This will be an appeal filed by the assessee up against the purchase of ld. CIT(A)-III, Jaipur dated 16.12.2015 for Assessment 2012-13 wherein the assessee has challenged the action of ld year. CIT(A) in confirming the dis allowance of exemption of Rs. 30,00,000/- claimed u/s 54F of this Act.
Shortly reported, the facts associated with situation are that throughout the year 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 reported and same ended up being permitted by the Assessing Officer and it is maybe 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/- within the title of their spouse, Smt. Nikita Jain, and stated deduction u/s 54F for the Act and which can 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. In reaction, the assessee presented that the consideration for such property had been paid of payment of advance from the assessee received from Narvik Nirman & Financiars Pvt. Ltd. plus it was further submitted that the brand new house that is residential not be bought because of the assessee in the very own title neither is it necessary so it should always be purchased solely inside the title. It had been submitted that the assessee has not yet bought the house that is new the title of a complete complete stranger and whole investment has arrived out from the supply of the assessee and there is no share through the assessee’s wife. The distribution associated with assessee had been considered 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 the assessee. It was further held by the AO that Smt. Nikita Jain, spouse associated with the assessee, is having her PAN and filing her return of earnings which can be additionally evaluated to income tax, consequently, according to tax conditions, husband and spouse both could never be regarded as single entity and also the good thing about investment created by a person assessee can not be directed at another assessee that is individual. The AO reference that is further drawn the conditions of Section 54F associated with Act and held that to claim deduction, the investment in new asset should always be into the title of assessee himself. It had been further held because of the AO that in lack of the non-public balance sheet of this assessee and lack of appropriate documentary evidence, it may not be ascertained whether assessee will not possess one or more residential home, except that brand new asset, in the date of transfer for the asset that is original. Properly, for those two reasons, the claim of this assessee u/s 54F for the I.T.Act, 1961 ended up being disallowed.
Being aggrieved, the assessee carried the problem in appeal ahead of the ld CIT(A) and submitted that the purchase of a fresh domestic household has to be bought by the assessee.
But, it isn’t specifically needed beneath the statutory law that the home should really be bought into the title of assessee just. It had been further contended that liberal construction should always be fond of conditions of section 54F for the Act if substantive requirement are satisfied, benefit provided by the Parliament shouldn’t be recinded for tiny and unimportant inconsistencies. Further, the assessee put reliance regarding the decision of Honorable Delhi High Court in the event of CIT vs. Kamal Wahal (351 ITR 4), wherein, into the context of section 54F for the Act and buy of household within the name of assessee’s spouse, it had been held that the newest house that is residential not be bought by the assessee in their title neither is it necessary so it must be bought and solely in his title. Further, reliance had been added to your choice of Honorable Madras tall Court in the event of CIT vs. V. Natarajan (287 ITR 271) where in actuality the home had been bought within the title regarding the assessee’s wife, deduction under area 54 had been permitted. Further, reliance had been put on your choice of Hon’ble Andhra Pradesh tall Court in case of belated Gulam Ali Khan vs. CIT (165 ITR 228) wherein into the context of part 54 regarding the Act, it absolutely was held that the term ‘assessee’ should be provided an extensive and interpretation that is liberal as to incorporate their appropriate heirs additionally. Further, reliance ended up being put on your choice of Honorable Karnataka High Court within the instance of DIT vs. Mrs. Jennifer Bhide (349 ITR 80) wherein it had been held that where in actuality the whole consideration has flown from her spouse, simply because in a choice of the purchase deed or perhaps into the bond, her husband’s title can also be mentioned, the assessee is not rejected the main benefit of deduction u/s 54 and 54EC associated with Act. Further, reliance ended up being put on the decision of Honorable Delhi tall Court in the event of CIT vs. Ravinder Kumar Arora (342 ITR 38) wherein into the context of section 54F for the Act, it had been held that in which the assessee has included the title of his spouse as well as the property was purchased jointly when you look at the names, it might perhaps perhaps not make a difference and also the conditions stipulated in section 54F stand fulfilled.
The ld. CIT(A) however relied https://www.sweetbrides.net/russian-brides/ regarding the choice of Honorable Rajasthan tall Court in the event of Kalya vs. CIT (251 CTR 174) wherein into the context of section 54B associated with Act, it absolutely was held that the assessee wouldn’t be eligible to get exemption for land purchase by him into the true title of his son and daughter-in-law. Further when you look at the said choice, it had been held that the word ‘assessee’ utilized in the IT Act should be given a ‘legal interpretation’ and not a ‘liberal interpretation, because it would tantamount to providing a totally free hand to your assessee along with his appropriate heirs also it shall curtail the income associated with the national, that your law will not permit. Following 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 for the 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 the decision that is recent of Rajasthan tall Court in case there is 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 actuality the investment is created when you look at the title associated with the wife, the assessee will probably be qualified to receive claim of deduction u/s 54B of the Act.
when you look at the said situation, the assessee has offered agricultural land and bought another agricultural land within the title of their spouse and claimed deduction u/s 54B for the Act. The Co-ordinate Bench vide its purchase in ITA No. 333/JP/2016 dated 26.12.2016 following decision of Honorable Rajasthan tall Court in the event of Kalya vs. CIT(supra) had decided the problem from the assessee and has now verified the denial of deduction u/s 54B of the Act. Into the context of said facts, on appeal because of the assessee, the Hon’ble Rajasthan tall Court has framed the following substantial concern of law:
“Where ld. ITAT ended up being justified in disallowing the exemption u/s 54B o f the Act without appreciating that the funds used when it comes to investment to buy for the home eligible u/s 54B belonged towards the appellant just and merely the document that is registered performed within the title o f the wife and additional the wife had not split revenue stream.”
The Honorable Rajasthan High Court, after considering its earlier in the day choice in the event of Kalya vs. CIT(supra) in addition to some 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 High Court, as additionally relied upon because of the assessee, has held it is the assessee that has to spend and it’s also maybe not specified within the legislation that the investment will be into the name for the assessee and where in fact the investment is created into the name of wife, the assessee will be qualified to receive deduction and it has hence decided the problem in preference of the assessee. The appropriate findings for the Honorable Rajasthan tall Court are contained at para 7.2 and 7.3 of their purchase 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.