The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the benefit of capital gain exemption under Section 54 of the Income Tax Act, 1961 cannot be denied to a joint owner who made the total investment in the purchase of the property.
The assessee, an NRI made investment in the property. He added the name of his father in the sale deed as a joint-owner to safe guard his interest. The sole grievance of the assessee was that the Assessing Officer disallowed 50% claim of the assessee and gave exemption u/s.54 of the Act of Rs.32,26,145/- towards the share of the assessee in the residential house.
Before the Tribunal, the assessee contended that the benefit of the provision must be granted to the person who made investment in the property and not to the person whose name has been added in the sale deed to safe guard the interest of the non-resident appellant. The contention of the non-resident appellant is also corroborated by Transfer of Property Act 1882.
The Tribunal bench relied on the decision of the Gujarat High Court in CIT vs. Ravinder Kumar Arora wherein a similar claim was decided in favour of the assessee.
Following the above decision, the bench held that “the assessee is entitled to the benefit of deduction of Rs.64,52,290/- under section 54 of the Act towards capital gain on the premise that the entire amount towards consideration of purchase of flat at Nandnavan Housing Co-operative Society has been paid by the assessee and merely because his father’s name has been inducted as joint owner, the said claim cannot be denied.”
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