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TMI Blog2020 (7) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition, indexed cost of construction and transfer expenses amounting to Rs. 2,47,411/- and deduction u/s 54 amounting to Rs. 8,37,280/- against the deemed sale consideration u/s 50C amounting to Rs. 10,84,691/-. The Assessing Officer allowed the deduction amounting to Rs. 2,47,411/-. However, deduction u/s 54 was denied by the Assessing Officer. As per Assessing Officer, the fresh investment in the plot situated at Plot No. 184, Maruti Nagar, Airport Road, Sanganer, Jaipur for Rs. 7,16,638/- was made by the assessee in the name of his wife and secondly, no documentation has been submitted in support of cost of construction thereon. Accordingly, the deduction claimed u/s 54 amounting to Rs. 8,37,280/- was denied by the Assessing Officer. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the action of the Assessing Officer. Against the said findings, the assessee is in appeal before us. 4. During the course of hearing, the ld. AR submitted that the assessee has purchased the plot of land for Rs. 7,16,638/- in the name of his wife and such investment was made out of the sale proceeds from sale of the original house property. In sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Co-ordinate Bench vide its order in ITA No. 333/JP/2016 dated 26.12.2016 following the decision of Hon'ble Rajasthan High Court in case of Kalya vs. CIT(supra) had decided the issue against the assessee and has confirmed the denial of deduction u/s 54B of the Act. In the context of said facts, on appeal by the assessee, the Hon'ble Rajasthan High Court has framed the following substantial question of law: "Where ld. ITAT was justified in disallowing the exemption u/s 54B of the Act without appreciating that the funds utilized for the investment for purchase of the property eligible u/s 54B belonged to the appellant only and merely the registered document was executed in the name of the wife and further the wife had not separate source of income." 11. The Hon'ble Rajasthan High Court, after considering its earlier decision in case of Kalya vs. CIT(supra) and the various other decisions of Hon'ble Delhi High Court, Hon'ble Madras High Court, Hon'ble Karnataka High Court, Hon'ble Punjab and Haryana High Court, and Hon'ble Andhra Pradesh High Court, as also relied upon by the assessee, has held that it is the assessee who has to invest and it is not specified in the legislati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the same is supported by the valuation report where the valuer has determined the cost of construction at Rs. 250481/-. 12. In light of above discussions, we are of the considered view that the assessee is eligible for claim of deduction under section 54 of the Act and the same is directed to be allowed. 13. In the result, the appeal of the assessee is allowed. ITA No. 1391/JP/2018 14. Now coming to the assessee's appeal in ITA No. 1391/JP/2018 wherein the assessee has challenged the levy of penalty u/s 271(1)(c) of the Act. 15. We find that the Assessing Officer has levied the penalty on account of denial of deduction claimed by the assessee u/s 54 of the Act. In view of our decision in ITA No. 1390/JP/2018 wherein we have directed to allow the claim of deduction u/s 54, the penalty u/s 271(1)(c) of the Act, being consequential in nature, is hereby directed to be deleted. 16. In the result, the appeal of the assessee is allowed. ITA No. 1392/JP/2018 17. In this appeal, the the assessee has challenged the levy of penalty u/s 271F of the Act. 18. In this regard, the ld. AR submitted that the assessee was under the belief that since his income during the previous year d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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