2011 (8) TMI 170 - HC - Income Tax

Deduction u/s 54F - Individual or HUF - assessing officer was of the opinion that the property was purchased in the name of the individuals namely Dr.Dinesh Megji Toprani and Mrs.Jyoti Dinesh Toprani and not in the name of the HUF and, therefore, the assessee was not entitled to the deduction under Section 54F of the Income Tax Act, 1961 - . In para10 of its order, the Income Tax Appellate Tribunal has recorded a finding of fact that the immovable property in question has been purchased from the HUF account, that the purchase document records the permanent account number of the HUF and that the income received from the property purchased have been assessed to tax in the hands of the HUF for assessment year 2007-08 - benefit of exemption u/s 54F allowed in the hands of HUF.

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal was justified in allowing the benefit of deduction claimed under Section 54F of the Income Tax Act, 1961.

Analysis:

1. The High Court dealt with the issue of whether the Income Tax Appellate Tribunal was correct in allowing the deduction claimed under Section 54F of the Income Tax Act, 1961. The assessee, a Hindu Undivided Family (HUF), had sold certain immovable properties and used the sale proceeds to purchase other properties, seeking the benefit of deduction under Section 54F. The assessing officer contended that since the properties were purchased in the names of individuals, not in the name of the HUF, the deduction was not applicable. However, the Commissioner of Income Tax (Appeals) and subsequently the Income Tax Appellate Tribunal upheld the assessee's claim. The Tribunal noted that the property was purchased from the HUF account, the purchase document contained the HUF's permanent account number, and the income from the property was assessed in the HUF's hands for a specific assessment year.

2. The High Court, in its analysis, emphasized that the Tribunal's finding of fact regarding the property's purchase from the HUF account, the presence of the HUF's permanent account number in the purchase document, and the income assessment in the HUF's hands for a particular year were crucial in determining the eligibility for deduction under Section 54F of the Income Tax Act, 1961. The Court concluded that since the property, despite being in the names of individual members, actually belonged to the HUF, the Tribunal's decision to allow the deduction was justified.

3. Consequently, the High Court dismissed the appeal filed by the Revenue, stating that there was no merit in challenging the Tribunal's decision. The Court held that the Income Tax Appellate Tribunal correctly allowed the benefit of deduction under Section 54F of the Income Tax Act, 1961, based on the property's ownership by the HUF, as evidenced by the relevant documents and income assessments. The appeal was dismissed, and no costs were awarded in the matter.