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 12 months 2012-13 wherein the assessee has challenged the action of ld. CIT(A) in confirming the dis allowance of exemption of Rs. 30,00,000/- claimed u/s 54F of this Act.
Fleetingly reported, the reality associated with the instance are that through the 12 months under consideration, the assessee has offered three agriculture lands belonging to him for the sale consideration of Rs. 99,25,000. The assessee has bought another agricultural land at a consideration of Rs. 32,00,000/- for which deduction u/s 54F has been reported and exact exact same had been permitted because of the Assessing Officer and it is perhaps not in dispute before us. The assessee in addition has bought a domestic home on 23.05.2011 for the purchase consideration of Rs. 30,00,000/- when you look at the name of their spouse, Smt. Nikita Jain, and stated deduction u/s 54F of this Act and that is in dispute before us.
through the span of evaluation procedures, the assessee had been expected to demonstrate cause as to the reasons the reported u/s 54F of this Act, 1961 may possibly not be disallowed, while the property wasn’t owned into the name of assessee. In reaction, the assessee submitted that the consideration for such russian brides home ended up being paid out of repayment of advance of the assessee received from Narvik Nirman & Financiars Pvt. Ltd. plus it ended up being further submitted that the newest house that is residential not be bought because of the assessee in their very very own title neither is it necessary so it must be bought solely in their title. It had been submitted that the assessee have not bought the new home in the title of a stranger and whole investment has arrived out from the way to obtain the assessee and there was clearly no share through the assessee’s spouse. The submission associated with assessee ended up being considered 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, wife associated with the assessee. It had been further held by the AO that Smt. Nikita Jain, spouse associated with assessee, is having her PAN and filing her return of earnings which can be also evaluated to income tax, consequently, according to income tax conditions, spouse and spouse both could never be regarded as solitary entity together with advantageous asset of investment made by a person assessee can not be directed at another assessee that is individual. The AO further drawn mention of the the provisions of Section 54F of this Act and held that to claim deduction, the investment in brand brand new asset should really be when you look at the title of assessee himself. It was further held because of the AO that in lack of the private stability sheet of this assessee and absence of appropriate documentary evidence, it can’t be ascertained whether assessee will not obtain more than one residential house, apart from brand new asset, regarding the date of transfer for the initial asset. Appropriately, of these two reasons, the claim associated with the assessee u/s 54F for the I.T.Act, 1961 had been disallowed.
Being aggrieved, the assessee carried the situation in appeal ahead of the ld CIT(A) and presented that the purchase of a brand new domestic household has become bought by the assessee.
Nevertheless, it is really not especially required underneath the law that your house ought to be bought into the title of assessee just. It had been further contended that liberal construction should really be fond of conditions of section 54F for the Act and in case substantive requirement are fulfilled, advantage issued by the Parliament really should not be taken away for tiny and unimportant inconsistencies. Further, the assessee put reliance from the choice of Honorable Delhi tall Court in case of CIT vs. Kamal Wahal (351 ITR 4), wherein, into the context of section 54F for the Act and get of household into the name of assessee’s wife, it absolutely was held that this new residential household need not be bought because of the assessee in the title nor is it necessary so it ought to be bought and solely inside the title. Further, reliance had been put on your choice of Honorable Madras High Court in the event of CIT vs. V. Natarajan (287 ITR 271) where in actuality the homely house had been bought within the name for the assessee’s spouse, deduction under part 54 had been permitted. Further, reliance ended up being put on your decision of Hon’ble Andhra Pradesh High Court in case of Late Gulam Ali Khan vs. CIT (165 ITR 228) wherein when you look at the context of part 54 for the Act, it had been held that the word ‘assessee’ must certanly be offered an extensive and interpretation that is liberal as to incorporate their legal heirs additionally. Further, reliance ended up being positioned on your decision of Honorable Karnataka tall Court into the full instance of DIT vs. Mrs. Jennifer Bhide (349 ITR 80) wherein it absolutely was held that in which the whole consideration has flown from her spouse, simply because either in the purchase deed or perhaps into the bond, her husband’s name can be mentioned, the assessee is not rejected the advantage of deduction u/s 54 and 54EC associated with Act. Further, reliance ended up being put on your choice 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 wife in addition to property is bought jointly within the names, it might maybe maybe not make a difference and also the conditions stipulated in section stand that is 54F.
The ld. CIT(A) however relied from the decision of Honorable Rajasthan High 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 would not be eligible to get exemption for land purchase by him into the title of his son and daughter-in-law. Further within the said choice, it had been held that the word ‘assessee’ utilized in the IT Act has to be provided a ‘legal interpretation’ and not a ‘liberal interpretation, since it would tantamount to offering a totally free hand to your assessee along with his legal heirs also it shall curtail the income for the national, that the legislation will not allow. After the choice of Honorable Rajasthan tall Court in case there is Kalya, the ld. CIT(A) upheld the rejection of claim associated with the assessee u/s 54F of this 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 present choice of Hon’ble Rajasthan tall Court in the event of Sh. Mahadev Balai vs. ITO (D.B. ITA No. 136/2017 & others dated 07.11.2017) wherein into the context of section 54B, it had been held that where in fact the investment is manufactured when you look at the title for the wife, the assessee will be qualified to receive claim of deduction u/s 54B of the Act.
The assessee has sold agricultural land and purchased another agricultural land in the name of his wife and claimed deduction u/s 54B of the Act in the said case. The Co-ordinate Bench vide its purchase in ITA No. 333/JP/2016 dated 26.12.2016 following decision of Honorable Rajasthan tall Court in the event of Kalya vs. CIT(supra) had determined the matter up against the assessee and contains verified 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 had been justified in disallowing the exemption u/s 54B o f the Act without appreciating that the funds used for the investment for sale associated with the home eligible u/s 54B belonged towards the appellant just and just the authorized document ended up being performed in the title o f the spouse and additional the spouse hadn’t split income source.”
The Honorable Rajasthan High Court, after considering its early in the day choice in the event of Kalya vs. CIT(supra) together with several other choices of Honorable Delhi tall Court, Honorable Madras tall Court, Honorable Karnataka tall Court, Honorable Punjab and Haryana tall Court, and Honorable Andhra Pradesh High Court, as also relied upon because of 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 associated with Honorable Rajasthan tall Court are included at para 7.2 and 7.3 of its purchase that are reproduced as under:-
on a lawn of investment created by the assessee into the name of his spouse, in view for the choice of Delhi tall Court in Sunbeam Auto Ltd. as well as other judgments of various High Courts, your message utilized is assessee has got to spend, it’s not specified it is to stay in the title o f assessee.