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2017 (1) TMI 1762 - AT - Income TaxDeduction u/s 54 - new residential Flats as been purchased jointly in the name of the assessee and that of her daughter, had thus rightly been restricted by the CIT(A) to the extent of 50% of the total investment - HELD THAT - In light of the binding force of the judgment of the Jurisdictional High Court in the case of Prakash Vs. ITO 2008 (9) TMI 234 - BOMBAY HIGH COURT the entitlement of the assessee towards claim of deduction u/s 54, in light of the fact that the aforesaid new residential Flats No. 1508 and 1509 had been purchased jointly in the name of the assessee and that of her daughter, had thus rightly been restricted by the CIT(A) to the extent of 50% of the total investment at ₹ 83,08,250/- (i.e. 50% of ₹ 1,66,16,500/-). Thus finding no reason to take a different view, we herein uphold the order of the CIT(A) and dismiss the appeal of the assessee.
Issues Involved:
1. Eligibility for deduction under Section 54 of the Income Tax Act, 1961. 2. Investment in residential property in joint names. 3. Interpretation of ownership and investment for the purpose of Section 54. Detailed Analysis: 1. Eligibility for Deduction under Section 54: The primary issue revolves around the eligibility of the assessee to claim a deduction under Section 54 of the Income Tax Act, 1961. The assessee sold a flat and invested the proceeds in two adjacent flats, claiming a deduction under Section 54. The Assessing Officer (A.O) restricted the deduction to 50% of the investment in one flat, as the investment was made in two flats and jointly with the assessee's daughter. The CIT(A) partially allowed the claim, recognizing the two flats as a single residential unit but still restricted the deduction to 50% of the total investment. 2. Investment in Residential Property in Joint Names: The A.O observed that the investment was made in two separate flats and not solely in the name of the assessee but jointly with her daughter. The A.O restricted the deduction to 50% of the investment in one flat, where the assessee was the first name holder. The CIT(A) upheld the view that the assessee's ownership rights were only 50% due to the joint ownership with her daughter, thereby restricting the deduction to 50% of the total investment. 3. Interpretation of Ownership and Investment for the Purpose of Section 54: The Tribunal analyzed whether the investment in the name of the assessee and her daughter could qualify for full deduction under Section 54. The Tribunal emphasized that Section 54 requires the investment to be in the name of the assessee. The Tribunal referred to the case of Prakash Vs. ITO (2009) 312 ITR 40 (Bom), where it was held that the investment must be in the name of the assessee to claim the deduction. The Tribunal rejected the assessee's argument that the daughter's name was included only for convenience, stating that the daughter had enforceable rights as a joint owner. Conclusion: The Tribunal upheld the CIT(A)'s decision, restricting the deduction under Section 54 to 50% of the total investment, as the investment was made in joint names. The Tribunal dismissed the appeal of the assessee, reiterating that the statutory provisions of Section 54 do not allow for a deduction when the investment is made in the name of a third party, even if no investment was made by the latter. The Tribunal's decision was based on the binding precedent set by the jurisdictional High Court in Prakash Vs. ITO. Order: The appeal of the assessee is dismissed. The order was pronounced in the open court on 3/01/2017.
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