ITO Vs Smt. Saraswati Ramanathan (ITAT Delhi)
The assessee is an individual. During the previous year relevant to the assessment year 2004-05 she sold 500 shares of ITC Ltd. for Ea.5,43,125 and credited the proceeds to her bank account with ICICI Bank, Gurgaon. She had inherited the shares from her husband who passed away on 1-4-1993. She invested Rs. 5,00,000 out of the sale proceeds in Rural Electrification Bonds- REC 54EC Series III on 24-3-2004. The investment was in the joint names of herself, being the first name, and her son A.R. Sridhar. She claimed exemption from capital gains tax under Section 54EC which was negatived by the Assessing Officer on the ground that the investment in the bonds was in the joint names which is not permitted under the above section under which it is the assessee who has to invest the gains in her own name. The CIT(A) however held that there is no such requirement in the section and the assessee having invested the sale proceeds of the shares in the REC bonds without any contribution from her son the section was complied with and the exemption cannot be denied. He further noted that the assessee was 69 years old and it was merely a matter of convenience on her part and to ensure that there would be no hassles in future that she made the investment in the joint names, her name being the first name and the son’s name being second.
ITAT agreed with the view taken by the CIT(A) that the assessee is eligible for the exemption under Section 54EC. I further find that the Mumbai bench, ITAT has held in the case of JCIT v. Smt. Armeda K. Bhaya (2005), 95 ITD 313 (copy filed) that for the purpose of Section 54 of the Act, it is sufficient compliance with the section that the assessee purchased the new flat in the names of himself, his father and mother and that it was not the requirement of the section that the new flat should be in the assessee’s exclusive name. It was held that the main condition of the section was that the sale consideration should be invested in the new house. I respectfully follow the ratio of the above decision. I accordingly confirm his order and dismiss the appeal filed by the revenue with no order as to costs.
In the following decisions also, exemption has been allowed to the assessee for investment in the sole/joint name with wife :
(1) CIT v. V. Natrajan, 287 ITR 271 (Mad.)
(2) CIT v. Gurnam Singh, 327 ITR 278
(3) JCIT v. Smt. Armeda K. Bhaya, 95 ITD 313 (Mum.)
Income Tax Appellate Tribunal – Delhi
Ito Vs Smt. Saraswati Ramanathan on 19 July, 2007
Equivalent citations: 2008 300 ITR 410 Delhi, (2008) 114 TTJ Delhi 803
ORDER
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