2019 (7) TMI 1925 - AT - Income Tax

Deduction u/s 54 in respect of capital gains earned - investment made by the assessee in his own name - AO disallowed deduction in respect of investments made in the name of nephew - AO allowed the deduction only for half portion of one residential house purchased in the name of assessee and his brother u/s 54 of the Act for the reason that deduction u/s 54 can be allowed only for one house property purchased in the name of assessee himself - HELD THAT - As assessee has made investment in his joint name alongwith brother, the same deserves to be allowed in terms of the decision of Hon'ble Rajasthan High Court in the case of Mahadev Bala 2017 (11) TMI 1622 - RAJASTHAN HIGH COURT, JAIPUR . Also see SHRI JITENDRA V FARIA VERSUS ITO 18 (2) (1) , MUMBAI 2017 (5) TMI 12 - ITAT MUMBAI We direct the AO to allow claim of deduction u/s 54 of the Act in respect of the investments made by the assessee in his own name alongwith the name of his brother. - Decided in favour of assessee in part.

Summary

Issues:
Delay in filing appeal, Disallowance of deduction u/s 54 of the Act for capital gains earned.

Analysis:
1. Delay in filing appeal: The appeal was filed by the assessee against the order of the ld. CIT(A)-2, Jaipur for the Assessment Year 2014-15. The assessee provided reasons for the delay in filing the appeal, which were found to be reasonable by the tribunal. Consequently, the delay was condoned, and the appeal was heard on merit.

2. Disallowance of deduction u/s 54 of the Act: The main grievance of the assessee related to the disallowance of deduction u/s 54 of the Act concerning capital gains earned. The assessee had sold a residential property jointly owned with his brother, and the AO allowed deduction only for one house purchased in the name of the assessee and his brother. The ld. CIT(A) upheld the AO's decision based on a judgment of the Hon'ble Rajasthan High Court. However, the assessee argued that the investment made jointly with his brother and in the name of his nephew should be allowed for deduction under section 54. The tribunal considered various precedents, including a decision of the Hon'ble Rajasthan High Court in a similar case, and held that the investments made jointly deserve to be allowed. The tribunal also cited a decision of the Mumbai Tribunal and the Delhi High Court supporting the allowance of full exemption even for properties purchased jointly.

3. Conclusion: The tribunal, following the decisions of the Hon'ble Jurisdictional High Court and Coordinate Bench, directed the AO to allow the claim of deduction u/s 54 of the Act for the investments made by the assessee in his own name along with his brother. The appeal of the assessee was allowed in part, and the order was pronounced in the open court on the specified date.