This can be an appeal filed by the assessee from 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.
Briefly reported, the important points associated with situation are that through the 12 months into consideration, the assessee has offered three agriculture lands belonging to him for a sale 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 reported and same ended up being allowed by the Assessing Officer and it is perhaps not in dispute before us. The assessee has additionally purchased a property that is residential 23.05.2011 for a purchase consideration of Rs. 30,00,000/- when you look at the name of their spouse, Smt. Nikita Jain, and stated deduction u/s 54F for the Act and that is in dispute before us.
throughout the length of evaluation proceedings, the assessee had been expected showing cause as to the reasons the reported u/s 54F of the Act, 1961 might not be disallowed, since the home was not owned within the title of assessee. Responding, the assessee submitted that the consideration for such home had been given out of repayment of advance of the assessee received from Narvik Nirman & Financiars Pvt. Ltd. also it had been further submitted that the newest house that is residential not be bought because of the assessee in their very own title neither is it necessary so it ought to be bought solely inside the name. It absolutely was submitted that the assessee have not purchased the new household in the title of the complete complete stranger and whole investment has arrived out from the supply of the assessee and there clearly was no share through the assessee’s spouse. The submission of this assessee ended up being 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, wife associated with assessee. It had been further held by the AO that Smt. Nikita Jain, spouse regarding the assessee, is having her PAN and filing her return of income which can be additionally evaluated to taxation, consequently, according to income tax provisions, husband and spouse both could never be thought to be single entity plus the advantage of investment created by an individual assessee is not directed at another specific assessee. The AO reference that is further drawn the conditions of Section 54F for the Act and held that to claim deduction, the investment in brand new asset should always be when you look at the title of assessee himself. It had been further held because of the AO that in lack of the non-public stability sheet of this assessee and lack of proper documentary evidence, it is not ascertained whether assessee will not obtain one or more residential home, apart from new asset, in the date of transfer of this asset that is original. Consequently, for those two reasons, the claim regarding the assessee u/s 54F for the I.T.Act, 1961 was disallowed.
Being aggrieved, the assessee carried the situation in appeal ahead of the ld CIT(A) and presented that the acquisition of a unique house that is residential to be purchased because of the assessee.
But, it is really not particularly required underneath the statutory legislation that the home must be bought into the name of assessee just. It had been further contended that liberal construction should really be directed at provisions of section 54F for the Act and when substantive requirement are satisfied, benefit issued by the Parliament shouldn’t be removed for tiny and unimportant inconsistencies. Further, the assessee placed reliance in the choice of Honorable Delhi tall Court in the event of CIT vs. Kamal Wahal (351 ITR 4), wherein, when you look at the context of section 54F for the Act and buy of household into the name of assessee’s spouse, it absolutely was held that this new residential household need not be purchased because of the assessee inside the title neither is it necessary it should really be bought and solely in their title. Further, reliance had been put on your decision of Honorable Madras tall Court in the event of CIT vs. V. Natarajan (287 ITR 271) in which the home had been bought within the title regarding the assessee’s spouse, deduction under part 54 had been permitted. Further, reliance ended up being positioned on your choice of Hon’ble Andhra Pradesh tall Court in the case of belated Gulam Ali Khan vs. CIT (165 ITR 228) wherein within the context of part 54 for the Act, it was held that the phrase ‘assessee’ must certanly be given an extensive and liberal interpretation so as to add their appropriate heirs additionally. Further, reliance ended up being positioned on your decision of Honorable Karnataka tall Court when you look at the instance of DIT vs. Mrs. Jennifer Bhide (349 ITR 80) wherein it absolutely was held that in which the consideration that is entire flown from her spouse, just because in a choice of the purchase deed or into the bond, her husband’s name can be mentioned, the assessee can not be rejected the advantage of deduction u/s 54 and 54EC of the Act. Further, reliance had been put on your choice 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 absolutely was held that where in fact the assessee has included the name of their spouse together with home is purchased jointly within the names, it might maybe not make a difference while the conditions stipulated in section 54F stand fulfilled.
The ld. CIT(A) but relied from the russian brides club choice of Honorable Rajasthan High Court in the event of Kalya vs. CIT (251 CTR 174) wherein when you look at 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 when you look at the true title of his son and daughter-in-law. Further into the said choice, it absolutely was held that the word ‘assessee’ utilized in the IT Act should be offered a ‘legal interpretation’ and not really a ‘liberal interpretation, because it would tantamount to providing a free of charge hand towards the assessee and their appropriate heirs also it shall curtail the income for the national, that the legislation doesn’t permit. After the decision of Honorable Rajasthan tall Court in case there is 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 also drawn our mention of the the decision that is recent of Rajasthan tall Court in the event of 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 in which the investment is manufactured when you look at the title of this spouse, the assessee will 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 order in ITA No. 333/JP/2016 dated 26.12.2016 after the choice of Honorable Rajasthan tall Court in the event of Kalya vs. CIT(supra) had decided the problem resistant to the assessee and it has 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 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 for the home eligible u/s 54B belonged towards the appellant just and just the registered document had been performed within the title o f the spouse and further the spouse had not split income source.”
The Honorable Rajasthan tall Court, after considering its previous choice in case of Kalya vs. CIT(supra) additionally 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 additionally relied upon because of the assessee, has held it is not specified in the legislation that the investment is to be in the name of the assessee and where the investment is made in the name of wife, the assessee shall be eligible for deduction and has thus decided the matter in favour of the assessee that it is the assessee who has to invest and. The appropriate findings regarding the Honorable Rajasthan High Court are included at para 7.2 and 7.3 of its order that are reproduced as under:-
on a lawn of investment created by the assessee into the title of their wife, in view of this decision of Delhi tall Court in Sunbeam Auto Ltd. as well as other judgments of various High Courts, your message used is assessee has to spend, it isn’t specified it is to stay the title o f assessee.