Exemption u/s 54F for investment in name of wife allowed following supreme court decision

Exemption u/s 54F for investment in name of wife allowed when non-jurisdictional High Courts had different opinions and no  decision was from jurisdictional HC

ABACUS Case Law Citation
ABCAUS 3357 (2020) (08) ITAT

Important case law relied upon by the parties:
CIT vs. Podar Cement (P.) Ltd. [1997] 226 ITR 625(SC)
Mysore Minerals Ltd. v. CIT [1999] 239 ITR  775(SC)
Prakash v ITO [2008] 312 ITR 40 (Bom)
Ganta Vijaya Laxmi vs  ITO Vijaywada [2013] 37 taxmann.com 263

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming disallowance of deduction u/s 54F of the Income Tax Act, 1961 (the Act).

The assessee had invested the long term capital gain in the name of his wife. The Assessing Officer (AO) had disallowed deduction claim for the sole reason that the assessee had not reinvested the impugned long term capital gains in his own name but in the name of his wife.

The CIT(A) observed that ownership of property as elaborated in sections 22 to 27 and 32 of the tax Act, are interlinked and connected for granting the benefit under the Act.

The CIT(A) further observed that the scheme and purpose of  section 54F, which was inserted by the Finance Act, 1982 with effect from 01.04.1983 was with a view to encourage house construction. No such benefit is available to a person other than the assessee. Meaning thereby that the assessee must comply with the conditions strictly as per the provision in all respects.  

The CIT(A) further noted that Hon’ble Bombay HC disallowed the exemption where the assessee sold and purchased the property from the realisation but in the name of the adopted son, who was not an assessee in the scheme of Act and section 54F.

On the contrary, the assessee relied upon the decision of the Delhi High Court deciding the issue in assessee’s favour 

Faced with this situation of non-jurisdictional high courts having   different opinions on the issue and no guidance coming from  Hon’ble jurisdictional high court,  the Tribunal invoked  Hon’ble Supreme Court judgment that the view in assessee’s favour has to be adopted. 

Accordingly, the Assessing Officer was directed to delete the impugned disallowance.

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