2020 (1) TMI 924 - HC - Income Tax

Exemption u/s 54F - assessee s claim was rejected as the AO noting that the land on which the assessee had claimed to build the residential house was in the name of his mother - Tribunal denied benefit u/s 54F as like Commissioner (Appeals) and held that the benefit u/s 54F is only available to an assessee if the newly purchased / constructed residential house is owned / held in the name of the assessee - HELD THAT - Commissioner (Appeals) followed the decision of Nagpur Bench of this Court in the case of Prakash vs. Income-Tax Officer and others 2008 (9) TMI 234 - BOMBAY HIGH COURT wherein the Assessee purchased the property in the name of adopted son and not on his own name, he was denied the benefit. While laying down this proposition the Court took a review of the law laid down by other High Courts and followed the decision of the Apex Court in the case of CIT v. Podar Cement P. Ltd. 1997 (5) TMI 2 - SUPREME COURT . The Division Bench distinguished the view taken by the Andhra Pradesh High Court in the case of Mir Gulam Ali Khan (Late) v. CIT 1984 (12) TMI 9 - ANDHRA PRADESH HIGH COURT It is the contention of Petitioner that the Delhi High Court in the case of Commissioner of Income-Tax v. Ravinder Kumar Arora 2011 (9) TMI 343 - DELHI HIGH COURT and in the case of Commissioner of Income-Tax v. Kamal Wahal 2013 (1) TMI 401 - DELHI HIGH COURT has given liberal interpretation to the term purchased occurring in the section 54F. We note that the Delhi High Court in the case of Ravinder Arora 2011 (9) TMI 343 - DELHI HIGH COURT had relied upon the decision of Andhra Pradesh High Court in the case of Late Mir Gulam Khan 1984 (12) TMI 9 - ANDHRA PRADESH HIGH COURT which has already been distinguished by this Court in the case of Prakash Vs. Income Tax Officer 2008 (9) TMI 234 - BOMBAY HIGH COURT . In view of this law laid down by this Court, substantial questions of law as framed do not arise. - Decided against assessee.

Summary

Issues:
1. Interpretation of Section 54F of the Income Tax Act, 1961
2. Eligibility criteria for claiming exemption under Section 54F
3. Ownership requirement for claiming benefit under Section 54F

Analysis:

Issue 1: Interpretation of Section 54F of the Income Tax Act, 1961
The appellant challenged the order of the Income Tax Appellate Tribunal, Pune, under Section 143(3) of the Income Tax Act 1961, specifically related to the Assessment Year 2009-10. The appellant raised substantial questions of law regarding the interpretation of Section 54F of the Act. The appellant claimed exemption under Section 54F for the construction of a residential house after selling certain immovable properties. However, the Assessing Officer rejected the claim as the land for construction was in the name of the appellant's mother. Both the Commissioner (Appeals) and the Tribunal upheld this decision, citing precedents and legal interpretations.

Issue 2: Eligibility criteria for claiming exemption under Section 54F
The Commissioner (Appeals) relied on the decision of the Nagpur Bench of the Court in a similar case where the benefit under Section 54F was denied because the property was purchased in the name of an adopted son, not the assessee. The Court reviewed decisions of other High Courts and followed the Supreme Court's ruling in CIT v. Podar Cement P. Ltd. The Delhi High Court's liberal interpretation of the term "purchased" in Section 54F was noted, but it was observed that the Delhi High Court's reliance on a case distinguished by the Bombay High Court rendered the framed substantial questions of law irrelevant.

Issue 3: Ownership requirement for claiming benefit under Section 54F
The key contention was whether the benefit under Section 54F of the Act is only available if the newly purchased or constructed residential house is owned or held in the name of the assessee. The appellant's claim was rejected as the land was in the name of the appellant's mother, leading to the denial of the exemption claim. The Court dismissed the appeal based on the ownership requirement and the legal precedents cited, including the distinction made from decisions of other High Courts.

In conclusion, the High Court of Bombay dismissed the appeal challenging the denial of exemption under Section 54F of the Income Tax Act, 1961, for the Assessment Year 2009-10, based on the ownership requirement and legal interpretations provided by the Assessing Officer, Commissioner (Appeals), and the Tribunal.