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ITO, Ward 32. (2) , New Delhi Versus M/s. Sunil Arora (HUF)

2015 (10) TMI 2043 - ITAT DELHI

Disallowance of exemption u/s 54 & 54F - registration of new property in the name of individual or HUF? - CIT(A) aalowed claim - Held that:- The facts of this case are squarely covered by the judgement of Vipin Malik (HUF) (2009 (8) TMI 33 - DELHI HIGH COURT) wherein it has been categorically held that when the property is not purchased with the sale proceeds of HUF property in the name of HUF itself, the assessee is not entitled for benefit of exemption u/s 54F of the Act. Since in the instant .....

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he fact that part of sale proceeds of HUF property have been invested in purchasing the Sushant Lok Property, the same cannot be treated as HUF property in any manner whatsoever. Because substantial part of investment on the purchase of new property, that too in the individual name of Sunil Arora and his wife Smt. Vaishali Sunil, have been made from other sources.

Merely because of the fact that the property purchased is recorded as the asset in the statement of affairs of HUF and the .....

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F, no benefit u/s 54F can be extended. he intention of legislature to legislate Section 54 and 54F is to ensure the reinvestment of funds in residential property by the assessee itself. But in the instant case, basic condition to get the benefit of Section 54 and 54F has not been complied with as the funds raised from the sale proceeds of HUF property have been invested by the members to purchase the property in their individual names, which does not fall in the category of assessee i.e. Sunil A .....

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t Year 2001-02 on the grounds inter alia that: 1. The CIT(A) has erred in deleting the disallowance of exemption of ₹ 43,39,328/- claimed by the assessee u/s 54 & 54F of the I. T. Act, 1961 ignoring the fact that the new property was registered in the name of individual and not in the name of HUF. 2. The CIT(A) has erred in holding that exemption u/s 54 & 54F is available to the HUF assessee even though the new property bought does not belong to the HUF but in the individual name o .....

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laimed deduction of ₹ 1.50 lacs as interest paid on borrowed funds for the purchase of property. 3. The assessee has also shown income from long term capital gain on sale of residential property of ₹ 21,81,250/- and long term capital gain on sale of shares of ₹ 23,58,078/-, assessee has claimed exemption u/s 54 of the Act of ₹ 21,81,250/- and exemption u/s 54F of the Act of ₹ 23,58,078/- and shown total taxable capital gain as nil . The assessee, M/s Sunil Arora (HU .....

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rest on borrowed capital of ₹ 1.50 lacs u/s 80C rebate and ₹ 34,011/- on the ground that new residential property is not in the name of assessee and loan from ICICI bank is also not sanctioned in the name of assessee and thereby assessed a total income of ₹ 46,99,328/-. Separate penalty proceedings u/s 271(1)(c) read with Section 274 of the Act have been sought to be initiated for concealing / furnishing inaccurate particulars of income. 5. The assessment order has been challen .....

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e name of HUF. 7. We have heard the authorized representatives of parties to the appeal and gone through documents placed on record in the light of the facts and circumstances of the case. 8. Undisputed facts of this case are inter alia that under I. T. Act, 1961, the HUF has separate and distinct status apart from members of HUF; that sale consideration for the purchase of new residential property at Sushant Lok was paid partly out of sale proceeds of original residential house property owned b .....

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shares of private limited company and partly out of loan financed from ICICI bank having no concern with the HUF and as such, assessee is not entitled for exemption u/s 54 and 54F of the Act. To support his arguments, Ld. D.R. relied upon the judgment of the Hon ble Delhi High Court cited as Vipin Malik (HUF) Vs CIT in I.T.A.No. 1241/2007 dated 7th August 2009 and the judgement of the Hon ble High Corut of Rajasthan at Jaipur Bench, Jaipur in the case of Shri Kalya Vs CIT and others in I.T.A.No .....

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ion 54-F the residential house which is purchased or constructed has to be of the same assessee whose agricultural land is sold and which is therefore not the case here. The following paragraph 12 of the order of the I.T.A.T effectively and exhaustively sets out these facts and we reproduce the same below:- " 12. We have considered the rival submissions and also perused the relevant material on record. It is observed that the claim of the assessee for exemption under Section 54F was disallo .....

