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TMI Blog2012 (6) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals)-XXIII, New Delhi erode in confirming a chin [sic. - erred in confirming order] of the Assessing Officer in restricting the deduction of Rs. 3,18,59,216/- claimed u/s 54F of the Income Tax Act, 1961 to Rs. 1,59,29,368/- only." 3. Briefly stated, the facts of the case are that the assessee filed his return of income on 30.10.2007 showing total income at Rs. 64,32,220/- for the relevant Assessment Year under consideration. The return was initially processed under sec. 143(1) of the Act. Thereafter, the case was selected for scrutiny and notice under sec. 143(2) dated 23.07.2008 was issued and served upon the assessee. Further, notice under sec. 143(2) and 142(1) along with questionnaire was issued by the AO on 25.09.2009, in response to which, the assessee's Authorized Representative appeared before the AO and filed replies from time to time. Books of account of the assessee were produced, which were put to test-check. 4. In the assessment proceedings, it was noticed by the AO that the assessee is proprietor of Arora Service Station and is running a petrol pump. During the relevant ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and stated that the assessee is entitled to exemption under sec.54F of the Act only to the extent of his right in the new residential house purchased jointly with his wife. The AO therefore, allowed 50% of the exemption claimed under sec. 54F of the Act as against total claim of Rs. 3,18,59,276- made by the assessee. The AO allowed claim only to the extent of Rs. 1,59,29,638/- and the balance 50% being Rs. 1,59,29,638/- was disallowed. 7. Being aggrieved, the assessee preferred an appeal before the learned CIT(A). 8. Before the learned CIT(A), the assessee placed reliance upon the decision of ITAT Madras D-Bench in the case of Third ITO v. S. Vardarajan [1989] 33 TTJ 466, where it has been held that the wife of the appellant was holding the property only in trust of the assessee and the assessee must be accepted as the real owner though the name of the wife was also included in the purchase deed. However, the learned CIT(A) has not followed this decision but followed the decision of ITAT Nagpur Bench in the case of ITO v. Prakash Timaji Dhanjode [2003] 81 TTJ 694. The CIT(A) also relied upon the decision of Hon'ble Punjab Haryana High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dated 01.07.2006 which gave rise to a capital gain. The assessee then invested a sum of Rs. 3,28,15,000/- on 01.03.2007 towards the purchase of a new residential house bearing No. 8, Block No. 7 situated in layout plan of Safdarjung Enclave, New Delhi and on that account, he claimed exemption under sec. 54F of the Act amounting to Rs. 3,18,59,276/-. This new residential house was purchased by the assessee in his own name along with his wife. The AO allowed the assessee's claim of exemption under sec. 54F only to the extent of 50% thereof inasmuch as the AO was of the view that the new residential house was purchased by two persons i.e. the assessee and his wife and exemption under sec. 54F is available only with reference to the assessee's share. The AO, therefore, restricted the deduction of Rs. 3,18,59,260/- claimed u/s 54F of the Act by the assessee to Rs. 1,59,29,368/- only. The controversy between the assessee and the department is with regard to the question whether the assessee is entitled to exemption under sec. 54F with reference to the total amount invested by the assessee in the new residential house or only to the extent of 50% thereof because of the reason that nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been claimed as exempt under sec. 54F of the Act. The fact that the whole of the consideration Rs. 3,28,15,000/- has been paid by the assessee himself is not in dispute. The assessee's wife has not contributed a single penny towards the purchase the new residential house. An affidavit by the assessee's wife has also been filed declaring and stating that the assessee's wife has not contributed single penny in the purchase of the house and she had no interest or title the said property. It has also been stated in the affidavit that the assessee's wife's name was stated in the purchase deed only for 'Shagun' purposes a because of the assessee being physically handicap. In the case of S. Varadarajan ( supra ), the assessee, an individual, claimed exemption under sec.54 of the Act on account of purchase of a flat. In that case, t document for the purchase of the flat was executed in the name of assessee's wife. The AO rejected the assessee's claim for the reason that the assess had not satisfied the conditions of sec. 54 of the Act because he had himself not purchased the property in his name and that his wife has not confirmed that she was holding benami for him. The claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the AO he had admitted that his son is the beneficial owner of the property and the investment was made in his name in view of the fact that he is 86 years old and that he was counselled to do so. Thus, on facts and circumstances of this case, we are of the view that the decision of the Madras Tribunal is also distinguishable." 16. The distinguishing feature between the decision in the case of S. Varadarajan ( supra ) and in the case of Prakash Timaji Dhanjode ( supra ) as pointed out by the Tribunal in the later decision in the case of Prakash Timaji Dhanjode ( supra ) has been looked into by us, and we find that the distinguishing feature pointed out by the Tribunal in the case of Prakash Timaji Dhanjode ( supra ) is not present in the present case. The facts of the present case are more identical to the case of S. Varadarajan ( supra ) inasmuch as, in the present case, the assessee has categorically stated that his wife's name was included in the purchase deed in trust for the assessee and that he was the real owner of the property and all the consideration for purchase of the property has been provided by him. Therefore, facts of the present case are ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was available to be taxed as capital gain was not utilized for the purchase of the flat either one year before the sale of the agricultural land or two yeas after the sale of the agricultural land inasmuch as most of the amount had already been paid to the cooperative society before one year of the sale of the agricultural land. The assessee also cannot be said to have constructed a residential house within three years of the sale of the agricultural land as the amount received from the sale of the agricultural land was not utilized for the purchase of the flat. The assessee's claim thus under sec. 54F was rejected. Independent of this view, the Hon'ble High Court has also considered another aspect of the matter that the agricultural land which was sold was of the assessee HUF and the flat purchased in the cooperative society was not in the name of the assessee HUF but in the individual name of the Karta along with his mother. It was therefore, held that the assessee was not entitled to claim the benefit of sec. 54F of the Act. In the present case, the amount received from the sale of land has been utilized by the assessee for the purchase of a flat though it was registered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In that case, the new property was purchased in the name of adopted son and the assessee's name was not included in the sale-deed. However, in the present case, the property has been purchased in the name of the assessee himself along with his wife and therefore, it cannot be said that the property has been exclusively purchased in the name of the third party. 21. A useful reference may be made to a recent decision of Hon'ble Punjab Haryana High Court in the case of CIT v. Gurnam Singh [2010] 327 ITR 278/[2008] 170 Taxman 160, where the Tribunal had recorded a pure finding of fact that the land in question was purchased out of the sale proceeds of the agricultural land, which was used only for agricultural purposes and merely because the assessee's son was shown in the sale deed as co-owner, it did not make any difference. In that case, it was not the case of the revenue that the land in question was exclusively used by his son. Therefore, the Hon'ble High Court held that the assessee was entitled to deduction under sec. 54B of the Act. In the present case, the new residential house has been purchased out of the sale proceeds of the land sold by the assessee. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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