Deduction under section 54 allowed for property purchased in the name of spouse- ITAT Delhi
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Case Details: |
Simran Bagga vs. ACIT |
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Judgement pronounced by: |
ITAT Delhi |
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Appeal Number: |
ITA No. 1786/Del/2023 |
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Assessment Year: |
2020-21 |
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In favour of: |
Assessee |
Facts of the case: The assessee Simran Bagga who is a NRI residing in UAE filed revised return of income for A.Y. 2020-21 on 4th March 2021 with a claim for deduction of Rs. 93,46,404/- u/s 54 of the Income Tax Act. The assessee had sold her property in New Delhi for an amount of Rs. 1.30 crores in the relevant A.Y. and out of the sale proceeds, an amount of Rs. 1 crore was invested into a new residential house in the name of her spouse. Deduction u/s 54 was claimed by the assessee against residential house so purchased in the name of her spouse. During the assessment, the AO disallowed the deduction arguing that the property was not registered in the name of the assessee and the payment was made from a joint account.
Contention of the assessee: The assessee contended that the deduction should not be restricted solely because the property was not registered in her name. The assessee, being aggrieved filed an appeal before the ITAT.
Observations of the Tribunal:
- It is not in dispute that property has been sold and the proceeds have been reinvested. The only issue arises is that when the property has been registered in the name of the spouse of the assessee whether the deduction is allowable or not.
- We find that the proceeds have been the sale proceeds from the Delhi property had been credited to the same bank account prior to the new investment and the same proceeds have been utilized for purchase of new property.
We are guided by the various orders of Hon’ble High Courts and the Tribunal which are as under:
- CIT vs. Natarajan [2006] ITR 271 (Madras HC)
- DIT vs. Mrs. Jennifer Bhide [2011] 15 com 82 (Kar HC)
- Kamlesh Keswani vs. ACIT W.P. (C) 13713/2022, CM APPL. 41874/2022 & CM APPL. 41875/2022 (Delhi HC)
- CIT vs. Sh. Mahadev Balai ITA No. 136/2017 (Raj. HC)
- Shankar Lal Kumawat vs. ITO 125 com 347 (Jaipur Trib.)
- N Ram Kumar vs. ACIT [2012] 25 com 337 (Hyd. ITAT)
- Krishnappa Jayaramaiah vs. ITO [2021] 125 com 110 (Bangalore ITAT)
- Mrs. Kamal Murlidhar vs. ITO [2019] taxmann.com 120 (Pune Trib.)
ITAT Judgement: Referring Hon’ble Delhi High Court in the case of CIT vs. Kamal Wahal [2013] 351 ITR 4 (Delhi) and CIT vs. Ravinder Kumar Arora [2012] 342 ITR 38 (Delhi) stated that purposive construction is to be preferred as against the literal construction, more so when even literal construction also does not say that the house should be purchased in the name of the assessee only. Section 54F/54 of the Act are the beneficial provisions which should be interpreted liberally on favour of the exemption/ deduction to the taxpayer and the deduction should not be denied.
Hence, keeping in view the entire facts of the case, since, the sale proceeds have been duly invested in acquisition of new property within the due time allowed, the assessee is eligible for claim of deduction under section 54F.
Disclaimer: The above article is based upon the decision of the Hon’ble Tribunal and is meant for educational purposes only. Readers are requested to act diligently and under consultation with any professional before applying the information contained in this article. Taxwink shall not be responsible for any loss or damage caused to any person from use of any information contained in this article.
