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Grandhi Nageswara Rao (HUF) Versus ACIT, Central Circle-2, Visakhapatnam

2018 (2) TMI 869 - ITAT VISAKHAPATNAM

Entitlement for exemption u/s 54F denied - denial of claim as new property required to be acquired by the HUF but not the individual - HUF and individual are two separate entities and if individual co-parcener acquires the property the same cannot be treated as HUF property - Held that:- HUF has sold the property and received 1/6th share of consideration amounting to ₹ 20,00,000/- out of which contributed ₹ 15 lakhs towards purchase of new property and the remaining amount of ₹ .....

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F. 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, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri B.V. Rao, AR For The Respondent : Shri Y. Sesh .....

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A.S. Steel Traders on 11.10.2012 and in the course of search, the document No.5019 of 2011 of SRO, Anakapalli was found and seized vide Annexure- AJ/O1, which revealed that the assessee had sold the land admeasuring 6 acres in survey No.1632/8 of Anakapalle along with 5 others in the capacity of HUF to the individuals Shri A. Jagadish and others. The assessee along with others have received the sale consideration of ₹ 1.20 crores against the market value adopted by the SRO at ₹ 2.10 .....

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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 expla .....

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also assessed the capital gains as per the SRO value. 3. Aggrieved by the order of the A.O., the assessee went on appeal before the CIT(A) and the Ld. CIT(A) confirmed the order of the A.O. 4. Aggrieved by the order of the CIT(A), the assessee is in appeal before this Tribunal. Appearing for the assessee, the Ld. A.R. argued that the assessee HUF has sold the property and the coparcener had acquired the residential house for which the source was funded by the HUF partially and balance was met ou .....

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ed was also offerred in the hands of HUF 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. .....

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hare of consideration amounting to ₹ 20,00,000/- out of which contributed ₹ 15 lakhs towards purchase of new property and the remaining amount of ₹ 25 lakhs was contributed by the co-parcener for acquiring the new property. Both the HUF and co-parcener of the property have 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 Nages .....

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ed the rival submissions on either side and perused the material available on record. The assessee sold a capital asset namely diamond and claims exemption on the capital gain under section 54F of the Act. The assessing officer rejected the claim of the assessee on 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 constructio .....

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purchase of a property in the name of any one of the coparcener, the property belongs to the HUF, even though the property was registered in the individual name of one of the coparcener. The property belongs to all the coparceners in equal shares as members of HUF. Therefore, the assessing officer is not justified in rejecting the claim of the assessee especially, when the investment was made in the name of Karta of HUF. 8. Now coming to second reason for disallowance of claim of the assessee, .....

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