153A of the Act and during the ensuingproceedings, examined the claim of the Assessee for deduction under Section54F of the Act. 6.The AO passed an assessment order dated 27.03.2015 under Section153A read with Section 143(3) of the Act restricting the deduction underSection 54F to ₹30 crores, as against ₹90 crores claimed by the Assessee. 7.The Assessee had deposited the consideration in the capital gainsaccount in two tranches – ₹30 crores on 28.07.2011 and ₹60 crores on 29.07.2011. The AO noted that the Assessee had paid a certain amount to acharitable trust/educational society, which, in turn, had paid certain sums to ITA 127/2025 Page 2 of 10 Signature Not Verified FITJEE Limited. FIITJEE Ltd. had paid an amount of ₹60 Crores to M/s Alert Buildtech Private limited on 28.07.2011 and the said company had lent ₹60 crores to the Assessee on 29.07.2011. 8.In the given facts, the AO reasoned that the amount received from thesale of shares was not directly invested in acquiring the new asset as theamount of ₹60 Crores continued to be reflected as outstanding. 9.Aggrieved by the said decision, the Assessee preferred an appeal beforethe Commissioner of Income Tax (Appeals) [CIT(A)], which was allowed byan order dated 28.08.2015. The learned CIT(A) noted that there was norequirement for the amount received from the sale of a capital asset to bedirectly invested in acquiring the house property [the new asset].Thelearned CIT(A) explained that the AO was required to determine whether theinvestment had been made in acquiring the new asset and that there was norequirement for the sale consideration received from sale of the capital assetbe traced in specie to the payments made for acquiring the new asset. The factthat a sum of ₹60 Crores continued to be reflected as outstanding, did not disentitle the Assessee from availing the deduction under Section 54F of theAct. Accordingly, the entire disallowance was deleted. 10.Aggrieved by the order dated 28.08.2015 passed by the learned CIT(A),theRevenuefiledanappealbeforethelearnedITAT[ITANo.5892/Del/2015], which was also disposed of by the impugned order. 11.However, as noted above, the Revenue’s appeal in the present case doesnot arise in respect of the said decision. It arises from an assessment orderdated 29.12.2017 framed by the AO under Section 147 read with 143(3) of ITA 127/2025 Signature Not Verified the Act. 12.The reassessment proceedings were initiated pursuant to a notice dated30.03.2017 issued under Section 148 of the Act. The AO had reopened theassessment on the basis that the records of South Delhi Municipal Corporation indicated that the Assessee owned more than one residentialproperty on the date of the transfer of the shares of FIITJEE Ltd. [the originalasset] being the basement and second floor of the property bearing addressD-6/5, Vasant Vihar, New Delhi. According to the AO, the basement andsecond floor were required to be considered as two separate residentialhouses. 13.In terms of clause (i) to the proviso to Section 54F(1) of the act, thesaid section would not apply if the assessee owned more than one residentialhouse. Clause (i) of the proviso to Section 54F of the Act is extracted below: “Section 54F. Capital gain on transfer of certain capital assetsnot to be charged in case of investment in residential house. ********* Provided that nothing contained in this sub-section shall applywhere.– (a) the assessee,–(i) owns more than one residential house, other than the new asset,on the date of the transfer of the original asset; or” 14.The AO held that the Assessee had more than one residential unit onthe date of transfer of the original asset and therefore, disallowed the entirededuction claimed under Section 54F of the Act. It is material to note that theAssessee had also filed objections for re-opening the assessment on theground that there was no failure on the part of the Assessee to fairly and truly ITA 127/2025 Page 4 of 10 Signature Not Verified disclose all material facts and therefore, the reassessment notice – which wasissued beyond the period of four years from the end of the relevant assessmentyear – was barred by limitation. The said objections were rejected by theAO. 15.Aggrieved by the assessment order dated 29.12.2017, the Assesseefiled an appeal before the learned CIT(A). 16.The learned CIT(A) dismissed the Assessee’s challenge to thedisallowance under Section 54F of the Act in terms of the order dated18.03.2019 passed under Section 250 of the Act. The Assessee beingaggrieved by the learned CIT(A)’s order preferred an appeal before thelearned ITAT [being ITA 3426/Del/2019], which was allowed by the learnedITAT by the impugned order. The present appeal by the Revenue is confinedto the impugned order rendered in the context of the Assessee’s appeal (ITA3426/Del/2019). 