Exemption u/s 54F for plot in the name of HUF allowed by ITAT following High Court judgment as members of HUF were not stranger and money was contributed by assessee.
ABCAUS Case Law Citation:
ABCAUS 2817 (2019) (03) ITAT
Important Case Laws Cited/relied upon by the parties
CIT Vs. Ravinder Kumar Arora, 342 ITR 38 (Del)
DCIT Vs. Mrs. Jeniffer Bhide, 349 ITR 080 (Kar)
CIT Vs. Kamal Wahal, 351 ITR 04 (Del)
Chitrang M. Dave, ITA No.2627/Ahd/2017
The Assessee was in the instant appeal before the Tribunal against the order of the CIT(A) in confirming the disallowance of exemption under section 54F of the Income Tax Act, 1961 (the Act) by the Assessing Officer (AO)
The assessee filed his return of income claiming exemption u/s 54F of the Act exemption for new plot purchased and the construction of house thereon. The return was processed under section 143(1) of the Act.
Thereafter, in pursuance of the revisionary order passed by the Commissioner under section 263 of the Act, fresh assessment was made under section 143(3) of the Act whereby the Assessing Officer (AO) denied the exemption u/s 54F.
The exemption was denied to the assessee on the ground that new plot was not purchased by him in his individual name, but it was purchased in the name of HUF.
Appeal to the CIT(A) did not bring any relief to the assessee.
Thus, the question before the Tribunal was whether the house constructed by the assessee on a plot purchased in the name of HUF, exemption under section 54F, was available to the assessee or not ?
The Revenue is of the opinion that for claiming exemption under section 54F, the investment ought to have been made in the assessee’s individual name and not in the name of HUF, because, HUF is a separate taxable entity.
On the other hand, stand of the assessee is that new house has been constructed on a plot purchased in the name of HUF, but members of the HUF have not contributed any money, rather whole investment was made from the sale proceeds of earlier capital asset/land as well as contribution made by the assessee only, and therefore, it fulfilled all the requisite conditions.
The assessee relied on the decisions of the Hon’ble Delhi High Court and Karnataka High Court as well as coordinate bench of the ITAT.
The Tribunal ovserved that the Hon’ble High Court had held that the predominant judicial view is that for the purposes of Section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name.
In the said case, the High Court allowed exemption for house purchased in the name of the wife who was not a stranger or somebody who was unconnected with him and the entire investment was made out of the sale proceeds and that there was no contribution from the assessee’s wife.
The Tribunal opined that in the present case also the assessee had ¼ share in the HUF. The other members of HUF were not stranger but wife and two sons. Money had only been contributed by the assessee.
Accordingly following the decision of the Hon’ble High Court the Tribunal directed the AO to grant exemption under section 54F of the Income Tax Act to the assessee.
