This might be an appeal filed because of the assessee up against 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.
Shortly claimed, the reality associated with the instance are that through the 12 months in mind, the assessee has sold three lands that are agriculture to him for the sale consideration of Rs. 99,25,000. The assessee has bought another land that is agricultural a consideration of Rs. 32,00,000/- for which deduction u/s 54F has been advertised and same had been permitted by the Assessing Officer and it is perhaps perhaps not in dispute before us. The assessee has additionally purchased a property that is residential 23.05.2011 for a purchase consideration of Rs. 30,00,000/- within the name of their spouse, Smt. Nikita Jain, and stated deduction u/s 54F of this Act and which will be in dispute before us.
throughout the span of evaluation procedures, the assessee had been expected to demonstrate cause why the reported u/s 54F of the Act, 1961 is almost certainly not disallowed, while the home wasn’t owned within the title of assessee. In reaction, the assessee presented that the consideration for such home was given out of payment of advance from the assessee received from Narvik Nirman & Financiars Pvt. Ltd. plus it ended up being further submitted that this new residential household need not be bought by the assessee in the very very own title neither is it necessary so it should really be bought exclusively in their name. It had been submitted that the assessee have not bought the brand new home in the title of a stranger and whole investment has arrived out of the supply of the assessee and there clearly was no contribution through the assessee’s spouse. The distribution of this assessee ended up being considered yet not discovered acceptable towards 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 of this assessee. It had been further held by the AO that Smt. Nikita Jain, spouse associated with the assessee, is having her PAN and filing her return of earnings that will be also evaluated to income tax, therefore, according to tax conditions, husband and spouse both could never be thought to be solitary entity while the advantageous asset of investment created by a person assessee can’t be directed at another assessee that is individual. The AO reference that is further drawn the conditions of Section 54F associated with the Act and held that to claim deduction, the investment in brand brand new asset should always be within the title of assessee himself. It had been further held because of the AO that in lack of the private balance sheet of this assessee and lack of appropriate documentary evidence, it may not be ascertained whether assessee will not obtain one or more domestic household, aside from brand new asset, from the date of transfer associated with initial asset. Appropriately, for those two reasons, the claim regarding the assessee u/s 54F for the I.T.Act, 1961 had been disallowed.
Being aggrieved, the assessee carried the problem in appeal prior to the ld CIT(A) and presented that the acquisition of a fresh domestic house has become purchased by the assessee.
But, it’s not particularly needed underneath the legislation that the home must be bought into the title of assessee just. It had been further contended that liberal construction should really be provided to conditions of section 54F for the Act if substantive requirement are satisfied, advantage issued by the Parliament really should not be recinded for tiny and inconsistencies that are irrelevant. Further, the assessee placed reliance regarding the choice of Honorable Delhi tall Court in the event of CIT vs. Kamal Wahal (351 ITR 4), wherein, when you look at the context of section 54F of the Act and buy of household within the name of assessee’s wife, it absolutely was held that the brand new house that is residential not be purchased because of the assessee in the title neither is it necessary so it is purchased and solely inside the name. Further, reliance ended up being positioned on your decision of Honorable Madras High Court in case of CIT vs. V. Natarajan (287 ITR 271) where in actuality the home was bought when you look at the title associated with the assessee’s spouse, deduction under part 54 ended up being allowed. Further, reliance had been put 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 part 54 associated with Act, it had been held that the term ‘assessee’ should be given an extensive and liberal interpretation therefore as to add their appropriate heirs additionally. Further, reliance had been put on your choice of Honorable Karnataka tall Court within the instance of DIT vs. Mrs. Jennifer Bhide (349 ITR 80) wherein it had been held that where in actuality 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 can’t be rejected the advantage of deduction u/s 54 and 54EC for the Act. Further, reliance was added to your decision of Honorable Delhi tall Court in the event of CIT vs. Ravinder Kumar Arora (342 ITR 38) wherein when you look at the context of section 54F for the Act, it absolutely was held that in which the assessee has included the name of their wife together with property happens to be bought jointly within the names, it could maybe perhaps not make a difference therefore the conditions stipulated in section stand that is 54F.
The ld. CIT(A) but relied regarding the choice of Honorable Rajasthan tall Court in the event of Kalya vs. CIT (251 CTR 174) wherein within the context of section 54B of this Act, it had been held that the assessee wouldn’t be eligible to get exemption for land purchase by him into the title of their son and daughter-in-law. Further into the said decision, it absolutely was held that the word ‘assessee’ found in the IT Act has to be offered a ‘legal interpretation’ and not just a ‘liberal interpretation, because it would tantamount to providing a totally free hand towards the assessee and their legal heirs also it shall curtail the revenue associated with national, that the law will not permit. After the choice of Honorable Rajasthan High Court in the event of Kalya, the ld. CIT(A) upheld the rejection of claim regarding the assessee u/s 54F of this Act.
throughout the span of hearing, the ld. AR reiterated the submissions created before the ld. CIT(A). Further, ld. AR additionally drawn our mention of the the decision that is recent of Rajasthan tall Court in the event of Sh. Mahadev Balai vs. ITO (D.B. ITA No. 136/2017 & others dated 07.11.2017) wherein when you look at the context of section 54B, it absolutely was held that where in actuality the investment is created within the title associated with the spouse, the assessee will probably 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 Bench that is co-ordinate vide purchase in ITA No. 333/JP/2016 dated 26.12.2016 after the choice of Honorable Rajasthan tall Court in the event of Kalya vs. CIT(supra) had determined the problem resistant to the assessee and has now 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 ended up being justified in disallowing dating an asian the exemption u/s 54B o f the Act without appreciating that the funds used for the investment to buy associated with home eligible u/s 54B belonged to your appellant just and simply the subscribed document had been performed when you look at the title o f the wife and additional the wife had not split income source.”
The Honorable Rajasthan tall Court, after considering its previous choice in the event of Kalya vs. CIT(supra) plus the some other choices of Honorable Delhi High Court, Honorable Madras tall Court, Honorable Karnataka tall Court, Honorable Punjab and Haryana tall Court, and Honorable Andhra Pradesh tall 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 the Honorable Rajasthan tall Court are included at para 7.2 and 7.3 of the purchase that are reproduced as under:-
on a lawn of investment created by the assessee within the title of their spouse, in view associated with choice of Delhi High Court in Sunbeam Auto Ltd. along with other judgments of various High Courts, your message utilized is assessee has to spend, it isn’t specified that it is to stay in the title o f assessee.