The Income Tax Appellate Tribunal (ITAT), Jaipur bench consisting of DR. S. Seethalakshmi, Judicial Member, and Rathod Kamlesh Jayantbhai, Accountant Member held that the husband can claim Capital Gain Exemption for Investment made in the name of the wife.
This appeal was preferred by the assessee against the order of the Commissioner of Income Tax. The facts of the case state that the assessee sold the immovable property for Rs.14,75,000/-. The value of which was evaluated at Rs.14,79,960/- by the Stamp Duty Authority. Out of sale consideration of Rs. 14,75,000/- the assessee made an investment of Rs. 7,48,000/- in the purchase of new residential house property in the name of his wife, Smt. Garima Singh. Accordingly, the assessee claimed exemption under Section 54F of the Income Tax Act. Hence, no capital gain was chargeable under the head Long-term capital gain on the sale of the above immovable property. The Assessing Officer while completing the assessment disallowed the exemption claimed and added the same to the total income of the assessee as long-term capital gain, stating that since the assessee made the investment in immovable property in the name of his wife and the assessee and his wife are different persons as well as separate assessee the deduction claimed u/s 54F of the Act, is not allowable to the assessee. The AO( Assessing Officer)held that the assessee did not file her return of income besides having taxable income therefore, penalty proceedings were also initiated against the assessee.
Being aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax. Bu the Commissioner of Income Tax also rejected the submissions made by the assessee and reiterated the decision of the Assessing Officer
After considering the arguments, the Tribunal held that “the claim of deduction U/s 54F of the Act cannot be denied merely on the ground that the new residential house was purchased in the name of his wife when the investment made by the assessee from the sale proceeds of the existing asset and yielded capital gain from the said transactions.”
The assessee (Kaushlendra Singh) was represented by C.P. Chawla and the respondent (Revenue) was represented by Runi Pal.
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