2012 (10) TMI 145 - AT - Income Tax

Exemption u/s 54F - flat purchased in the name of his minor daughter - Held that - A bare reading of section 54F(1) makes it clear that there is no requirement that the house has to be purchased in the name of the assessee only. The only requirement of the provision is the assessee must have purchased the house. In the present appeal, the fact remains that the minor daughter has no ostensible source to make such investment in purchase of flat. It is the assessee who had actually made the investment out of the consideration received towards sale of shares. The assessee has also explained the reason behind registration of the house in the name of his minor daughter. As decided in Late Mir Gulam Ali Khan (by Legal Representative Mrs. Noor Begum Versus Commissioner Of Income-Tax 1984 (12) TMI 9 - ANDHRA PRADESH HIGH COURT the word assessee also includes the legal heir - Also CIT v. Ravinder Kumar Arora 2011 (9) TMI 343 - DELHI HIGH COURT states that Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of the assessee only. Thus considering the well settled principle of law that when there are divergent views, to give effect to a beneficial provision the view favourable to the assessee has to be adopted - decided in favour of assessee.

Summary

Issues:
Claim of exemption u/s 54F for property purchased in the name of the assessee's minor daughter.

Analysis:
The appeal before the Appellate Tribunal ITAT Hyderabad pertained to the assessment year 2008-09, focusing on the claim of exemption u/s 54F made by the assessee. The assessee had sold shares and invested the proceeds in purchasing a flat in the name of his minor daughter, claiming a deduction u/s 54F(1) of the Act. However, both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) disallowed the deduction, stating that the flat was not purchased in the name of the assessee but in the name of his daughter. The AO relied on various court decisions to support this disallowance.

The learned AR for the assessee argued that although the flat was registered in the daughter's name, the entire investment was made by the assessee himself. The term "purchase" was highlighted, emphasizing that it should be interpreted in common parlance and not strictly. The AR cited relevant case laws to support the contention that the word "assessee" should be interpreted liberally to include legal heirs. On the other hand, the learned DR argued that the minor daughter had a separate legal identity, and the ownership rights needed to be in the name of the assessee to claim the benefits of section 54F.

After considering the arguments and case laws presented by both parties, the Tribunal analyzed the provisions of section 54F(1) of the Act. It was noted that the section does not expressly require the house to be purchased only in the name of the assessee. The Tribunal highlighted the lack of ostensible source for the minor daughter to make such an investment, emphasizing that it was the assessee who had actually made the investment. The Tribunal referenced decisions by the Andhra Pradesh High Court and the Delhi High Court, which supported a wide and liberal interpretation of the term "assessee" in relation to section 54F.

Ultimately, the Tribunal held that the assessee was entitled to the deduction u/s 54F for the flat purchased in the name of his daughter, subject to the restrictions under the proviso to section 54F(1) of the Act. The decision was influenced by the legislative intent to encourage house construction and the principle of adopting a view favorable to the assessee in case of divergent opinions. As a result, the appeal filed by the assessee was allowed.