2021 (2) TMI 635 - AT - Income Tax

Exemption u/s. 54F denial - assessee has purchased the new residential house property in the name of her husband out of the sale proceeds of her erstwhile residential property - assessee is a non-resident Indian who had earned income from long term capital gains during the relevant assessment year - HELD THAT - Even if the assessee purchases the new asset in the name of his or her immediate relatives such as spouse own children then the assessee will be entitled to claim the benefit of exemption U/s. 54 of the Act. Therefore hereby direct the Ld. AO to grant exemption to the assessee U/s. 54F of the Act and accordingly delete the LTCG assessed in the hands of the assessee. See V. NATARAJAN. 2006 (2) TMI 136 - MADRAS HIGH COURT SHRI GURNAM SINGH 2008 (4) TMI 28 - PUNJAB AND HARYANA HIGH COURT AND RAVINDER KUMAR ARORA 2011 (9) TMI 343 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

Issues Involved:
Claim of exemption under Section 54 of the Income Tax Act for the purchase of a new residential house property in the name of a spouse.

Detailed Analysis:
The appeal was filed against the order of the Ld. CIT(A)-10, Hyderabad for the Assessment Year 2008-09, where the issue revolved around the denial of exemption under Section 54 of the Act. The assessee, a non-resident Indian, had sold her residential property and purchased a new one in the name of her husband. The Assessing Officer (AO) disallowed the exemption, stating that the house was not purchased in the assessee's name. The Ld. CIT(A) upheld this decision, leading to the appeal.

The Ld. AR cited several decisions of the Hon'ble High Courts to support the assessee's claim, emphasizing that the new asset need not be purchased in the assessee's name alone. The decisions highlighted instances where the purchase was made jointly or in the name of immediate relatives, still qualifying for exemption under Section 54 of the Act. The Ld. DR, however, relied on the orders of the revenue authorities.

Upon careful consideration of the cited decisions and the facts of the case, the Tribunal found merit in the assessee's argument. The Tribunal noted that purchasing the new asset in the name of immediate relatives, such as a spouse or children, would still entitle the assessee to claim exemption under Section 54. Following the judicial precedents and the legislative intent to encourage investment in residential properties, the Tribunal directed the Ld. AO to grant exemption under Section 54F and delete the assessed Long Term Capital Gains (LTCG) of the assessee.

In conclusion, the appeal of the assessee was allowed, and the decision was pronounced in favor of the assessee on February 4, 2021. The judgment underscores the importance of interpreting tax provisions liberally to achieve the legislative objectives and provide relief to taxpayers investing in residential properties, even if purchased in the name of immediate relatives.