The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that capital gain exemption under Section 54F of the Income Tax Act, 1961 has available for purchase of property along with husband and son.
Assessee Anjali Mittal is an individual engaged in the business of purchase and sale of gold, silver and diamond jewellery in the name and style M/s. Pushpanjali Jewels. When a survey action conducted on the business premises of assessee under Section 133A of the Income Tax Act, the department found some stock and it was got valued by an approved valuer who valued the stock at Rs. 5,57,34,223/- as against the value as per books at Rs. 4,63,31,680/-.
During the survey, a statement of Himanshu Mittal, Son of the assessee was recorded. He surrendered an amount of Rs. 1 crore as undisclosed income for the previous year relevant to Assessment Year 2018-19.
Thereafter, assessee filed return and the case was selected for scrutiny.
AO completed the assessment and made addition along with denying exemption under Section 54F Income Tax Act claimed by the assessee. Aggrieved assessee filed an appeal before CIT (A). The CIT (A) allowed the appeal of the assesee. Further the aggrieved revenue filed an appeal before the tribunal.
Kanav Bali, counsel for the revenue submitted that assessee purchased a new property and rest of the payment has been made by the outsiders. Hence the benefit of Section 54 would not be available to assesee.
Somil Agarwal counsel for the assessee submitted that payment towards purchase of the new property is made by the husband of the assessee and her son. No outsider paid any payment towards purchase of the property.
Further, relied upon the decision of the Mr. Sunil Sachdeva vs. ACIT counsel for assessee submitted that “No one to one correlation is essential between the capital gain arising out of the sale of the old property and utilization thereof for purchase of new residential property in order to claim the benefit of exemption under section 54F of the Act”.
While considering the contention the tribunal observed that Long term capital gain arising out of sale of the old property was claimed as exempt under section 54F as the assessee purchased the new property in her name and paid Rs. 9,05,478/- from her account and rest of the payment was made by her family members.
Hence, once the new property has purchased and investment has made in the name of the assessee, the condition precedent for claiming exemption under section 54F Income Tax Act, 1961 stands fulfilled.
Moreover, relied upon the decision of In Sunil Sachdeva’s case, the Delhi Bench of the Tribunal also held that section 54F Income Tax Act, 1961 did not require one to one co-relation between capital gain arising out of transfer of long term capital asset and utilization thereof for purchase /construction of residential house.
Therefore, the bench concluded that the argument of the revenue and objection of the AO that sale consideration obtained from the old property has not been utilized by the assessee has no legal basis and could not be a hindrance to the assessee for claiming exemption under section 54F of the Income Tax Act.
Two member benches of Shamim Yahya, (Accountant Member) and Astha Chandra, (Judicial Member) allowed the appeal of the assessee.
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