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2022 (5) TMI 609 - AT - Income TaxExemption u/s 54F - investment of new residential house in the name of assessee wife - HELD THAT - The assessee claimed exemption U/s 54F of the Act against the investment of new residential house in the name of his wife is justifiable . The assessee sold immovable property for sale consideration of Rs.14,75,000/- on 11-10- 2010.The value of which was estimated at Rs.14,79,960/-by the Stamp Duty Authority. Out of the sale consideration of Rs. 14,75,000/- the assessee made investment of RS.7,48,000/- in the purchase of new residential house property in the name of his wife namely, Smt. Garima Singh, within the prescribed time limit as prescribed under the provisions of section 54F of the Act. Exemption was claimed U/s 54F of the Act on this account is Rs. 6,33,190/-. It is further noticed that the AO has not disputed the purchase of new house in the name of wife of the assessee though the claim was denied by the AO - claim of deduction U/s 54F of the Act cannot be denied merely on the ground that the new residential house was purchased in the name of his wife when the investment made by the assessee from the sale proceeds of the existing asset and yielded capital gain from the said transactions. Further we taken into consideration that the Ld AR for the assessee has placed the reliance on various decisions in which exemption u/s 54/ 54F/54B/54EC of the Act has been allowed notwithstanding the fact that investment in a new residential house was made in the name of wife/brother /sons. CIT (A) erred in not allowing the exemptions claimed u/s 54F by following the decision of following the decision of Hon'ble Rajasthan High Court in the case of Shri Kalya 2012 (6) TMI 239 - RAJASTHAN HIGH COURT has not allowed the exemption claimed by the assessee u/s 54F holding /observing that the decision of the Hon'ble jurisdictional Rajasthan High Court above, the contention of the assessee cannot be accepted. We are of the considered view that the decision which was cited by the CIT (A) does not have any relevance with the present case. - Decided in favour of assessee. We are allowing the exemption claimed u/s 54F of the Act. Appeal of assessee allowed.
Issues Involved:
1. Confirmation of addition of Rs. 6,33,190/- on account of long-term capital gain. 2. Denial of exemption under Section 54F of the Income-tax Act, 1961. 3. Interpretation and application of Section 54F in relation to investments made in the name of the assessee's wife. Issue-wise Detailed Analysis: 1. Confirmation of Addition of Rs. 6,33,190/- on Account of Long-Term Capital Gain: The assessee sold immovable property for Rs. 14,75,000/- on 11/10/2010, with the Stamp Duty Authority valuing it at Rs. 14,79,960/-. The assessee invested Rs. 7,48,000/- in a new residential house in his wife's name, claiming exemption under Section 54F. The AO disallowed the exemption, adding Rs. 6,33,190/- to the assessee's income as long-term capital gain, reasoning that the investment was made in the wife's name, who is a separate assessee with her own income. 2. Denial of Exemption under Section 54F: The AO and CIT(A) denied the exemption under Section 54F on the grounds that the investment was made in the name of the assessee's wife, who has a separate source of income and is a separate assessee. The CIT(A) distinguished the case from the Rajasthan High Court decisions cited by the assessee, noting that in those cases, the wives had no separate income sources. 3. Interpretation and Application of Section 54F: The CIT(A) relied on the Rajasthan High Court's decision in Kalya v. Commissioner of Income-tax, which emphasized a legal interpretation of "assessee" rather than a liberal one. The CIT(A) held that the exemption under Section 54F could not be extended to investments made in the name of the assessee's wife, aligning with the Kalya case where the court ruled against extending exemptions to properties purchased in the names of legal heirs. Tribunal's Findings: The Tribunal considered the various decisions cited by the assessee, including those from the Rajasthan High Court and other High Courts, which allowed exemptions under Sections 54/54F/54B/54EC even when investments were made in the names of spouses or other family members. The Tribunal noted that the AO did not dispute the purchase of the new house but denied the claim solely because it was in the wife's name. The Tribunal referred to the Rajasthan High Court's decision in Laxmi Narayan vs. CIT, which recognized that the law does not explicitly require the new property to be purchased in the assessee's name alone. The Tribunal concluded that the exemption under Section 54F should not be denied merely because the new residential house was purchased in the wife's name, especially when the investment was made from the assessee's own funds. Conclusion: The Tribunal allowed the appeal, granting the exemption under Section 54F and setting aside the CIT(A)'s order. The Tribunal emphasized a broader interpretation of the term "assessee" in line with the intent of the law, which aims to provide tax relief for reinvestment in residential properties, regardless of the registered name on the new property. The appeal was thus allowed, and the addition of Rs. 6,33,190/- was deleted. Order Pronounced: The appeal of the assessee was allowed, and the order was pronounced in the open Court on 04/05/2022.
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