This will be an appeal filed because of the assessee from the purchase of ld. CIT(A)-III, Jaipur dated 16.12.2015 for Assessment Year 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 for the instance are that through the 12 months 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 agricultural land at 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 not in dispute before us. The assessee in addition has bought a property that is residential 23.05.2011 for a purchase consideration of Rs. 30,00,000/- when you look at the title of their wife, Smt. Nikita Jain, and stated deduction u/s 54F of this Act and that is 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 was given out of payment of advance of the assessee received from Narvik Nirman & Financiars Pvt. Ltd. plus it ended up being further submitted that the brand new house that is residential not be bought by the assessee in the very very own title neither is it necessary so it ought to be bought solely in their title. It absolutely was submitted that the assessee has not yet bought the house that is new the title of the complete stranger and whole investment has arrived from the supply of the assessee and there is no share through the assessee’s spouse. The distribution associated with the asian wife assessee had been considered although not discovered acceptable towards the Assessing Officer. According to Assessing Officer, the house that was offered had been from the assessee whereas the reinvestment in home (residential house) happens to be built in the title of Smt. Nikita Jain, spouse regarding the assessee. It was further held by the AO that Smt. Nikita Jain, wife for the assessee, is having her PAN and filing her return of earnings that is additionally evaluated to taxation, consequently, depending on income tax conditions, spouse and spouse both could never be regarded as solitary entity as well as the good thing about investment created by a person assessee is not fond of another assessee that is individual. The AO further drawn mention of the the conditions of Section 54F associated with the Act and held that to claim deduction, the investment in new asset ought to be into the title of assessee himself. It had been further held because of the AO that in lack of the non-public stability sheet for the assessee and lack of appropriate documentary evidence, it can not be ascertained whether assessee will not possess one or more domestic home, except that brand new asset, from the date of transfer for the initial asset. Consequently, for those two reasons, the claim associated with the assessee u/s 54F of the I.T.Act, 1961 ended up being disallowed.
Being aggrieved, the assessee carried the situation in appeal before the ld CIT(A) and presented that the purchase of a fresh residential household has become bought because of the assessee.
But, it is really not especially required beneath the statutory legislation that your house must be bought into the title of assessee just. It had been further contended that liberal construction should always be directed at provisions of section 54F of the Act and in case substantive requirement are fulfilled, advantage provided by the Parliament shouldn’t be taken away for small 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, within the context of section 54F for the Act and buy of household within the name of assessee’s spouse, it absolutely was held that this new residential household need not be bought because of the assessee in their title neither is it necessary so it must certanly be bought and solely inside the title. Further, reliance ended up being added to your decision of Honorable Madras High Court in the event of CIT vs. V. Natarajan (287 ITR 271) where in actuality the homely household ended up being bought into the title of this assessee’s spouse, deduction under part 54 ended up being permitted. Further, reliance had been positioned on your decision of Hon’ble Andhra Pradesh High Court in case of Late Gulam Ali Khan vs. CIT (165 ITR 228) wherein within the context of section 54 associated with Act, it absolutely was held that your message ‘assessee’ should be offered an extensive and liberal interpretation therefore as to incorporate their appropriate heirs additionally. Further, reliance ended up being put on your choice of Honorable Karnataka tall Court into the instance of DIT vs. Mrs. Jennifer Bhide (349 ITR 80) wherein it absolutely was held that where in actuality the whole consideration has flown from her spouse, just because in a choice of the purchase deed or perhaps in the bond, her husband’s title can also be mentioned, the assessee can’t be rejected the advantage of deduction u/s 54 and 54EC regarding the Act. Further, reliance had been added to your choice of Honorable Delhi tall Court in case 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 where in actuality the assessee has included the title of his spouse and also the home is bought jointly within the names, it can maybe not make a difference while the conditions stipulated in section 54F stand fulfilled.
The ld. CIT(A) but relied from the decision of Honorable Rajasthan tall Court in the event of Kalya vs. CIT (251 CTR 174) wherein within the context of section 54B associated with the Act, it absolutely was held that the assessee wouldn’t 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 really a ‘liberal interpretation, because it would tantamount to giving a free of charge hand to your assessee along with his legal heirs also it shall curtail the revenue regarding the national, that your legislation will not allow. After the choice of Honorable Rajasthan tall Court in the event of Kalya, the ld. CIT(A) upheld the rejection of claim regarding 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 case there is Sh. Mahadev Balai vs. ITO (D.B. ITA No. 136/2017 & others 07.11.2017 that is dated wherein when you look at the context of section 54B, it absolutely was held that where in actuality the investment is manufactured within the title regarding the spouse, the assessee will probably be qualified to receive claim of deduction u/s 54B of the Act.
within the said instance, the assessee has offered agricultural land and bought another agricultural land into the title of their spouse and reported deduction u/s 54B regarding the Act. The Co-ordinate Bench vide its 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 contrary to the assessee and has now verified the denial of deduction u/s 54B of the Act. Within the context of said facts, on appeal because of the assessee, the Hon’ble Rajasthan High Court has framed listed here substantial concern of legislation:
“Where ld. ITAT ended up being justified in disallowing the exemption u/s 54B o f the Act without appreciating that the funds used for the investment to buy of this home eligible u/s 54B belonged to your appellant just and simply the subscribed document had been performed within the title o f the spouse and further the spouse hadn’t separate revenue stream.”
The Honorable Rajasthan tall Court, after considering its earlier in the day decision in the event of Kalya vs. CIT(supra) and also the several other choices of Honorable Delhi tall Court, Honorable Madras High Court, Honorable Karnataka tall Court, Honorable Punjab and Haryana tall Court, and Honorable Andhra Pradesh tall Court, as also relied upon by the assessee, has held that it’s the assessee who has got to take a position and it’s also maybe not specified into the legislation that the investment is usually to be when you look at the name associated with assessee and where in actuality the investment is manufactured within the name of spouse, the assessee shall be qualified to receive deduction and it has hence determined the situation in preference of the assessee. The appropriate findings regarding the Honorable Rajasthan High 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 when you look at the title of their spouse, in view regarding the choice of Delhi tall Court in Sunbeam car Ltd. as well as other judgments of various High Courts, the phrase utilized is assessee has to spend, it isn’t specified that it’s to stay in the title o f assessee.