17.A plain reading of the impugned order proceeds on the basis that thelearned ITAT had accepted the Assessee’s objection that the notice issuedunder Section 148 of the Act is barred by limitation as there was no failure onthe part of the Assessee in truly and fairly disclosing all material facts. Thelearned ITAT also faulted the AO’s decision in finding that the Assessee hadmore than one residential unit, which would render the Assessee ineligible forclaiming a deduction under Section 54F of the Act. 18.Before proceeding further, it is relevant to refer to the properties, whichwere owned by the Assessee and were considered as more than one dwellingunit. The learned ITAT had noted the description of the sale deeds pertaining ITA 127/2025 Signature Not Verified to the different floors of the property bearing the address D-6/5 Vasant Vihar, New Delhi. The same are reproduced below: 18.Before proceeding further, it is relevant to refer to the properties, whichwere owned by the Assessee and were considered as more than one dwellingunit. The learned ITAT had noted the description of the sale deeds pertaining ITA 127/2025 Signature Not Verified to the different floors of the property bearing the address D-6/5 Vasant Vihar, New Delhi. The same are reproduced below: “a.D-6/5, Basement, Vasant Vihar, New Delhi was purchased by Mr.K.K. Goel HUF along with assessee vide registered sale deed dated02.07.2001. In this, the assessee was having 50% share in thecapacity of co-owner.K.K. Goel HUF along with assessee vide registered sale deed dated02.07.2001. In this, the assessee was having 50% share in thecapacity of co-owner. b.D-6/5, Second Floor, Vasant Vihar, New Delhi was purchased byMs Monila Goel (assessee's daughter in law) and assessee videregistered sale dated 28.01.2008. In this, the assessee was having50% of share in the capacity of co-owner.Ms Monila Goel (assessee's daughter in law) and assessee videregistered sale dated 28.01.2008. In this, the assessee was having50% of share in the capacity of co-owner. c.D-6/5, Ground Floor, Vasant Vihar was purchased by Ms. MonilaGoel (daughter in law) along with Mr. DK Goel (assessee's son)vide registered sale deed 02.07.2001. Both parties are having equalshare in the said property.Goel (daughter in law) along with Mr. DK Goel (assessee's son)vide registered sale deed 02.07.2001. Both parties are having equalshare in the said property. d.D-6/5, First Floor, Vasant Vihar, New Delhi was purchased by MsMonila Gael. Physical possession of the said property was takenover on 02.09.2014, but not registered as 100% payment is madeto the seller only in financial year 2013-14.”Monila Gael. Physical possession of the said property was takenover on 02.09.2014, but not registered as 100% payment is madeto the seller only in financial year 2013-14.” 19.It is clear from the above that separate floors of the singular housebearing the address D-6/5 Vasant Vihar, New Delhi, were purchased by thefamily members of the Assessee. The fact that different floors may be ownedor partly owned would not detract from the fact that the portions owned wererequired to be considered ‘one residential house’. 20.In Commissioner of Income-tax and Anr. v. D. Ananda Basappa:(2009) 309 ITR 329, the Karnataka High Court considered the admissibilityof exemption under Section 54 of the Act in a case where the Assessee hadsold a residential house and purchased two adjacent apartments. The Courtheld that “the expression ‘a’ residential house should be understood in a sensethat building should be of residential in nature and ‘a’ should not beunderstood to indicate a singular number”. However, in the facts of the said ITA 127/2025 Page 6 of 10 case, the court noted that two apartments had been joined to make one unit byopening a door between the two apartments and therefore, the same could beconstrued as one unit. 21.In Pawan Arya v. Commissioner of Income Tax: 2010 SCC OnLineP&H 12590, the court distinguished the decision in Commissioner of IncomeTax & Anr. v. D. Ananda Basappa, (supra) and stated that the exemptionunder Section 54F of the Act would not be applicable where the units arelocated at two different locations. In the aforesaid context, the court observedas under:- “4. As regards claim for exemption against acquisition of twohouses under Section 54 of the Act, the same is not admissible inplain language of statute. In the judgment of Karnataka High Courtin CIT v. D. Ananda Basappa [2009] 309 ITR 329 (Kar), referredto in the impugned order, exemption against purchase of two flatswas allowed having regard to the finding that both the flats could betreated to be one house as both had been combined to make oneresidential unit. The said judgment, thus, proceeds on a different factsituation.” 22.It is also relevant to refer to the decision of the coordinate bench of this court in Commissioner of Income-tax v. Gita Duggal: 2013 SCC OnLineDel 752 where this court has held as under: - “4. As regards claim for exemption against acquisition of twohouses under Section 54 of the Act, the same is not admissible inplain language of statute. In the judgment of Karnataka High Courtin CIT v. D. Ananda Basappa [2009] 309 ITR 329 (Kar), referredto in the impugned order, exemption against purchase of two flatswas allowed having regard to the finding that both the flats could betreated to be one house as both had been combined to make oneresidential unit. The said judgment, thus, proceeds on a different factsituation.” 