Assessee can’t be denied benefit of 50% Deduction merely because Assessee’s son name is also there in Purchase Document: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) held that the assessee can not be denied the 50% of deduction under Section 54 of the Income Tax Act, 1961 merely because the name of assessee’s son is also mentioned in the purchase document when the entire purchase consideration has flown from the assessee.

The assessee, Smt. Subbalakshmi Kurada sold a residential house property for a sum of Rs.12.75 crores. She purchased another residential house property for Rs.11.02 crores. The new house property was purchased in the joint name of the assessee and her son. The assessee claimed deduction of Rs.8.47 crores under Section 54 of the Act towards the cost of new residential house property against the long term capital gain arising on sale of original house property. Since the new residential house property has been purchased in the name of assessee and her son,

The AO restricted the deduction under Section 54 of the Act to 50%, he allowed a deduction to the extent of Rs.4.23 crores only. The Ld CIT(A) also confirmed the same and hence the assessee has filed the appeal.

The tribunal headed by the Vice President N. V. Vasudevan and an Accountant Member B. R. Baskaran, while relying on the decisions of the higher court held that the assessee can not be denied the 50% of deduction under Section 54 of the Income Tax Act, 1961 merely because the name of assessee’s son is also mentioned in the purchase document when the entire purchase consideration has flown from the assessee.

“We hold that the assessee is entitled to full deduction u/s 54 of the Act. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow deduction u/s 54 of the Act as claimed by the assessee,” the tribunal said.