Case Law Details
Hem Chandra R. Gavankar Vs ITO (ITAT Mumbai)
Introduction: The recent decision of the Income Tax Appellate Tribunal (ITAT) Mumbai in the case of Hem Chandra R. Gavankar highlights the denial of capital gain exemption for investments made in the names of the assessee’s wife and daughter. The appeal, directed against the order of the Commissioner of Income Tax (Appeals)-33, Mumbai, pertains to the assessment year 2006-07.
Detailed Analysis: The dispute centered around the denial of a deduction claimed under Section 54 of the Income Tax Act, 1961. The ITAT Mumbai considered the facts of the case, noting that the original asset was sold, giving rise to capital gain. The Assessing Officer (AO) reopened the assessment, and during the proceedings, computed the net long-term capital gain at Rs. 35,07,490/- after allowing relevant benefits.
The key contention was the denial of the deduction under Section 54. The ITAT observed that for claiming benefit under this provision, the assessee must invest the capital gain or sale consideration in purchasing a house property in their own name. The ITAT relied on the decision of the Hon’ble Bombay High Court in the case of Praksh vs. ITO (2008) 312 ITR 40 to support this interpretation.
The ITAT considered the claim made by the assessee that the property was purchased in the name of his wife and adult daughter. However, it held that the assessee was not eligible for the deduction under Section 54 since the new house property was not purchased in his own name.
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