The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the Hindu Undivided Family (HUF) is eligible to claim capital gain exemption under section 54F of the Income Tax Act, 1961 for the property purchased in the joint-name of the members.
The assessee, an HUF sold a plot of land and earned capital gain which it claimed exempt under section 54F as the assessee purchased a residential house. The only cause of denial of exemption by the Revenue is that in Sale Deed the names of the two members of HUF also appear along with the name of the assessee HUF and that the assessee failed to prove that other two co-purchasers are members of assessee HUF. The Assessing Officer denied the claim of exemption on the ground that the two members of the HUF are co-purchasers.
A bench of G.S. Pannu, President and Ms. Astha Chandra, Judicial Member observed that this is unjustified on the face of the facts brought on record that the entire consideration towards purchase was financed by the funds of the HUF alone and there was no contribution by the two other members of HUF.
“The decision (supra) of the Hon’ble Gujarat High Court applies squarely to the facts of the assessee’s case. Rather the case of the assesee is on better footing as in the decision (supra) of the Hon’ble Gujarat High Court the investment towards purchase of residential property was made in the name of some of its members instead of the assessee HUF. Even then, the Hon’ble Gujarat High Court held in the decision (supra) that the investment made in the name of members of HUF in substance and in effect belong to HUF. We are, therefore, of the opinion that the impugned addition deserves to be deleted. This ground of the assessee is thus allowed,” the Tribunal said.
Shri Akhilesh Kumar, Advocate appeared for the assessee.
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