2019 (2) TMI 1345 - AT - Income Tax

Addition towards denial of 50% deduction claim u/s 54F - Whether provision of section 54/54F does not include investment made jointly with a relative, who is not a legal heir? - HELD THAT - Admittedly, the assessee has invested his entire capital gains in the acquisition of a new residential property. Admittedly, the joint owner has also categorically admitted that he has not made any investments in the construction of the property in the name of the assessee. Just because, the assessee has made an investment and has held it jointly with the assessee s brother, it would not disentitle the assessee to claim of deduction u/s.54F of the Act, especially when he is the one, who has made the entire investments. - Decided against revenue

Summary

Issues:
- Appeal against CIT(A)'s order for assessment year 2009-10.
- Deduction claim u/s 54F of ?73,33,110 jointly with a relative.
- Dispute regarding the denial of deduction.
- Interpretation of section 54/54F and joint investment with a relative.
- Applicability of judicial precedents.
- Decision on the appeal by the Appellate Tribunal ITAT Chennai.

Analysis:
1. The appeal was filed by the Revenue against the CIT(A)'s order for the assessment year 2009-10. The main issue raised was the denial of a deduction claim u/s 54F of ?73,33,110, which was jointly made with a relative who is not a legal heir. The Revenue contended that the CIT(A)'s decision was contrary to the facts and circumstances of the case.

2. The Revenue argued that the CIT(A) erred in allowing the deduction claim under section 54F for the joint investment made with the relative. They emphasized that section 54/54F does not include investments made jointly with a relative who is not a legal heir, regardless of the contribution made by that relative. The Revenue cited various decisions to support their stance.

3. The Assessee, on the other hand, defended the deduction claim by stating that the entire capital gains were invested in a new residential property, jointly with the brother who confirmed not contributing any money to the investment. The Assessee's representative relied on judicial precedents, including decisions by the Co-ordinate Bench of the Tribunal, to support their argument.

4. After considering the submissions from both parties, the Appellate Tribunal upheld the CIT(A)'s decision. The Tribunal noted that the Assessee had made the entire investment and the joint owner (brother) had confirmed not contributing to the investment. Therefore, the Tribunal concluded that the joint ownership with the brother did not disentitle the Assessee from claiming the deduction u/s 54F. The Tribunal also highlighted that the CIT(A) had followed judicial discipline by referring to relevant precedents.

5. Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order in favor of the Assessee. The decision was pronounced in an open court after the hearing, concluding the legal proceedings on 13th December 2018 in Chennai.