Capital gain Exemption u/s 54 allowed for new property purchased in joint names with wife & daughter

Capital gain Exemption u/s 54 can not be denied for new property purchased in joint names of self wife & daughter when the amount was actually invested-ITAT

ABCAUS Case Law Citation:
ABCAUS 2481 (2018) 08 ITAT

Important Case Laws Cited/relied upon:
CIT vs. Kamal Wahal (2013) 351 ITR 4 (Delhi)
CIT vs Ravinder Kumar Arora (2012) 342 38 ITR (Delhi)
Vipin Malik (HUF) vs. CIT (2011) 330 ITR 309 (Delhi)

The instant appeal was filed by assessee against the order of CIT(A) confirming the addition made by the AO by not allowing the benefit under section 54 of the Income Tax Act, 1961 ( (the Act).

During the course of assessment proceedings, the Assessing Officer observed that the assessee declared long term capital gain, out of which exemption under section 54 was claimed.

It was found that investment was made in plot and construction of residential house jointly with his wife and daughter. He, therefore, restricted the benefit of exemption under section 54 at one third, being, the share pertaining to the assessee and disallowed the remaining amount.

No relief was allowed on the first appeal against which the assessee had come up in appeal before the Tribunal.

The Tribunal observed that it was not in dispute that the assessee in fact invested the requisite amount for claiming benefit under section 54. The only reason given by the authorities below in denying the proportionate amount of exemption under section 54 was that the new property was purchased in joint names of self, wife and daughter.

The Tribunal opined that the benefit of exemption under section 54 cannot be denied simply for the reason that the assessee made investment in the new property in names of his relatives also, when it is an undisputed position that the investment was made out of the proceeds of the property sold resulting into computation of capital gain.

It was noted that the Hon’ble jurisdictional High Court had held that for the purposes of claiming the benefit of deduction under 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 that case too, the assessee had purchased the property in the name of his wife for which the benefit of section 54F was denied. Similar view was taken in another case.

Accordingly, it overruled the impugned and directed the grant of benefit under section 54 on the amount claimed by the assessee.

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