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2020 (7) TMI 683 - AT - Income TaxDeduction u/s 54 denial - AO disallowed the claim of the assessee on account of the fact that the fresh investment has been made in the name of the assessee’s wife and secondly, the assessee has failed to substantiate the cost of construction - HELD THAT:- In the instant case, the assessee has sold a residential house on 29.11.2007 and the same is thus not under dispute. Secondly, the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India. In the instant case, the assessee has purchased a plot of land situated at Plot No. 184, Maruti Nagar, Airport Road, Sanganer, Jaipur on 5.11.2007 and thereafter, has carried out construction of a residential house thereon, which as per valuation report has been carried out during the year 2007-08. The Assessing officer has disallowed the claim of the assessee on account of the fact that the fresh investment has been made in the name of the assessee’s wife and secondly, the assessee has failed to substantiate the cost of construction. As far as investment made in the name of the assessee’s wife is concerned, we find that the issue is covered in favour of the assessee by decision of the Hon’ble Rajasthan High Court in case of Shri Mahadev Balai vs ITO [2017 (1) TMI 183 - ITAT JAIPUR]. The ratio of the aforesaid decision though rendered in the context of section 54F of the Act, given the similarity of language employed, will equally apply in the instant case in context of section 54. Further, the decision of Hon’ble Madras High Court in case of CIT vs. Natarajan [2006 (2) TMI 136 - MADRAS HIGH COURT] rendered in context of section 54 supports the case of the assessee. Therefore, mere fact that the investment has been made in the name of the wife cannot be a reason for disallowance of deduction under section 54. Regarding the cost of the construction, the same is supported by the valuation report where the valuer has determined the cost of construction at ₹ 250481/-. Assessee is eligible for claim of deduction under section 54 - Appeal of the assessee is allowed. Levy of penalty u/s 271(1)(c) - HELD THAT:- As directed to allow the claim of deduction u/s 54, the penalty u/s 271(1)(c) of the Act, being consequential in nature, is hereby directed to be deleted. Penalty u/s 271F - failure to furnish return of income (ITR) - HELD THAT:- In the instant case, the assessee’s total income without giving effect to the provision of section 54 come to ₹ 9,37,280/- which exceeds the maximum amount not chargeable to tax. The assessee was therefore required to furnish his return of income and in absence of any reasonable cause shown by the assessee for such failure to file his return of income, the penalty u/s 271F is hereby confirmed. Appeal of the assessee is dismissed.
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