Bhaskari Madhavan Vs ITO (ITAT Chennai)
As per provisions of section 54 of the Income Tax Act, 1961, the assessee can claim benefit of deduction, in case, sale consideration received from transfer of original asset was invested in purchase of another residential house property. As per plain reading of section 54 of the Act, it is very clear that investment should be made in the name of the assessee to get benefit of deduction. However, various courts, including the Hon’ble Madras High Court in the case of CIT vs. V.Natarajan (supra) had taken a lenient view considering beneficial provisions of section 54 of the Act, and held that even if investments is made in the name of spouse or minor daughter, the deduction cannot be denied. We have gone through the arguments of the learned A.R for the assessee in light of decision of the Hon’ble Madras High Court in the case of CIT vs. V. Natarajan (supra) and we ourselves do not subscribe to the arguments advanced by the learned AR for the assessee to claim benefit of deduction u/s.54 of the Act, in respect of purchase of new property in the name of married daughter, because courts have considered the provisions and after considering fact that the assessee has purchased house property in the name of spouse has allowed benefit, because as per provisions of section 64 & 64(1A) of the Act, in case of purchase of property is in the name of spouse and minor children, income from such property is assessable in the hands of the assessee. Therefore, under those facts, the Courts have held that when property was purchased in the name of spouse, benefit of deduction cannot be denied. In the present case, the assessee has purchased property in the name of married daughter, although she was divorced, but she is an independent for purpose of the Income Tax Act. Therefore, we are of the considered view that benefit of deduction u/s.54 of the Act cannot be allowed, when property has been purchased in the name of married daughter. The Assessing Officer as well as learned CIT(A), after considering relevant facts has righty denied deduction claimed u/s.54 of the Income Tax Act, 1961.
