Exemption u/s. 54f of it act
Sandeep Agarwal
(Querist) 02 June 2012
This query is : Resolved
Sir,
My client has sold an urban agricultural land(Long Term Capital Asset) and deposited the whole sale proceeds in his S.B. A/c. and to take exemption u/s. 54F he has purchased a resi. house in his wife's name and the payment has been made after withdrawing the money from his S.B. A/c. in which sale proceeds of Ag. land was deposited. Now my question is whether he could avail the exemption u/s. 54F for this purchase of resi. house in his wife's name? Kindly quote some case law in favour of the assessee if any.
A V Vishal
(Expert) 02 June 2012
CIT Vs. Ravinder Kumar Arora (Delhi HC)- Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of the assessee only. Here is a case where the house was purchased by the assessee and that too in his name and wife‟s name was also included additionally. Such inclusion of the name of the wife for the above-stated peculiar factual reason should not stand in the way of the deduction legitimately accruing to the assessee. Objective of Section 54F and the like provision such as Section 54 is to provide impetus to the house construction and so long as the purpose of house construction is achieved, such hyper technicality should not impede the way of deduction which the legislature has allowed. Purposive construction is to be preferred as against the literal construction, more so when even literal construction also does not say that the house should be purchased in the name of the assessee only. Section 54F of the Act is the beneficial provision which should be interpreted liberally in favour of the exemption/deduction to the taxpayer and deduction should not be denied on hyper technical ground. Andhra Pradesh High Court in the case of Late Mir Gulam Ali Khan Vs. CIT, (1987) 165 ITR 228 (AP) has held that the object of granting exemption under Section 54 of the Act is that an assessee who sells a residential house for purchasing another house must be given exemption so far as capital gains are concerned. The word “assessee” must be given wide and liberal interpretation so as to include his legal heirs also. There is no warrant for giving too strict an interpretation to the word “assessee” as that would frustrate the object of granting exemption. We also find judgments of other High Courts giving benefit of Section 54F(1) of the Act when the house of the assessee is purchased jointly with his wife. In the case of CIT Vs. Natrajan, (2007) 287 ITR 271 (Mad), though this case was decided in relation to Section 54 of the Act, the said Section is pari materia of Section 54F(1) of the Act. Likewise, the Punjab & Haryana High Court in the case of CIT Vs. Gurnam Singh, (2010) 327 ITR 278 took the same view while discussing the provisions of Section 54 of the Act which is again pari materia of Section 54F(1) of the Act.
Shrichand Nahar
(Expert) 03 June 2012
If house property purchased in sole name of wife, then assessee may not be entitled to claim exemption.
V.Mahadevan
(Expert) 03 June 2012
I am in full agreement with the views expressed (and well supported by citations) by Shri. A.V.Vishal, which should satisfy the querist. My warm appreciation to Shri Vishal
mahadevan
A V Vishal
(Expert) 03 June 2012
Mr Nahar can you quote relevant provisions or any citations in support of your reply
Suhail A.Siddiqui
(Expert) 03 June 2012
Mr Vishal given good citation in support but Mr. Aggarwal neither mention that the proceed revived by him is kept in SB account and used during the financial year nor residential house purchased by him is in his wife's sole name or in joint name.
C. P. CHUGH
(Expert) 04 June 2012
Agreed with MR Vishal, Courts have been taking very liberal view while granting exempions. It has been stated in clear words, that the exemption cannot be denied merely on technicalities, if the intent of legislature is satisfied. Though the facts in the case of Ravinder Kumar Arora's case are slightly different,the assessee is very likely to succeed.
Sandeep Agarwal
(Querist) 05 June 2012
Thanks Mr. Vishal but there is one doubt in my mind that in all case laws the new Resi. Hoouse was purchased by the assessee in co-ownership of his wife but in my case the Resi. House has been purchased solely in the name of his wife . Will there be any different openion regarding exemption or the treatment will remain same.
A V Vishal
(Expert) 09 June 2012
Investment in wife’s name was accepted in CIT v V. Natarajan (2006) 287 ITR 271 (Mad) on the ground that the purchase of the property was out of the sale proceeds so that what was considered mainly was the source of funds for reinvestment. A similar view was taken by the Delhi Bench of the Tribunal in ITO v Smt. Saraswati Ramanathan (2008) 300 ITR (AT) 410.
Shonee Kapoor
(Expert) 20 June 2012
Fully endorse views of ld. Vishal.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
