TMI Blog2018 (2) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... ve entered into a memorandum of understanding to transfer the property in the name of HUF after complete repayment of the loan, which was granted to the individual co-parcener Mr. G. Rama Murthy Setty, S/o Nageswara Rao. The assessee also declared the rental income in its hands and the loan is being repaid by the HUF. Co-parcener is one of equal shareholder of the HUF. Under the similar facts and circumstances, the coordinate bench of ITAT, Chennai in the case of Purnachand & Family (HUF) cited (2017 (3) TMI 1175 - ITAT CHENNAI) held that the property acquired in the name of Karta is entitled for the deduction u/s 54F of the Act. - Decided in favour of assessee - I.T.A.No.142/Vizag/2017 - - - Dated:- 9-2-2018 - SHRI V . DURGA RAO, JUD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 6 acres of land sold to Mr. A Jagadish and others of M/s. A.S. Steel Traders and received a sum of ₹ 20,00,000/- as sale consideration and claimed deduction u/s 54F of the Act. The A.O. rejected the deduction claimed by the assessee u/s 54F of the Act, since the impugned property was purchased in the name of Sri Ramana Murthy Setty, co-parcener of the HUF. The assessee contended that Sri G. R. Setty, one of the co-parcener of the HUF has purchased the property for which the funds were given from the HUF and the balance amount was taken as a loan from LIC (HFL) and the property was transferred to HUF by a memorandum of understanding. However, the Ld. A.O. was not impressed with the explanation of the assessee, hence disallowed the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the loan installments were repaid by the HUF and on complete repayment of the loan, the property would be transferred by registered sale deed to the hotchpotch of HUF. Since the funds were invested from HUF and the co-parceners are having equal share in the HUF property, the Ld. A.R. argued that HUF is entitled for deduction u/s 54F of the Act even though the property was purchased in the name of co-parceners. Hence, argued that the orders of the Ld. CIT(A) to be set aside and allow the appeal of the assessee. The Ld. A.R. also relied on the decision of Hon ble ITAT, Chennai bench in the case of Puranchand Family (HUF) Vs. ITO ,ITA No.2974 (Mds) of 2016 dated 31st January 2017 5. On the other hand, the Ld. D.R. supported the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three grounds :-- ( 1 ) First, the capital asset was purchased in the individual name of coparcener of HUF . ( 2 ) Borrowed funds were used for purchase of the new asset and not the sale proceeds of the diamond . ( 3 ) There was no construction on the new asset . 7 . As regards the investment made in the individual capacity, even though HUF is an independent assessable unit under Income Tax Act, under the common law, HUF cannot be considered to be a legal entity . The HUF has to be represented through any one of the coparceners . Therefore, when the assessee HUF invested the funds in the name of any one of the coparcener, it has to be construed that the investment was made in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered opinion, when the assessee borrowed the funds and utilized in purchasing the capital asset and thereafter uses the sale proceeds or capital gain for repaying the loan borrowed, that would amount to sufficient compliance of the requirement of section 54F of the Act . Therefore, merely because the borrowed funds were used when the property was purchased before the date of the sale of asset, this Tribunal is of the considered opinion, this cannot be a reason for disallowing the claim of the assessee . 10 . In view of the above, we are unable to uphold the orders of both the lower authorities . Accordingly, the orders of both the lower authorities are set aside and the addition is deleted . The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
