This really is an appeal filed by the assessee resistant to 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 important points regarding the instance are that during the 12 months in mind, the assessee has offered three agriculture lands belonging to him for the purchase 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 claimed and exact same ended up being permitted by the Assessing Officer and it is maybe not in dispute before us. The assessee in addition has bought a property that is residential 23.05.2011 for the purchase consideration of Rs. 30,00,000/- into the title of his wife, Smt. Nikita Jain, and stated deduction u/s 54F of this Act and that will be in dispute before us.
The assessee was asked to show cause as to why the claimed u/s 54F of the Act, 1961 may not be disallowed, as the property was not owned in the name of assessee during the course of assessment proceedings. As a result, the assessee presented that the consideration for such home had been paid of payment of advance of the assessee received from Narvik Nirman & Financiars Pvt. Ltd. plus it ended up being further submitted that this new residential house need not be bought because of the assessee in the very own title neither is it necessary so it should really be purchased solely in the name. It had been submitted that the assessee hasn’t bought the brand new home in the title of the stranger and whole investment has arrived out from the way to obtain the assessee and there clearly was no share through the assessee’s spouse. The distribution for the assessee ended up being considered yet 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 regarding the assessee. It was further held by the AO that Smt. Nikita Jain, spouse regarding the assessee, is having her PAN and filing her return of earnings that will be additionally evaluated to income tax, therefore, depending on tax conditions, spouse and spouse both could never be regarded as single entity as well as the good thing about investment produced by a person assessee may not be provided to another individual assessee. The AO further drawn mention of the conditions of Section 54F associated with the Act and held that to claim deduction, the investment in brand new asset should always be into the title of assessee himself. It had been further held by the AO that in lack of the non-public stability sheet associated with assessee and lack of appropriate documentary evidence, it can’t be ascertained whether assessee will not possess one or more domestic household, aside from new asset, from the date of transfer of this original 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 submitted that the purchase of a brand new domestic household has become bought because of the assessee.
Nevertheless, it’s not particularly needed beneath the legislation that your house should really be purchased into the title of assessee just. It had been further contended that liberal construction should always be directed at conditions of section 54F for the Act and when substantive requirement are satisfied, advantage issued by the Parliament really should not be removed for tiny and unimportant inconsistencies. Further, the assessee put reliance in the decision of Honorable Delhi tall Court in the event of CIT vs. Kamal Wahal (351 ITR 4), wherein, into the context of section 54F for the Act and get of household within the name of assessee’s wife, it had been held that the newest house that is residential not be bought by the assessee inside the name neither is it necessary so it should really be bought and solely in the title. Further, reliance had been put on your decision of Honorable Madras High Court in the event of CIT vs. V. Natarajan (287 ITR 271) where in fact the household was bought into the title for the assessee’s spouse, deduction under area 54 was permitted. 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 when you look at the context of area 54 associated with Act, it had been held that your message ‘assessee’ must certanly be given a broad and interpretation that is liberal as to add their appropriate heirs additionally. Further, reliance ended up being positioned on your decision of Honorable Karnataka tall Court in the full situation of DIT vs. Mrs. Jennifer Bhide (349 ITR 80) wherein it had been held that where in fact the consideration that is entire flown from her husband, just because in a choice of the purchase deed or into the bond, her husband’s name can also be mentioned, the assessee can’t be rejected the main benefit of deduction u/s 54 and 54EC associated with Act. Further, reliance had been positioned on your decision of Honorable Delhi tall Court in the event of CIT vs. Ravinder Kumar Arora (342 ITR 38) wherein within the context of section 54F for the Act, it had been held that where in fact the assessee has included the name of their spouse in addition to home happens to be bought jointly when you look at the names, it can perhaps not make a difference plus the conditions stipulated in section 54F stand fulfilled.
The ld. CIT(A) but relied on the choice of Honorable Rajasthan High Court in the event of Kalya vs. CIT (251 CTR 174) wherein into the context of section 54B associated with the Act, it had been held that the assessee wouldn’t be eligible to get exemption for land purchase by him into the name of their son and daughter-in-law. Further when you look at the said decision, it had been held that the word ‘assessee’ found in the IT Act has to be offered a ‘legal interpretation’ and not really a ‘liberal interpretation, it shall curtail the revenue of the Government, which the law does not permit as it would tantamount to giving a free hand to the assessee and his legal heirs and. Following 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.
throughout the length of hearing, the ld. AR reiterated the submissions created before the ld. CIT(A). Further, ld. AR additionally drawn our mention of the current 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 created into the title regarding 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 Co-ordinate Bench vide its purchase in ITA No. 333/JP/2016 dated 26.12.2016 after the choice asian brides of Honorable Rajasthan tall Court in the event of Kalya vs. CIT(supra) had determined the matter contrary to the assessee and contains verified the denial of deduction u/s 54B of the Act. Into the context of said facts, on appeal by the assessee, the Hon’ble Rajasthan tall Court has framed the next significant question of legislation:
“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 home eligible u/s 54B belonged into the appellant only and just the subscribed document ended up being performed within the title o f the wife and further the spouse had not split source of income.”
The Honorable Rajasthan tall Court, after considering its early in the day choice in the event of Kalya vs. CIT(supra) together with some other choices of Honorable Delhi tall Court, Honorable Madras tall Court, Honorable Karnataka High Court, Honorable Punjab and Haryana tall Court, and Honorable Andhra Pradesh High Court, as additionally relied upon by the assessee, has held that it’s the assessee that has to spend and it’s also perhaps not specified within the legislation that the investment will be in the title for the assessee and in which the investment is manufactured within the title of spouse, the assessee will probably be qualified to receive deduction and it has thus determined the problem in preference of the assessee. The appropriate findings associated with the Honorable Rajasthan tall Court are contained at para 7.2 and 7.3 of its order 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.