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duction u/s 54F by referring to the various certificates and receipts issued by the said society wherein the names of individuals were appearing without any indication of HUF. The learned counsel for the assessee, on the other hand, has relied on the possession certificate issued by the society on 30.4.2000 wherein both the individual names were appearing with Shri Vipin Malik being mentioned as Karta of M/s Vipin Malik, HUF. He has also contended that Smt. Chanan Devi Sachdeva being the oldest .....

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per the records of the society, the membership 237 stands in the joint name of Smt. Chanan Devi Sachdeva and Shri Vipin Malik, resident of S-370, Greater Kailash, Part-II, New Delhi. There is no mention whatsoever to suggest or indicate any involvement of HUF in ITA No.1241 /2007 Page 7 the said membership or Vipin Malik holding the membership as Karta of the assessee-HUF. Page 11 of the paper book is a letter issued by the said society on 19.10.1995 giving details of amounts deposited by them a .....

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he period 1.4.96 to 31.3.97 with a title of account being "Chanan Devi Sachdeva and Vipin 237" which again goes to show that the membership was stated to be held jointly by the said individuals without there being any indication of HUF. The only document which contains the name of HUF with reference to Shri Vipin Malik as Karta of HUF is a possession certificate issued by the society on 30.4.2000 and a perusal of the copy of the said certificate placed at page No.16 of the assesseea s .....

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r did not contain any reference to HUF, we find it difficult to accept the stand of the assessee that the membership in the said society was held by it in the capacity of HUF and the investment made in construction of the said property was in its own name. On the contrary, the documentary evidence placed on record clearly shows that the said membership was standing in the joint name of Smt. Chanan Devi Sachdeva and Shri Vipin Malik in their individual capacity and an attempt to show the same as .....

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titled to get exemption for the land purchased by him in the name of his son and daughter-in-law. In the facts and circumstances of the case also aforesaid inference has not been drawn. Same is question of fact. No substantial question of law arises in appeal. Question whether purchase was by assessee or by son, is a question of fact. 8. Secondly, the word assessee used in the I. T. Act, needs to be given a legal interpretation and not a liberal interpretation , as contended by the Ld. Counsel f .....

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partly out of sale proceeds of original residential house property and from the sale of shares of private limited company and partly out of loan financed by ICICI bank; that the property in question has been duly recorded as asset in the statement of affairs of HUF and the loan from ICICI bank as liability and primarily relied upon the following judgements: i) CIT Vs Dinesh Megji Toprani (HUF), I.T.A. No. 3404 of 1010 ii) JCIT Vs Smt. Armeda K. Bhaya, 95 ITD 313 (Mum. ITAT), iii) ITO Vs Ramesh .....

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law, hence, liable to be set aside for the following reasons: i) that the facts of this case are squarely covered by the judgement of Vipin Malik (HUF) (supra) delivered by the Hon'ble Jurisdictional High Court wherein it has been categorically held that when the property is not purchased with the sale proceeds of HUF property in the name of HUF itself, the assessee is not entitled for benefit of exemption u/s 54F of the Act. Since in the instant case the property was also not purchased wit .....

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f HUF property have been invested in purchasing the Sushant Lok Property, the same cannot be treated as HUF property in any manner whatsoever. Because substantial part of investment on the purchase of new property, that too in the individual name of Sunil Arora and his wife Smt. Vaishali Sunil, have been made from other sources. iv) that merely because of the fact that the property purchased is recorded as the asset in the statement of affairs of HUF and the loan from ICICI bank as a liability, .....

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at the income received from that property purchased have been assessed to tax in the hands of HUF for Assessment Year 2007-08 providing the distinctive status of HUF property purchased from the capital gain in the said case, which is missing in the present case. vi) that in the instant case, assessee is strictly Sunil Arora HUF when the capital gain has been invested to purchase the other property in the individual names of Sunil Arora and Vaishali Sunil to the prejudice of other members of HUF, .....

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