The intention of the legislature has been watched and smelled by the Court & Tribunals. Benefit of section 54F is entitled to the legitimate assessee. Wide interpretation of the language of the section has been made and benefit has been allowed by the Tribunals.

Deduction u/s  54F  fully allowable despite property purchase in joint names.

Assessee purchased the property along with the name of his wife and son shown as purchaser in the document under which the property was purchased.

The issue was whether deduction under section 54F had to be restricted to only 1/3rd of the cost of acquisition of the new asset for the reason that assessee purchased the property along with the name of his wife and son shown as purchaser in the document under which the property was purchased. Revenue claimed that the purchase of new asset should be only in the name of the transferor i.e., the Assessee, and to the extent the capital gain was invested in the joint name of the assessee’s wife and son, the deduction could not be allowed.

Deduction under Section 54F - Judicial Views

DIT (Intl.) vs. Mrs. Jennifer Bhide (2011) 15 com82 (Karn)

It was held in the case that  the entire consideration has flown from assessee ad no consideration had flown from her husband. Merely because the husband’s name was also mentioned in the purchase document, assessee could not be denied the benefit of deduction. The law is well settled that where two views are possible on an issue, the view favorable to assesse should be followed. Following the above decision, it was concluded that assessee should be entitled to the benefit of deduction under section 54F to the whole extent of investment in purchase of new asset, even though the property has been purchased in the joint names of assessee, his wife and son.

[Shri Bhatkal Ramarao Prakash v. ITO – Date of Judgment 04.01.2019 (ITAT Bangalore)] (AY 2015-16)

Investment made in a residential house – Purchase of three different properties – Exemption was allowed only in respect of one constructed house

Tribunal held that in absence of any material to show that three different properties were purchased were purchased to meet residential requirement of family of assessee the deduction was allowed only in respect of one constructed house. Positiion prior to 01.04.2015 (AY Year 2011-12) –

[Rakesh Garg. V. ITO (2019) 197 TTJ 632 (2018) 173 ITD 302 (ITAT Jaipur)

Investment in a residential house – Assessee owing a house on date of transfer is not entitled to benefit under section 54F

It was held that the assessee was owning house on date of transfer is not entitled to benefit under Section 54F. ( Assessment years: 1998-99 & 1999-2000)

[Arjun malhotra v. CIT (2018) 403 ITR 354 (Del)]

Investment in a residential house – Sale is not concluded or agreement of sale is not certain to be honored, assessee cannot claim deduction in respect of purchase or construction of property [Section 54F (4)]

Dismissing the appeal of the assessee, the Tribunal held that, when the sale is not concluded or agreement of sale is not certain to be honored, assessee cannot claim deduction in respect of purchase or construction of property within one year before or within two years after sale of original asset or to have constructed property within three years after sale of property for purpose of claiming deduction

( assessment year: 2014-15) – [Mahesh Malneedi v. ITO (2018) 169 ITD 154 (ITAT Hyderabad)]

Mere technically that the sale deed was executed in the name of member of the HUF rather not HUF, would not be sufficient to defeat the claim of deduction.

It was held that where consideration that arose in hands of HUF (assessee) on sale of capital asset had been invested of the HUF assessee, deduction house in name of some of its members instead of the HUF assessee, deduction under section 54F would still be available to the HUF. It noted that mere technically that the sale deed was executed in the name of member of the HUF rather not HUF, would not be sufficient to defeat the claim of deduction.

[PCIT v. Vaidya Panalalmanilala (HUF) (2018) 98 Taxmann.com 189 (Guj)]

The Assessing Officer disallowed the assessee’s claim for deduction under section 54F on the ground that though the assessee had purchased a certain land after the sale of old asset, the residential house had not been constructed and completed on the said land within three years from date of sale of old asset. The CIT (A) allowed the assessee’s appeal holding that there were genuine and bona fide reasons which resulted in the delay in completion of construction of the residential house, which were beyond the control of the assessee. The Tribunal concurred with the CIT(A)’s findings and held that the assessee was eligible for deduction under section 54F. The Court dismissed Revenue’s appeal holding that since the Tribunal and the CIT(A) had concurred in their factual finding, the appeal filed against order of the Tribunal could not be entertained.

[PCIT v. Smt. Charumathi Seshadri (2018) 97 taxmann.com 178 (Mad)]

Assessee failed to claim deduction in return of Income, but assessing Officer was directed to allow

The assessee neither disclosed the capital gains in the return of income nor claimed any deduction under section 54F of the Act, the assessee is not entitled to get any deduction under section 54F. Merely on account of fact that the assessee has not claimed exemption, the same could not have been denied. CIT (A) ought to have considered the issue on merits since the decision of the Supreme Court in the case of Goetze (India) Ltd. would not debar the first appellate authority to consider the fresh claim, if any, so as to arrive at the correct taxable income. Therefore ITAT set-aside the orders passed by the Assessing Officer and directed the assessing Officer to allow the claim of deduction under section 54F of the Act.

[Manohar Reddy Basani v. ITO (2018) 94 taxmann.com 321 (ITAt Hyderabad)]

Investment in a residential house – two residential units purchased at two different localities – Exemption was restricted to only investment in one residential house property.

It was held that, exemption was restricted to only investment in one house property. Assessee was not entitled to exemption with regard to two residential units purchased at two different localities. ( Asssessment Year: 2013-14) –

[ACIT v. N.S. Viswanathan (2018) 67 ITR 307 (ITAT Cochin)]

Capital gains – Investment in a residential house – Property purchased in the name of wife – Loan was sanctioned in the name of wife – Not entitled to exemption

Property purchased in the name of wife. Loan was sanctioned in the name of wife. Not entitled to exemption. ( Assessment year: 2009-10)

[Kaushal Kishore Maheshwari v. ACIT (2017) 190 TTJ 811: (2018) 162 DTR 41 (ITAT Delhi)]

For availing the benefit of section 54F assessee and his counsels has to read the judgements thoroughly . It has to be watched telescopically before availing deduction .

Author Bio

Qualification: LL.B / Advocate
Company: S.K. Jain and Co.
Location: Faridabad, Haryana, India
Member Since: 16 May 2019 | Total Posts: 104
I am S.K.Jain , Tax Consultant cum Advocate practising in Income Tax , GST , Company Matters . The name of the concern is S.K. Jain and Co. and I am prop. of this concern . I am in practice for the last 30 years . Professionals and non professional can feel free to contact me on mail . My mail ID is View Full Profile

My Published Posts

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Telegram

taxguru on telegram TELEGRAM GROUP LINK

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

December 2021
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
2728293031