Assessee entitled to full tax deduction under section 54F despite joint ownership. Indexation from 01.04.1981.

The Tribunal upheld that the assessee was entitled to 100% deduction under section 54F of the Income Tax Act, despite the property being registered in joint names, as the entire consideration was paid by the assessee. Additionally, the Tribunal ruled that the benefit of indexation should be calculated from 01.04.1981, the year the previous owner acquired the property. Consequently, the Revenue's appeal was dismissed, affirming the Ld. CIT(A)'s decision on both issues.

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Issues Involved:

1. Deletion of addition by restricting the deduction claimed u/s 54F of the Income Tax Act, 1961.
2. Benefit of indexation from 01.04.1981 instead of the Year 1984-85.

Summary:

Issue 1: Deletion of Addition by Restricting Deduction Claimed u/s 54F

During assessment proceedings, the Assessing Officer noticed that the assessee sold 60% share of a property for Rs. 5,40,54,000/- and claimed deduction u/s 54F by purchasing another property. The new property was registered in the joint name of the assessee and her husband. The Assessing Officer restricted the deduction to 50% as the husband's name was included in the registry. On appeal, the Ld. CIT(A) found that the property devolved on the appellant due to HUF partition and had been assessed under the Wealth Tax Act for over 25 years. The Ld. CIT(A) held that the inclusion of the husband's name was irrelevant as the consideration was invested in the new property. The Tribunal upheld this view, stating that the assessee was entitled to 100% deduction u/s 54F, as the entire consideration was paid by the assessee, and the inclusion of the husband's name did not alter the situation.

Issue 2: Benefit of Indexation from 01.04.1981

The Assessing Officer allowed the benefit of indexation from 1985, the year the property was inherited. On appeal, the Ld. CIT(A) accepted the appeal based on the decision of the Special Bench in DCIT Vs Manjula J. Shah, which held that for computing long-term capital gain, the indexed cost of acquisition should be computed with reference to the year the previous owner first held the asset. The Tribunal confirmed the order of Ld. CIT(A), stating that the property was purchased by the previous owner in 1968-69, and thus, the benefit of indexation from 01.04.1981 was appropriate.

Conclusion:

In the result, Revenue's appeal was dismissed, and the order of Ld. CIT(A) was confirmed in both issues.

Order Pronounced in the Open Court on 18.01.2013.

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