This really is an appeal filed because of the assessee from the purchase of ld. CIT(A)-III, Jaipur dated 16.12.2015 for Assessment 2012-13 wherein the assessee has challenged the action of ld year. CIT(A) in confirming the dis allowance of exemption of Rs. 30,00,000/- claimed u/s 54F of this Act.
Shortly reported, the important points for the instance are that through the year into consideration, the assessee has offered three lands that are agriculture to him for the purchase consideration of Rs. 99,25,000. The assessee has purchased another land that is agricultural a consideration of Rs. 32,00,000/- for which deduction u/s 54F has been advertised and exact exact same ended up being permitted because of the Assessing Officer and it is perhaps maybe not in dispute before us. The assessee in addition has bought a residential property on 23.05.2011 for a purchase consideration of Rs. 30,00,000/- into the title of their spouse, Smt. Nikita Jain, and stated deduction u/s 54F of this Act and that will be in dispute before us.
throughout the span of assessment procedures, the assessee had been expected showing cause as to the reasons the reported u/s 54F of this Act, 1961 is almost certainly not disallowed, once the property had not been owned into the name of assessee. As a result, the assessee presented that the consideration for such home ended up being given out of payment of advance from the assessee received from Narvik Nirman & Financiars Pvt. Ltd. and it also had been further submitted that the latest house that is residential not be purchased by the assessee inside the very own title neither is it necessary so it ought to be bought exclusively in the name. It absolutely was submitted that the assessee has not bought the new home in the title of the complete stranger and whole investment has arrived out from the supply of the assessee and there is no share from the assessee’s spouse. The submission for the assessee had been considered although not discovered acceptable into the Assessing Officer. The property which was sold was belonging to the assessee whereas the reinvestment in property (residential house) has been made in the name of Smt as per Assessing Officer. Nikita Jain, spouse associated with assessee. It had been further held by the AO that Smt. Nikita Jain, spouse of this assessee, is having her PAN and filing her return of earnings that will be also evaluated to taxation, therefore, according to income tax conditions, husband and wife both could never be regarded as solitary entity plus the advantageous asset of investment created by an individual assessee is not fond of another assessee that is individual. The AO further drawn mention of the conditions of Section 54F of this Act and held that to claim deduction, the investment in new asset must certanly be into the name of assessee himself. It had been further held russian brides because of the AO that in lack of the non-public balance sheet for the assessee and lack of proper documentary evidence, it can not be ascertained whether assessee will not obtain one or more domestic household, apart from brand new asset, regarding the date of transfer associated with asset that is original. Appropriately, for those two reasons, the claim of this assessee u/s 54F for the I.T.Act, 1961 ended up being disallowed.
Being aggrieved, the assessee carried the situation in appeal prior to the ld CIT(A) and presented that the acquisition of a new house that is residential to be bought by the assessee.
Nonetheless, it’s not especially needed under the legislation that the home must be bought when you look at the title of assessee just. It was further contended that liberal construction should always be fond of conditions of section 54F for the Act and in case substantive requirement are satisfied, advantage issued by the Parliament shouldn’t be removed for small and unimportant inconsistencies. Further, the assessee put reliance in the choice of Honorable Delhi High Court in the event of CIT vs. Kamal Wahal (351 ITR 4), wherein, when you look at the context of section 54F for the Act and buy of home into the name of assessee’s wife, it had been held that the brand new house that is residential not be purchased by the assessee in the title neither is it necessary so it must be bought and exclusively inside the name. Further, reliance ended up being added to your choice of Honorable Madras tall Court in the event of CIT vs. V. Natarajan (287 ITR 271) in which the homely home ended up being purchased into the title regarding the assessee’s spouse, deduction under area 54 ended up being allowed. Further, reliance was positioned on your decision of Hon’ble Andhra Pradesh tall Court in the event of belated Gulam Ali Khan vs. CIT (165 ITR 228) wherein into the context of area 54 regarding the Act, it had been held that the term ‘assessee’ should be offered a broad and interpretation that is liberal as to incorporate their legal heirs additionally. Further, reliance ended up being put on your decision of Honorable Karnataka tall Court into the full situation of DIT vs. Mrs. Jennifer Bhide (349 ITR 80) wherein it had been held that in which the consideration that is entire flown from her spouse, simply because in a choice of the purchase deed or into the bond, her husband’s title can be mentioned, the assessee may not be rejected the benefit of deduction u/s 54 and 54EC for the Act. Further, reliance was put on your decision of Honorable Delhi tall Court in the event of CIT vs. Ravinder Kumar Arora (342 ITR 38) wherein into the context of section 54F for the Act, it had been held that where in actuality the assessee has included the title of their spouse while the home happens to be purchased jointly within the names, it might perhaps maybe not make a difference while the conditions stipulated in section stand that is 54F.
