Deduction u/s 54F cannot be denied if a person holding one more residential property in joint name

Shree Anil Dev Vs DCIT (ITAT Bangalore)

Conclusion: Disallowance of assessee’s claim for deduction under section 54F on the ground of assessee holding one more residential property in joint name along with his wife, could not be sustained as although in purchase deed, name of assessee was also there along with name of wife and purchase consideration of second residential property was paid by her out of joint/her individual bank account however, assessee’s wife was having sufficient own funds in that joint bank account received as her share in sale proceeds of shares.

Held: Assessee had claimed Investment from capital gains to the residential property and had claimed deduction u/s 54F. However, within one year assessee had purchased another residential property. The claim of assessee was that the second property though stood in the joint name of assessee and his wife however, the same belonged exclusively to his wife. AO had noted that the property had been funded by assessee from his joint bank account with his wife. AO denied deduction on the ground that assessee on the date of transfer held more than one residential property one fully owned by assessee and other jointly owned by assessee along with his wife. It was noted that both persons i.e. the present assessee and his wife were stating that the purchase was by wife of the assessee although in the purchase deed, name of the assessee was also there along with the name of wife and purchase consideration of this second residential property was paid by her out of the joint/her individual bank account and she was having sufficient own funds in that joint bank account received as her share in sale proceeds of the shares and this claim was accepted by CIT (A) also in her case and that order of CIT (A) had attained finality because the appeal of revenue against this order of CIT (A) got dismissed by the tribunal because of low tax effect. Thus, the disallowance of the assessee’s claim for deduction u/s 54F made by the AO and confirmed by CIT (A) was deleted.

FULL TEXT OF THE ITAT JUDGEMENT

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