Case Details: Vidjayane Durairaj - Vidjayane Velradjou vs. ITO - [2024] 169 taxmann.com 625 (Chennai-Trib.)
Judiciary and Counsel Details
- Aby T. Varkey, Judicial Member & Jagadish, Accountant Member
- V. Meenakshi Sundar, CA for the Appellant.
- P. Krishna Kumar, JCIT for the Respondent.
Facts of the Case
The assessee didn’t file his return of income for the relevant assessment year. However, the Assessing Officer (AO) received information from the ITS Data that the assessee had deposited cash into his bank account during the relevant year. Hence, he re-opened the assessment and issued a notice under section 148, pursuant to which the assessee filed his return. AO noted that the assessee sold an immovable property during the relevant year, consideration of which was received in cash, and the sale proceeds were deposited into his and his wife’s bank account. Subsequently, the assessee had claimed a deduction for the capital gain investment into residential property purchased by his wife.
The AO noted that the assessee’s wife was also assessed to tax and independently filed her return of income. Accordingly, the AO contended that the assessee’s claim of exemption under section 54F on account of the purchase of property in his wife’s name was not allowable and disallowed the deduction claimed under section 54F.
On appeal, the CIT(A) confirmed the AO’s order and the matter reached before the Chennai Tribunal.
ITAT Held
The Tribunal held that the assessee sold an immovable property during the relevant assessment year in cash, and out of said sale proceeds, the amount was deposited in the assessee’s and his wife’s bank account. Subsequently, the assessee purchased a residential property in his wife’s name and claimed deduction under section 54F, which the AO disallowed because the assessee did not purchase the said residential property in his name.
It was observed that the AO reopened the assessment of the assessee’s wife for the relevant assessment year since there was a huge amount of cash deposited in her bank account. It was noted that she filed her return of income pursuant to the notice under section 148. The AO verified the details furnished by the assessee’s wife and found that the assessee’s husband sold three properties and received sale proceeds in cash. The AO accepted the assessee’s wife’s contentions and completed the assessment by accepting the income returned.
Considering the over-all facts, the assessee’s claim of deduction under section 54F ought to have been granted to assessee though in the context of section 54, which section is in pari materia with section 54F. further, it was noted that predominant judicial view in this regard was that for the purpose of section 54F, new residential house need not be purchased by the assessee in his own name. Since the assessee has purchased the residential property in his wife’s name, deduction need to be allowed.
Thus, the AO was directed to give deduction claimed under section 54F and assessee’s appeal was allowed.
List of Cases Reviewed
- CIT v. Kamla Wahal reported in [2013] 30 taxmann.com 34 (Delhi) (para 11)
- Commissioner of Income-tax v. Ravinder Kumar Arora [2011] 15 taxmann.com (Delhi) (para 9)
- Commissioner of Income-tax v. Gurnam Singh 327 ITR 278 [Para 9] – followed.
List of Cases Referred to
- CIT v. V. Natarajan [2006] 154 Taxman 399/287 ITR 271 (Madras) (para 6)
- Kamal Kant Kamboj v. ITO [2017] 88 taxmann.com 541 (para 6)
- CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) (para 6)
- CIT v. Kamal Wahal [2013] 30 taxmann.com 34/214 Taxman 287/351 ITR 4 (Delhi) (para 9).
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