Income Tax Case Analysis – Simran Bagga vs. ACIT (ITAT Delhi)- Section 54
Introduction:
In a noteworthy decision, the Income Tax Appellate Tribunal (ITAT) Delhi, in the case of Simran Bagga vs. ACIT, has provided clarity on the eligibility of income tax deduction under section 54. The dispute arose when Simran Bagga, a non-resident individual residing in the UAE, sought a deduction of INR 93,46,404 under section 54 for a property registered in her spouse’s name. The Assessing Officer (AO) disallowed the claim, leading to an appeal before the ITAT.
Detailed Analysis:
Simran Bagga revised her return for A.Y. 2020-21, declaring a total income of Rs. 2,11,190 after claiming the section 54 deduction. The property in question, situated in New Delhi, was sold for Rs. 1,30,00,000, and the Assessee invested Rs. 1,00,00,000 in a new residential house in Hyderabad, registered in her spouse’s name, Mr. Ajay Suri. The AO disallowed the deduction, arguing that the property was not registered in Simran Bagga’s name, and the payment was made from a joint account. The Assessee contended that the deduction should not be denied solely because the property was not in her name. The case reached the ITAT.
The ITAT considered documentary evidence, including HDFC bank statements and payment receipts, proving that the investment was made from the sale proceeds of the Delhi property. Due to travel restrictions amid the COVID-19 pandemic, the property was registered in Mr. Ajay Suri’s name for convenience. The ITAT referred to precedents and High Court judgments, emphasizing the crucial factor of utilizing sale proceeds for the new investment. The Tribunal held that the Assessee is eligible for the deduction under section 54F, considering the investment made within the stipulated time.
Conclusion:
The ITAT Delhi’s decision in Simran Bagga vs. ACIT establishes a precedent affirming that income tax deductions under section 54F can be claimed even if the new property is registered in the spouse’s name. The ruling aligns with a purposive construction, interpreting tax laws liberally in favor of taxpayers. This victory underscores the importance of documenting the direct connection between sale proceeds and new investments to substantiate claims. Taxpayers can find reassurance in the ITAT’s approach, promoting a fair interpretation and application of tax laws.
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