Case Law Details
CA Sandeep Kanoi
Issue for consideration is in relation to allowing deduction under sec. 54 of the Act in respect of the whole of the amount invested by the assessee in the purchase of residential house. The assessee purchased residential property at C-602, The Residency, Ardee City, Gurgaon in joint name with his wife Smt. Ritu Verma and claimed deduction under sec. 54 of the Act in respect of amount of Rs. 80,00,000/- invested in residential property. However, the AO restricted the deduction under sec. 54 to the extent of Rs. 40,00,000/- as the property was jointly held by the assessee with his wife.
The assessee had invested entire amount of Rs. 80,00,000/- in the new asset and the name of his wife Smt. Ritu Verma has been entered in the sale agreement just for the purpose of security reasons. Under sec. 64(1)(iv) subject to provisions of sec. 27(i), the income as arises directly or indirectly to the spouse of an individual from the assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with the agreement to live apart shall be included in the income of such individual. Therefore, if the new asset as held by Mrs. Ritu Verma is let out and the income is earned, the same will be clubbed in the hands of the assessee. Further, sec. 27 also provides that where an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred. Therefore, within the meaning of provision of sec. 27, the assessee will be the owner of the whole property and therefore, the income will be assessable in the hands of assessee. Once the assessee is owner, the capital gain, if any, on sale will be assessable in the hands of the assessee only. Therefore, the apprehension of the learned Sr. DR is without any basis that Smt. Ritu Verma has become owner of the property. Since Shri Suresh Verma, the assessee for the purpose of sec. 22 to 26 is the owner of the new property, in our considered opinion the assessee will be eligible for benefit of entire amount spent on acquisition of new asset, which is jointly held by him with his wife Smt. Ritu Verma. In view of above facts, in our considered opinion, the learned CIT(A) was justified in allowing the benefit of sec. 54 in respect of entire amount of Rs. 80,00,000/-.
Also Read- Section 54F Exemption available even if investment is made under joint name with spouse
Income Tax Appellate Tribunal, Delhi
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