The ld. CIT(A) however relied regarding the decision of Honorable Rajasthan tall Court in the event of Kalya vs. CIT (251 CTR 174) wherein when you look at the context of section 54B of this Act, it absolutely was held that the assessee wouldn’t be eligible to get exemption for land purchase by him within the true name of his son and daughter-in-law. Further when you look at the said decision, it was held that the word ‘assessee’ found in the IT Act has to be offered a ‘legal interpretation’ and not just a ‘liberal interpretation, since it would tantamount to providing a totally free hand to your assessee along with his appropriate heirs plus it shall curtail the income associated with the national, that the legislation will not allow. Following choice of Honorable Rajasthan tall Court in case there is Kalya, the ld. CIT(A) upheld the rejection of claim regarding the assessee u/s 54F for the Act.
The ld during the course of hearing. AR reiterated the submissions created before the ld. CIT(A). Further, ld. AR additionally drawn our mention of the current decision of Hon’ble Rajasthan tall Court in case there is Sh. Mahadev Balai vs. ITO (D.B. ITA No. 136/2017 & others 07.11.2017 that is dated wherein into the context of section 54B, it absolutely was held that where in fact the investment is manufactured into the name associated with spouse, the assessee will be qualified to receive claim of deduction u/s 54B of the Act.
when you look at the said instance, the assessee has offered agricultural land and purchased another agricultural land when you look at the title of their spouse and claimed deduction u/s 54B for the Act. The Bench that is co-ordinate vide purchase in ITA No. 333/JP/2016 dated 26.12.2016 after the decision of Honorable Rajasthan tall Court in the event of Kalya vs. CIT(supra) had determined the problem resistant to the assessee and it has confirmed the denial of deduction u/s 54B of the Act. The Hon’ble Rajasthan High Court has framed the following substantial question of law in the context of said facts, on appeal by the assessee
“Where ld. ITAT ended up being justified in disallowing the exemption u/s 54B o f the Act without appreciating that the funds used when it comes to investment to buy associated with the home eligible u/s 54B belonged to your appellant just and just the subscribed document was executed within the title o f the spouse and further the spouse had not split income source.”
The Honorable Rajasthan tall Court, after considering its earlier choice in the event of Kalya vs. CIT(supra) in addition to several other choices of Honorable Delhi tall Court, Honorable Madras tall Court, Honorable Karnataka tall Court, Honorable Punjab and Haryana High Court, and Honorable Andhra Pradesh tall Court, as additionally relied upon by the assessee, has held it is not specified in the legislation that the investment is to be in the name of the assessee and where the investment is made in the name of wife, the assessee shall be eligible for deduction and has thus decided the matter in favour of the assessee that it is the assessee who has to invest and. The appropriate findings for the Honorable Rajasthan tall Court are included at para 7.2 and 7.3 of the purchase that are reproduced as under:-
The word used is assessee has to invest, it is not specified that it is to be in the name o f assessee on the ground of investment made by the assessee in the name of his wife, in view of the decision of Delhi High Court in Sunbeam Auto Ltd. and other judgments of different High Courts.