22.It is also relevant to refer to the decision of the coordinate bench of this court in Commissioner of Income-tax v. Gita Duggal: 2013 SCC OnLineDel 752 where this court has held as under: - “11. There could also be another angle. Section 54/54F uses theexpression “a residential house”. The expression used is not “aresidential unit”. This is a new concept introduced by the AssessingOfficer into the section. Section 54/54F requires the assessee toacquire a “residential house” and so long as the assessee acquires abuilding, which may be constructed, for the sake of convenience, insuch a manner as to consist of several units which can, if the needarises, be conveniently and independently used as an independentresidence, the requirement of the section should be taken to havebeen satisfied. There is nothing in these sections which require theresidential house to be constructed in a particular manner. The only ITA 127/2025 requirement is that it should be for the residential use and not forcommercial use. If there is nothing in the section which requires thatthe residential house should be built in a particular manner, it seemsto us that the Income-tax authorities cannot insist upon thatrequirement. A person may construct a house according to his plansand requirements. Most of the houses are constructed according tothe needs and requirements and even compulsions. For instance, aperson may construct a residential house in such a manner that hemay use the ground floor for his own residence and let out the firstfloor having an independent entry so that his income is augmented.It is quite common to find such arrangements, particularlypostretirement. One may build a house consisting of four bedrooms(all in the same or different floors) in such a manner that anindependent residential unit consisting of two or three bedroomsmay be carved out with an independent entrance so that it can be letout. He may even arrange for his children and family to stay there,so that they are nearby, an arrangement which can be mutuallysupportive. He may construct his residence in such a manner that incase of a future need he may be able to dispose of a part thereof asan independent house. There may be several such considerations fora person while constructing a residential house. We are therefore,unable to see how or why the physical structuring of the newresidential house, whether it is lateral or vertical, should come in theway of considering the building as a residential house. We do notthink that the fact that the residential house consists of severalindependent units can be permitted to act as an impediment to theallowance of the deduction under section 54/54F. It is neitherexpressly nor by necessary implication prohibited.” 23.This court in Mrs. Kamla Ajmera v. Pr. Commissioner of Income Tax:Neutral Citation No.: 2024:DHC:9342-DB, referred to the decision in CITv. Geeta Duggal, (supra), and held that in certain circumstances, multipleresidential units may be considered as a single residential house for thepurposes of exemption under Section 54F of the Act. The court observed asfollows: - “39. This assumes significance in the backdrop of our opinion thatthe word ‘a’ used in Section 54F of the Act denotes one singular ITA 127/2025 Page 8 of 10 residence, along with the caveat that in case the floors or houses areso constructed as to be used as one singular unit or capable of beingused as such, they may fall within the definition of a residentialhouse.” 23.This court in Mrs. Kamla Ajmera v. Pr. Commissioner of Income Tax:Neutral Citation No.: 2024:DHC:9342-DB, referred to the decision in CITv. Geeta Duggal, (supra), and held that in certain circumstances, multipleresidential units may be considered as a single residential house for thepurposes of exemption under Section 54F of the Act. The court observed asfollows: - “39. This assumes significance in the backdrop of our opinion thatthe word ‘a’ used in Section 54F of the Act denotes one singular ITA 127/2025 Page 8 of 10 residence, along with the caveat that in case the floors or houses areso constructed as to be used as one singular unit or capable of beingused as such, they may fall within the definition of a residentialhouse.” 24.The Madras High Court also held a similar view in Commissioner ofIncome-tax v. Gumanmal Jain: 2017 SCC OnLine Mad 13653. 25.The aforesaid decisions were rendered in the context of construingwhether the new asset purchased is ‘a residential house’ – an expression usedin Section 54 and 54F of the Act. However, the said decisions would beequally applicable for construing the term ‘one residential house’ as used inclause (i) of the proviso to Section 54F of the Act. We say so because inPawan Arya v. Commissioner of Income Tax (supra) as well as inCommissioner of Income-tax v. Gita Duggal: (supra) and Mrs KamlaAjmera v. Pr. Commissioner of Income Tax (supra), the term ‘a residentialhouse’ has been construed to mean ‘one residential house’. We find it difficultto accept that, in the given facts, different floors of a house are required to beconsidered as multiple residential houses. 26.In view of the above, we find no infirmity with the decision of thelearned ITAT in holding that the Assessee could not be denied the deductionunder Section 54F of the Act on the ground that she holds more than oneresidential unit. 27.We also find that there has been no failure on the part of the Assesseeto truly and fairly disclose all the material facts in her return. The Assesseehad fairly disclosed about the sale of the original asset, in respect of whichcapital gains had arisen as well as about the house property purchased fromthe said sale proceeds. 28.The configuration of ownership of the property, as recorded in the ITA 127/2025Page 9 of 10 South Delhi Municipal Corporation records for D-6/5, does not lead to theconclusion that there was any failure on the part of the Assessee in disclosingthe material facts relevant for claiming the deduction sought by the Assessee.29.In view of the above, we find that no substantial question of law arisesfor consideration of this court. Accordingly, the appeal as well as the pendingapplication is, accordingly, dismissed. VIBHU BAKHRU, J TEJAS KARIA, JAPRIL 30, 2025‘gsr’Click here to check corrigendum, if any ITA 127/2025