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2024 (12) TMI 901 - AT - Income TaxLTCG - Deduction u/s. 54F - since the residential property in question was purchased in the name of assessee s wife who is also assessed to tax separately - HELD THAT - We are of the opinion that assessee s claim of deduction u/s. 54F of the Act ought to have been granted to assessee as held in the case of CIT v. Natarajan 2006 (2) TMI 136 - MADRAS HIGH COURT though in the context of sec.54 of the Act, which section in pari materia with sec.54F of the Act. And it is noted that predominant judicial view in this regard is that for the purpose of sec.54F of the Act, new residential house need not be purchased by the assessee in his own name. Since the assessee has purchased the residential property in his wife s name, deduction need to be allowed and for such a proposition. As decided in the case of CIT v. Kamla Wahal 2017 (8) TMI 285 - PUNJAB AND HARYANA HIGH COURT the assessee in the present case has not purchased the new house in the name of a stranger or somebody who is unconnected with him. He has purchased it only in the name of his wife. There is also no dispute that the entire investment has come out of the sale proceeds and that there was no contribution from the assessee's wife. AO is directed to give deduction claimed u/s. 54F of the Act. Decided in favour of assessee.
Issues:
Appeal against disallowance of deduction u/s. 54F of the Income Tax Act for Assessment Year 2012-13. Detailed Analysis: 1. Background and AO's Action: The assessee appealed against the disallowance of a deduction u/s. 54F of the Income Tax Act for the Assessment Year 2012-13. The AO reopened the assessment based on information that the assessee had deposited cash into a bank account. The AO noted that the assessee sold an immovable property for Rs. 50,40,000 and claimed a deduction of Rs. 44,27,994 for investing in a residential property in his wife's name. The AO considered this deduction not allowable as the property was in the wife's name, who files taxes separately. 2. Appeal to Ld.CIT(A): The assessee appealed to the Ld.CIT(A), who upheld the AO's decision to disallow the deduction. 3. Arguments Before the Tribunal: The assessee contended that the Ld.CIT(A) erred in not following the decision of the Hon'ble Madras High Court and relied on the principle that in case of doubt, a construction favoring the assessee should be adopted. The Department argued that the deduction is only allowable if the property is purchased in the assessee's name. 4. Tribunal's Decision: After considering the arguments and facts, the Tribunal found that the assessee had purchased the residential property in his wife's name, and the predominant judicial view allowed deduction u/s. 54F even if the property is not in the assessee's name. Citing various High Court decisions, the Tribunal directed the AO to grant the deduction claimed u/s. 54F. 5. Precedent and Decision: The Tribunal relied on the decision of the Hon'ble Delhi High Court in the case of CIT v. Kamla Wahal, which emphasized that for the purposes of Section 54F, the new residential house need not be purchased exclusively in the assessee's name. The Tribunal dismissed the appeal and allowed the deduction claimed u/s. 54F. In conclusion, the Tribunal allowed the appeal, directing the AO to grant the deduction claimed u/s. 54F of the Income Tax Act for the Assessment Year 2012-13, based on the legal precedent and the specific circumstances of the case.
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