2022 (4) TMI 854 - AT - Income Tax

Deduction claimed u/s. 54 - LTCG - Disallowance of deduction as the New property was purchased in the name of Appellant s daughter - HELD THAT - As per plain reading of section 54 of the Act, it is very clear that investment should be made in the name of the assessee to get benefit of deduction. However, various courts, including the case of CIT vs. V.Natarajan . 2006 (2) TMI 136 - MADRAS HIGH COURT had taken a lenient view considering beneficial provisions of section 54 of the Act, and held that even if investments is made in the name of spouse or minor daughter, the deduction cannot be denied - we ourselves do not subscribe to the arguments advanced by the learned AR for the assessee to claim benefit of deduction u/s.54 of the Act, in respect of purchase of new property in the name of married daughter, because courts have considered the provisions and after considering fact that the assessee has purchased house property in the name of spouse has allowed benefit, because as per provisions of section 64 64(1A) of the Act, in case of purchase of property is in the name of spouse and minor children, income from such property is assessable in the hands of the assessee. Therefore, under those facts, the Courts have held that when property was purchased in the name of spouse, benefit of deduction cannot be denied. In the present case, the assessee has purchased property in the name of married daughter, although she was divorced, but she is an independent for purpose of the Income Tax Act. Therefore, we are of the considered view that benefit of deduction u/s.54 of the Act cannot be allowed, when property has been purchased in the name of married daughter. Assessing Officer as well as learned CIT(A), after considering relevant facts has rightly denied deduction claimed u/s.54 - Decided against assessee.

Summary

Issues:
1. Condonation of delay in filing the appeal due to Covid-19 lockdown.
2. Disallowance of deduction claimed under section 54 of the Income Tax Act, 1961 for purchase of property in the name of the appellant's daughter.

Analysis:
1. Condonation of Delay:
The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals) and was initially considered time-barred by 115 days. The assessee cited the Covid-19 lockdown as the reason for the delay and filed a petition for condonation along with an affidavit. The Appellate Tribunal noted the general exemption provided by the Hon'ble Supreme Court in extending limitation periods due to the pandemic. Considering the circumstances and in the interest of natural justice, the Tribunal condoned the delay and admitted the appeal for adjudication.

2. Disallowance of Deduction under Section 54:
The assessee had claimed a deduction under section 54 of the Income Tax Act, 1961 for the purchase of a property in the name of her married daughter. The Assessing Officer disallowed the deduction, leading to an appeal. The Appellate Tribunal considered the provisions of section 54, which require the investment to be made in the name of the assessee to claim the deduction. While the assessee relied on judicial precedents, including a decision of the Madras High Court, the Tribunal held that the purchase of property in the name of a married daughter does not qualify for the deduction under section 54. The Tribunal emphasized that the courts have allowed deductions for investments made in the name of spouses based on specific provisions, which did not apply in the case of a property purchased in the name of a married daughter. Therefore, the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) and dismissed the appeal filed by the assessee.

In conclusion, the Appellate Tribunal upheld the decision to disallow the deduction claimed under section 54 of the Income Tax Act, 1961 for the property purchased in the name of the appellant's daughter. The Tribunal's analysis considered the specific provisions of the Act and judicial precedents related to deductions for property investments, ultimately leading to the dismissal of the appeal.