TMI Blog2001 (11) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... estion was used for agricultural purposes and therefore, outside the purview of the definition of the term capital asset within the meaning of the IT Act, and, therefore, not liable to capital gains tax. The assessee also contended that he had invested the sale proceeds in the following manner: (a) By purchase of a vacant plot at circle No. 4, Ward No. 11/20 Ganesh Nagar, Nagpur on 2nd March, 1983, in the name of Shri Prakash, his only adopted son. (b) By constructing a commercial and residential building of a value of Rs. 2,00,000 within the prescribed period. According to the valuation report, the construction of the building was commenced in 1983 and completed in 1985. The assessee filed an affidavit wherein he has affirmed the fact that the land was purchased in his son s name and the construction was being done on the said land after due sanction. It was also stated in the said affidavit that the investment is also done in his son s name in view of his old age and counselling by others not to invest in his name. The AO did not agree with the contention of the assessee that sale of agricultural lands by the assessee did not constitute transfer of capital asset as the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the AO to compute relief in accordance with provisions of s. 54F of the Act. 5. The Revenue has preferred the present appeal against the said order of the CIT(A). The only issue to be decided in the present appeal is as to whether the assessee is entitled to claim the relief under s. 54F of the Act despite the fact that the investments of the net consideration received by him on transfer of a capital asset is not invested in his name but in the name of his adopted son. 6. The learned Departmental Representative submitted that the provisions of s. 54F of the IT Act, 1961 clearly contemplate investment of the capital gain received on transfer of the capital asset by the assessee in his name. He also submitted that the assessee and his adopted son are two distinct entitles in the eye of law. He submitted that the affidavit filed by the assessee filed in the paper book filed by the Department clearly demonstrates that the investment in the land and building has been made by the assessee in the name of his adopted son and the reason for doing so was due to the old age of the assessee and counselling by others to make investment in the son s name. He submitted that in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption. He also relied on the ruling of the Madras Bench of the Tribunal in the case of ITO vs. Varadarajan (1989) 33 TTJ (Mad) 446. He also submitted that the provisions of s. 54F being a beneficial provision and giving rise to two possible views, the view favourable to the assessee has to be adopted. 8. We have heard the rival contentions and have perused the records. The facts are not in dispute. They are as follows. The assessee had made a transfer of a capital asset. That he had gained a sum of Rs. 1,83,852 on capital by reason of the transfer of a capital asset. That he had purchased a vacant land on 2nd March, 1983, and constructed a residential house thereon from 1983 to 1985, within the time frame contemplated by s. 54F. The investment in the new asset has however been made by the assessee not in his name but in the name of his adopted son. We are not concerned in this appeal about the reasons which prompted the assessee in doing so. The relevant portions of s. 54F reads as follows: "Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F(1) Subject to the provisions of sub-s. (4), where, in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under s. 45 on the basis of the cost of such new asset as provided in cl. (a) or, as the case may be, cl. (b) of sub-s. (1) shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such new asset is transferred." A plain reading of s. 54F would show that it is the assessee who has to invest the capital gain in the new asset or construction of a residential house in his name. The expression that the assessee has purchased or constructed a new asset in sub-s. (1) would only mean that the new asset has to be in the name of the assessee. The proviso to sub-s. (1) makes the position very clear inasmuch as it says that the assessee shall not own any residential house on the date of transfer or purchase a residential house within 1 year of the transfer or construct residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he estate of a prepositus is dependent on the fact of his surviving the prepositus. Death is a certain event but who will die first is not a certain event. This is the reason why law regards transfer by a heir apparent of his chance of succession as non-transferable under s. 6 of the Transfer of Property Act. 11. One more case of the Madras Tribunal reported in ITO vs. Varadarajan (1989) 33 TTJ (Mad) 466 on which the counsel for the assessee relied on remains to be considered. The facts in the said case are identical to the facts of the present case. The distinguishing feature in the said case was that the assessee in the said case had purchased the new asset in the name of his wife Banami for himself. The assessee in the said case had after purchase in the name of his wife declared income from the said property in his name. The assessee claimed that the purchase in the name of his wife was Benami and that he was the real owner of the property. In such circumstances, the Tribunal came to the conclusion that there was compliance with the requirement of s. 54 and allowed exemption. In the present case, the assessee has not made any such claim. In the affidavit filed before the AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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