Deduction u/s 54F Allowable for Property Purchased in Wife's Name: ITAT Directs AO to Approve [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) directed the assessing officer (AO) to approve the deduction under section 54F of the Income Tax Act for the property purchased in the wife’s name.

Vidjayane Durairaj Vidjayane (assessee) did not file an Income Tax Return (ITR) for the assessment year (AY) 2012-2013. The AO issued a notice and re-opened the assessment after noting that the assessee had deposited cash of Rs. 19,75,000 for the relevant year.

Become PF & ESIC Pro: Basic to Advance Course - Enroll Today

The assessee filed his ITR in compliance with the notice declaring Rs. 2,92,100 as total income. The AO noted that the assessee had sold immovable property for the consideration of Rs. 50,40,000 and it was deposited in the bank account. 

The AO disallowed a claim of deduction of the assessee for the purchase of residential property under section 54F of the Income Tax Act. Therefore, the AO added Rs. 44,27,994 observing that the residential property was purchased in his wife’s name. The commissioner of tax (appeals)[CIT(A)] dismissed the appeal filed by the assessee.

Become PF & ESIC Pro: Basic to Advance Course - Enroll Today

Aggrieved by the order, the assessee filed an appeal before ITAT. The counsel for the assessee relied on the judgment of the Madras High Court in the case of CIT v. V. Natarajan held that the new residential house need not be purchased in the name of the assessee. The counsel for the assessee also contended that the assessee had no residential house other than the purchased house.

On the other hand, the counsel for the revenue relied on the findings of the lower authorities.

Become PF & ESIC Pro: Basic to Advance Course - Enroll Today

The two-member bench comprising Aby T. Varkey (Judicial Member) and Jagadish (Accountant Member) observed the judgment of Delhi High Court in the case of CIT v. Kamla Wahal held that new residential property need not be in the name of the assessee in order to avail the deduction under section 54F of the Income Tax Act.

The tribunal accepted the contention of the assessee counsel and relying on the judgments of the High Court set aside the order of the AO. Therefore, the tribunal directed to grant deduction claimed under section 54F of the Income Tax Act. The appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates