Case Law Details
Urmila Madhukar Ved Vs ITO (ITAT Pune)
This appeal by the assessee emanates from the order passed by the CIT(Appeals)-7, Pune on 11-09-2019 in relation to the assessment year 2010-11.
2. The only issue raised in this appeal is against the denial of exemption u/s.54 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) because of purchasing a new house in the name of the assessee’s son.
3. Succinctly, the facts of the case are that the assessee sold an immovable property for Rs.1.00 crore and invested Rs.5.00 lakh for purchase of units of mutual fund. No return was filed by the assessee. The case was taken up by means of notice u/s.148. Thereafter, the return was filed declaring total income of Rs.8,52,790/- claiming refund of Rs.12.34 lakh. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee sold an immovable property on 28-05-2009 for consideration of Rs.1.00 crore having stamp duty valuation at Rs.1,00,87,031/-. The AO observed that the assessee claimed exemption u/s.54 for a sum of Rs.46,59,600/-. On further enquiry, it transpired that the assessee remitted a sum of Rs.1.29 crore to her son Rahul Madhukar Ved at London, who purchased an immovable property at London in his own name. The AO opined that the exemption claimed by the assessee u/s.54F amounting to Rs.46,59,600/- could not be granted because the new property was purchased by the assessee’s son in his own name. The ld. CIT(A) affirmed the order passed by the AO relying on the judgment of Hon’ble jurisdictional High Court in Prakash Vs. ITO (2009) 312 ITR 40 (Bom.), against which the assessee has approached the Tribunal.
4. I have heard both the sides and gone through the relevant material on record. The primary question for consideration is as to whether exemption u/s.54 can be allowed when the new property purchased by the assessee in the name of someone else other than self? The ld. CIT(A) has relied on the judgment of Hon’ble jurisdictional High Court in the case of Prakash Vs. ITO and other (supra), in which it has been held that when a new property is purchased in the name of son with clear intention to transfer the property to him and the son becomes the full owner of property for all the purposes, the assessee cannot claim the benefit of exemption u/s 54B.
5. It is seen that the Hon’ble Delhi High Court in CIT vs. Shri Kamal Wahal (2013) 351 ITR 4 (Del) and the Hon’ble Punjab & Haryana High Court in CIT vs. Gurnam Singh (2010) 327 ITR 278 (P&H) have decided similar issue in favour of the assessee by allowing exemption u/s 54B observing that the assessee having invested sale proceeds of his agricultural land in purchasing another agricultural land, though in a joint name with his son, was eligible for exemption. Identical view in favour of the assessee has been canvassed by certain other Hon’ble High Courts also.
6. On the contrary, the Hon’ble jurisdictional High Court in Prakash Vs. ITO and other (supra) has disentitled the assessee to the claim of exemption when a new property is not purchased in the name of assessee, who transferred the original property. The Hon’ble Punjab & Haryana High Court in a later decision in the case of CIT vs. Dinesh Verma (2015) 233 Taxman 409 (P&H) considered a case in which the new property was not purchased in the name of the assessee who transferred the original property. The Hon’ble High Court did not grant the benefit of exemption u/s 54B to that extent.
7. Ergo, it is overt that the decisions have been rendered at variance by the two sets of the Hon’ble High Courts – one in favour of the assessee and other in favour of the Revenue. It goes without saying that the decision of a High Court is binding on the all subordinate Courts and authorities or Tribunal under its superintendence throughout the territories in relation to which it exercises jurisdiction within the terms of Article 227 of the Constitution of India. When discordant views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that the other view of the non-jurisdictional High Court may sound more appealing on individual level vis-a-vis the view of the jurisdictional High Court. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion – for or against – on that point. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court. In that view of the matter, I am bound to follow the view taken by the Hon’ble jurisdictional High Court. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon’ble Bombay High Court in favour of the assessee on this issue. I, therefore, hold that the authorities below were justified in denying the benefit of exemption u/s 54 of the Act.
8. In the result, the appeal is dismissed.
Order pronounced in the Open Court on 29th March, 2022.
