Case Law Details
Briefly the facts are during the relevant previous year, the assessee has sold 1,10,000 shares for a consideration of Rs.96,36,519. Out of sale consideration of shares, the assessee invested a sum of Rs.55,68,662/- for purchasing a flat in the name of his minor daughter. The assessee claimed the amount invested in purchase of flat as a deduction u/s 54F (1) of the Act. The AO disallowed the deduction claimed on the ground that the flat was not purchased by the assessee in his own name. The AO relying upon different High Courts’ decisions and also a decision of ITAT, Nagpur Bench in case of ITO vs. Prakash Timaji Dhanjode 258 ITR (AT) 0114 held that the assessee is not entitled for deduction u/s 54F(i). Assessee being aggrieved by the assessment order filed an appeal before the CIT (A). Since the AR of the assessee or no one appeared before the CIT (A) on the last date fixed on 28-11-2011 the appeal was decided by the CIT (A) on the basis of statement of facts and grounds of appeal filed before him. The CIT (A) upheld the reasoning of the AO that since the property was purchased in the name of the assessee’s doughter and not in the name of the assessee himself, no deduction u/s 54F can be allowed.
The Hon’ble Delhi High Court in the case of CIT vs. Ravinder Kumar Arora (2011) 42(1) ITCL 0498 following the principles laid down by the Hon’ble Andhra Pradesh High Court in the case of Late Mir Gulam Ali Khan vs. CIT(supra) held that the language of section 54F does not mandate that the house property should be purchased in the name of the assessee alone. The Honourable Delhi High Court held that the word “assessee” must be given wide and liberal interpretation as held by the Hon’ble AP High Court in the case of Late Mir Gulam Ali Khan (supra). The Hon’ble Delhi High Court further held that language contained u/s 54F(1) is pari materia with section 54 of the Act. Similar is also the view in the case of CIT vs. Gurnam Singh (2010) 327 ITR 278 and Hon’ble Madras High court in the case of CIT vs. V. Natarajan (2006) 287 ITR 271. The ITAT, Madras Bench in the case reported in 33 TTJ 466 while considering a case of identical nature where the assessee purchased the property in the name of his wife and claimed exemption u/s 54 held that the assessee is entitled to exemption u/s 54 of the Act. However, it is seen that the Hon’ble Punjab & Haryana High Court in the case of Jai Narayan vs. ITO 306 ITR 335 (P & H) and in the case of Prakash Vs. ITO 220 CTR 249 (Mumbai) and ITAT in the case of ITO vs. Prakash Timaji Dhanjode ITAT Nagpur 81 TTJ 694 have held a different view to the effect that for getting exemption u/s 54F, the property has to be purchased in assessee’s name. The intention of the legislature in introducing sec. 54F as explained in Board’s Circular No.346 dated 30 th June, 1982 is for encouraging house construction. It is an encouragement given to the assessee to exchange one of the residential houses for another or where he has none to convert any of his long term assets into a residential house. The object behind such a provision is to encourage large scale house building activity or investment in house property to meet acute housing shortage in the country. Therefore, looking at the legislative intent, a liberal interpretation has to be given to section 54F which is a beneficial provision.
It is also well settled principle of law that when there are divergent views, to give effect to a beneficial provision the view favourable to the assessee has to be adopted. In the aforesaid view of the matter, following the ratio laid down by the jurisdictional High Court in case of late Mir Gulam Ali Khan(supra), by the Hon’ble Delhi High Court in case of CIT vs. Ravinder Kumar Arora (supra) and also by the ITAT, Madras Bench in 33 TTJ 466 (supra), we hold that the assessee will be entitled for deduction u/s 54F for the flat purchased in the name of his daughter subject to the restrictions under the proviso to section 54F(1) of the Act. Hence the grounds raised by the assessee are allowed.
INCOME TAX APPELLATE TRIBUNAL, HYDERABAD
ITA No.1901/HYD/2011 – Assessment Year : 2008-09
Please become a Premium member. If you are already a Premium member, login here to access the full content.
