The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the capital gain exemption under Section 54F of the Income Tax Act, 1961 would be allowable in case where the house has been constructed in the plot of HUF.
The Revenue was of the view that for claiming exemption under section 54F, the investment ought to have been made in the assessee’s individual name and not in the name of HUF, because, HUF is a separate taxable entity.
Before the authorities, the assessee maintained that the new house has been constructed on a plot purchased in the name of HUF, but members of the HUF have not contributed any money, rather whole investment was made from the sale proceeds of earlier capital asset/land as well as contribution made by the assessee only, and therefore, it fulfilled all the requisite conditions.
The assessee, in support of his contentions, relied on the decisions of Delhi and Karnataka High Courts and various Tribunals.
The Tribunal noted that in the present case, the assessee has purchased a flat in a housing society and included the name of his father along with him. The deduction was disallowed to the assessee to the extent of the share of his father i.e. 50%, but Tribunal allowed the deduction to the assessee
“In the present case, the assessee has his share to the extent of 1/4th in the HUF. The other members of HUF are not stranger. They are wife of the assessee and two sons. Money has only been contributed by the assessee. Therefore, to our mind, the facts as available in the decision of Hon’ble Delhi Court cited supra, are squarely applicable on this case. We allow the appeal of the assessee, and direct the AO to grant exemption under section 54F of the Income Tax Act to the assessee,” the Tribunal said.
Subscribe Taxscan Premium to view the Judgment
