Capital Gain Exemption u/s 54- Investment made by the assessee jointly with daughter & son in law
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Case Details: |
ITO vs. Rachna Arora |
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Appeal No.: |
ITA No. 1112/Chd/2019 |
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Order pronounced by: |
ITAT Chandigarh |
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Date of Order: |
31-03-2021 |
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In Favour of: |
Assessee |
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Assessment Year: |
2015-16 |
Source: www.itat.gov.in
Brief Facts:
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The assessee had sold a residential property for Rs. 4.35 crores on which she derived long-term capital gain. The assessee invested the whole of the sales consideration in the purchase of another residential property jointly with her daughter and her son in law which was purchased for Rs. 5.35 crores. The shares of the three co-owners namely the assessee, her son in law and her daughter in the purchased property were 34%, 33% & 33% respectively. As the assessee’s share in the said property was 34%, the A.O. held that the assessee would be entitled to claim of exemption u/s 54 to the extent of 34% of the total long-term capital gain invested by her. |
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Aggrieved, the assessee preferred an appeal before Ld. CIT(A) where she submitted that she purchased the property conjointly with her daughter and her son-in-law to avoid any litigation subsequent to her death. She submitted that nothing contained in section 54 of the Act precludes the assessee from investing capital gains in property conjointly, the assessee placed reliance on judicial pronouncements of various High Courts wherein the respective have invariably held that it is mandatory that the investment should exclusively be made by the assessee in his own name to claim deduction u/s 54 of the Act. The Ld. CIT(A) allowed the assessee’s appeal and deleted the addition. Aggrieved, the Revenue preferred an appeal before the Tribunal. The contention of the Revenue was that the CIT(A)’s order was not in consonance with the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Shri Dinesh Verma in ITA No. 381/2014. |
Observations of Tribunal:
- The only contention of the Revenue being, that the decision of the Hon’ble Jurisdictional High Court in the case of Shri Dinesh Verma (supra) has not been followed by the Ld. CIT(A). We find that the Ld. CIT (A) had taken note of the said decision and applied the same to the facts of the present case noting categorically that though the said decision pertained to claim of exemption u/s 54B of the Act, yet the ratio would be applicable in the instant case also.
- In the case of Shri Dinesh Verma (supra), the Hon’ble Jurisdictional High Court had allowed the exemption of capital gains, to the extent of the sale consideration invested by the assessee in the new asset, denying the exemption to the extent invested by his wife. The Hon’ble High Court held that the assessee would be entitled to the benefit of exemption u/s 54B only on the amount invested by him after the sale of his original property.
Ruling:
Drawing parity from the same, the Ld. CIT(A), we find, has in the present case, noted the fact that the assessee has invested her entire sales consideration in the new property and, therefore, is entitled to exemption of the entire amount of long-term capital gains. We don’t find any infirmity in the same. Moreover, the Ld. DR has neither been able to controvert the facts of the present case as noted by the Ld. CIT(A) nor has pointed out how the decision of the Hon’ble Jurisdictional High Court was applicable against the assessee in the facts of the present case. In view of the same, we don't find any reason to interfere in the order of the Ld. CIT(A). In the result, the appeal of the Revenue is dismissed.
Read Complete Order: ITO vs. Smt. Rachna Arora
Disclaimer: The article is based upon the ruling of the ITAT Chandigarh and is meant for informative purposes only. Readers are requested to act diligently and under consultation with the professional before applying the information contained in this article.
