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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.
The old flat had been sold on 7.3.2006 and therefore the assessee was required to construct a new residential house by 6.3.2009. The purpose of section 54 is to allow exemption to the assessee of long term capital gain arising from sale of residential house if the capital gain is invested in construction of new residential house within a period of three years from the date of transfer and, therefore, in case, the assessee had invested the capital gains in construction of a new residential house within a period of three years, this should be treated as sufficient compliance of the provisions.
Whether where assessee invested sale proceeds of tenancy rights in specified bonds, he was entitled to deduction under section 54EC even though his wife and daughters were co-holders of said bonds? Exemption Under Section 54F if Assessee claims two units as one he has to furnish Approved Municipal Plan.
In the instant case, it is found that the eligible new asset was not purchased within one year before the date on which the transfer of the original asset took place. Thus, the amount which is not utilized by the assessee for the purchase of new asset before the date of furnishing the return of income under section 139 was required to be deposited as per the provisions of sub-section (4) for availing deduction under section 54F in respect of those amounts also. In other words, as per the plain language employed in the above sub-section (4), only the amount which was actually utilized by the assessee for the purpose of purchase of the new residential house before the date of furnishing of the return of income under section 139 shall only be eligible for computation of deduction under section 54F(1).
. Given the fact that the assessee had not owned the property in her name only to the exclusion of anybody else including the husband, but in joint name with her husband, we agree with the submission of the learned senior counsel appearing for the assessee herein that unless and until there are materials to show that the assessee is the exclusive owner of the residential property, the harshness of the proviso cannot be applied to the facts herein. Apart from that, 50% ownership is with reference to the clinic situated in the ground floor. As such, the entire property is not an exclusive residential property. Hence, we are inclined to agree with the assessee’s contention that the joint ownership of the property would not stand in the way of claiming exemption under Section 54F.
Assessee having constructed the building and invested the capital gain, the assessee is entitled for deduction u/s. 54F of the Act if other conditions discussed herein below are fulfilled.
In the instant case, the claim of the CIT is that the assessee is the owner of house properties situated at Trichy and Bangalroe and therefore, the said decision is not squarely applicable to the facts of the case. In our considered view, if the house properties situated at Trichy and Bangalore are owned by the assessee’s wife then the same cannot be considered as owned by the assessee for disallowing exemption u/s 54F of the Act.
The learned First Appellate Authority failed to appreciate the fact that the provisions of U/s. 54F do not require the same sale proceeds to be utilized to claim deduction U/s. 54F.
Assessee has invested in purchase of new residential house at Rs. 70,80,620/- within the period of two years in which the transfer took place and therefore, the assessee was eligible for deduction u/s 54F(1) of the Act in respect of the said investment out of this deemed long term capital gains. In our considered opinion, the Assessing Officer was not justified in not granting exemption u/s 54F with reference to this investment made by the assessee in computing long term capital gains of the year under consideration.
Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Miss Jagriti (supra) has held that sub-section (4) of section 139 provides the extension period of limitation as an exception to sub-sec. (1) of sec. 139 of the Act. Sub-sec. (4) was in relation to the time allowed to an assessee under sub-sec. (1) to file the return. Therefore, such provision was not an independent provision, but relates to the time contemplated under sub-sec.(1) of sec. 139. Therefore, subsec.(4) has to be read along with sub-sec.(1).
