In a significant ruling, a division bench of the Delhi High Court has held that the statutory benefit under section 54 of the Income Tax Act, 1961 cannot be denied to the assessee merely for the reason that the name of the wife was included in the property newly purchased.
The petitioner, Mr. Kamlesh Keswani was served with a notice dated 23rd June, 2021, under Section 148 of the Act wherein it was alleged that the AO has reasons to believe that the petitioner’s income chargeable to tax for AY 2015-16 has escaped assessment.
The petition sold his old residential property and purchased a New Property within the stipulated time. It is further admitted that the entire sale consideration for the New Property as well as the stamp duty has been paid by the petitioner.
The department has not disputed that this information was available and scrutinised by the AO during the assessment proceedings which resulted in the assessment order dated 07th November, 2017, and the AO was satisfied with respect to the claim of the LTCG of the petitioner.
A division bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the judgment of this Court in Ravinder Kumar Arora relied upon by the petitioner as regards his entitlement to claim LTCG is squarely applicable to the facts of the case.
“We also find merit in the submission of the learned counsel for petitioner that the re-assessment has been initiated on the basis of change of opinion, which is not permissible. There is no new information available with the respondent to re-assess the LTCG claim. The AO had considered the same documents during the earlier assessment proceedings and was satisfied with the claim of LTCG made under Section 54 of the Act,” the Court said.
Allowing the plea of the assessee, the Court held that “the petitioner is entitled to claim exemption under Section 54 of the Act on these admitted facts, as the conditions stipulated in Section 54 stand fulfilled. The New Property would be treated as the property purchased by the petitioner in his name and merely because he has included the name of his wife and the property has been purchased in the joint names, it would notdisentitle the petitioner from claiming the exemption under the statutory provisions. Accordingly, the order dated 28th July, 2022 under Section 148A(d) of the Act, and notice dated 28th July, 2022, issued under Section 148 of the Act by the respondent with respect to the Assessment Year 2015- 16 are set aside.”Subscribe Taxscan Premium to view the Judgment
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