The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) recently allowed 50 percent as capital gain exemption under section 54 of the Income Tax Act 1961 to joint owner of property.
Assessee Mumtaz Naseem Syed, after filing the return of income selected for scrutiny after the assessment the assessing officer disallowed the 50% deduction under section 54 of the income tax act, 1961 solely on the ground that the new property in which the amount of capital gain has been invested is in joint name of the assessee and her son since the payments made out of the earnings / contribution of her son Khalid Naseem. Against the order assesee filed appeal before ITAT.
Ajay Kumar, counsel for the revenue submits that the assessee and her son have together invested in the house property at JP Greens and the deduction claimed under section 54 of the Income Tax Act 1961 by the assessee has been restricted to 50 percent.
Further assessee did not have any source of income but the son of the assessee had a credit of deposit of Rs. 1 crore. Hence there is no deposit from the assessee and the only deposit came after sale of property then after an amount of Rs. 1 crore being paid by the son of the assessee for purchase of Flat at JP Greens.
section 54 of the Income Tax Act 1961 provides exemptions to sellers of a residential property and the sale is used for acquiring another residential property .
On behalf of the assessee no one appeared for the assessee.
After considering the material and records division bench of ITAT comprising Dr. B. R. R. Kumar (Accountant Member) and Yogesh Kumar U.S (Judicial Member) confirmed the addition made the assessing officer and observed that “Since the assessee and her son have jointly invested the house property and are the joint owners of the house property having 50% right, title and interest over the property, the Assessing Officer is, therefore, correct in restricting the claim of the assessee under section 54 of the Income Tax Act 1961 to Rs. 1,79,23,884/- by making an addition of Rs. 74,49,302/- to the total income of the assessee.”
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