Purchased Flat in Minor Daughter’s Name, Deduction U/S 54F Allowed by ITAT

N. Ram Kumar Vs ACIT (ITAT Hyderabad)

Purchased Flat in Minor Daughter’s Name, Deduction U/S 54F Allowed by ITAT: N. Ram Kumar Vs ACIT (ITAT Hyderabad)

Introduction: The Income Tax Appellate Tribunal (ITAT) Hyderabad recently delivered a significant judgment in the case of N. Ram Kumar vs. ACIT concerning the eligibility of an assessee for exemption under Section 54F of the Income Tax Act, 1961. The central issue revolved around the assessee’s claim for deduction under Section 54F for investing the sale proceeds of shares in a residential flat purchased in the name of his minor daughter. The ITAT’s decision offers clarity on the interpretation of Section 54F and the eligibility criteria for claiming exemptions.

Factual Background: During the relevant assessment year 2008-09, N. Ram Kumar sold 1,10,000 shares for a total consideration of Rs. 96,36,519. Out of the sale proceeds, he invested Rs. 55,68,662 in purchasing a residential flat, which was registered in the name of his minor daughter. The assessee claimed the amount invested in the flat as a deduction under Section 54F of the Income Tax Act.

However, the Assessing Officer (AO) disallowed the deduction, arguing that the flat was not purchased in the name of the assessee himself. The AO relied on various High Court decisions and an ITAT decision to support the disallowance of the deduction under Section 54F. Aggrieved by the assessment order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].

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