ITAT Denies Section 54F Exemption for Property Purchased in Mother's Name [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) denied a deduction under Section 54F of the Income Tax Act, 1961, citing that it cannot be claimed for a residential property purchased in the name of the assessee’s mother.

Stay Updated with the Latest Audit Report Formats & Audit Trials Requirements! Click here 

Ashok Kumar (assessee), an individual faced scrutiny for Assessment Year (AY) 2015-16. The assessee had filed his income tax return declaring an income of Rs. 2,70,000. The assessee sold a commercial property for Rs. 1,23,00,000 on 05.02.2015 which resulted in a Long-Term Capital Gain of Rs. 78,57,794 after indexing the cost of acquisition.

The assessee invested the capital gain in a residential property purchased on 30.06.2015 in the name of his mother, Smt. Promila Rani Yadav to claim deduction under section 54F of the Income Tax Act.

The Assessing Officer (AO) disallowed the deduction, citing that Section 54F requires the new asset to be purchased in the assessee’s name. Aggrieved by the order of AO, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].

The CIT(A) upheld the AO’s order and dismissed the claim of deduction under Section 54F of the Income Tax Act. Aggrieved by the CIT(A)’s order, the assessee filed an appeal to the ITAT. The counsel for the Revenue defended the CIT(A)’s order.

The Counsel for the Revenue relied on the Judgement of Jurisdictional High Court in the case of Kamal Kant Kamboj vs ITO which held that for claiming deduction under section 54B the new asset had to be purchased in the name of the assessee but not in the name of family member.

The Counsel for the Revenue submitted that section 54F of the act is pari materia with provisions of section 54B of the act. Therefore the counsel submitted that the reasoning of Kamal Kant Kamboj would apply to the present appeal.

The two-member bench comprising Vikas Awasthy (Judicial Member) and Amitabh Shukla (Accountant Member) observed that the Punjab & Haryana High Court in Jai Narayan vs. ITO and Kamal Kant Kamboj vs. ITO had ruled that deductions under Sections 54F and 54B require the new asset to be purchased in the assessee’s name, not a family member’s.

Therefore the tribunal upheld the disallowance of the deduction claim under section 54F of the Income Tax Act. Thereby the tribunal affirmed the order of the CIT(A). The tribunal dismissed the assessee’s appeal.

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