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2014 (1) TMI 1271 - AT - Income TaxEntitlement for deduction u/s 54B and 54F of the Act Investments made in the name of daughters Capital gains - Held that - The benefit of exemption u/s 54B and 54F could be given to an assessee only if the new property is purchased in his own name Relying upon Jai Narayan Vs. ITO 2007 (8) TMI 295 - PUNJAB AND HARYANA HIGH COURT - The investments have been made in the name of married daughters and apparently both of them are also majors - Thus, it is not a case of joint ownership along with the assessee - Both the daughters of the assessee shall have every right over the property purchased in their respective names - Thus, it cannot be said that the intention of purchasing the properties was not to give benefit to them - The assessee claims that she has entered into a purchase possession agreement with her two daughters - the agreement does not actually effect transfer of assets to the name of the assessee also, the agreements have been entered only to show some compliance with the provisions of sec. 54B/54F of the Act - the term assessee used in sec. 54B/54F of the Act cannot be extended to mean the major married daughters Decided against Assessee.
Issues Involved:
1. Whether the assessee is entitled to claim deduction under sections 54B and 54F of the Income Tax Act for investments made in the name of her daughters. Detailed Analysis: 1. Facts of the Case: The assessee sold agricultural land and purchased two properties in her daughters' names, claiming deductions under sections 54B and 54F. The properties purchased were: - Agricultural land in the name of her younger daughter. - A flat in the name of her eldest daughter. 2. Assessing Officer's (AO) Decision: The AO denied the deductions, stating that the properties were not registered in the assessee's name and rejected the "benami" claim, citing the Benami Transactions Prohibition Act, which exempts properties purchased in the name of unmarried daughters only. The AO also dismissed the "possession purchase agreements" as they were unregistered and did not transfer the properties. 3. CIT(A)'s Decision: The CIT(A) upheld the AO's decision, emphasizing that the "possession purchase agreements" did not convey any title to the assessee. The CIT(A) relied on the Supreme Court's decision in Suraj Lamp & Industries Pvt. Ltd Vs. State of Haryana, which stated that immovable property can only be transferred by a registered deed of conveyance. 4. Assessee's Arguments: The assessee argued that the investments were made from the sale proceeds of the agricultural land and that the "possession purchase agreements" complied with the provisions of sections 54B and 54F. The assessee also cited several case laws, including the jurisdictional Andhra Pradesh High Court's decision in Late Mir Gulam Ali Khan Vs. CIT, which allowed deductions even when the property was purchased in the name of legal representatives. 5. Tribunal's Analysis: The Tribunal examined the relevant sections of the Income Tax Act: - Section 54B: Allows deduction if the assessee purchases agricultural land within two years of selling the original agricultural land. - Section 54F: Allows deduction if the assessee purchases a residential house within one year before or two years after the sale of the original asset. The Tribunal noted that the term "assessee" in these sections refers to the person who sold the property and that the new asset should be in the name of the assessee. The Tribunal distinguished the facts of the current case from the case of Late Mir Gulam Ali Khan, where the legal representative completed the purchase initiated by the deceased assessee. 6. Tribunal's Conclusion: The Tribunal concluded that the term "assessee" in sections 54B and 54F cannot be extended to include major married daughters. The investments were made in the names of the assessee's married daughters, who have full rights over the properties. The "possession purchase agreements" did not effectuate a transfer of assets to the assessee. Hence, the deductions under sections 54B and 54F were not allowable. 7. Final Judgment: The appeal filed by the assessee was dismissed, affirming the CIT(A)'s decision. Pronounced on 22-07-2013.
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