2016 (12) TMI 1865 - AT - Income Tax

Case Update: Proof of Asset Acquisition crucial for Tax Relief

The Tribunal dismissed the assessee's appeal and allowed the revenue's appeal, ruling that the assessee did not prove the acquisition of a new asset for ... Deduction u/s 54F - claim denied as genuineness of the transactions not proved - onus to prove - whether the assessee is eligible for exemption under section 54F in view of the fact that the husband of the assessee released the property in favour of the appellant, whether such release is acceptable under the law? - HELD THAT:- The onus lies on the assessee to prove beyond doubt the transaction entered by the assessee and her husband as genuine. The very fact that the transaction is between the wife and husband had raised the eye brows of the AO about the genuineness of the transactions. The transaction is perhaps intended to avoid the tax liability in the hands of the assessee. The release deed executed by her husband is not registered. The onus lies on the assessee to prove that the transaction was a genuine transaction by furnishing the details of actual date of payment of consideration to her husband towards relinquishing his share of right in the property - even after the relinquishment deed, the assessee along with her husband entered jointly into a lease agreement dated 09.01.2008 with Shell Technology India (P) Ltd. This goes to prove that the release deed is not actually intended to be acted upon - appellant is not entitled to any deduction under section 54F as she has failed to prove beyond doubt that the assessee acquired the new house by the sale proceeds of the original assets sold. Since we held that the assessee had not acquired any asset, the other aspects are considered to be irrelevant and does not require any adjudication. - Decided against assessee. Issues:Cross appeals by assessee and revenue against CIT(A) order for AY 2008-09.Analysis:1. Facts and Denial of Exemption under Section 54F:- Assessee filed return for AY 2008-09 declaring income of Rs. 9,06,856.- AO completed assessment under section 143(3) denying exemption of Rs. 1,56,33,870 under section 54F.2. Impugned Addition and Claim for Exemption:- Assessee sold property for Rs. 5,35,00,000, claiming exemption under section 54F.- Claimed exemption for acquisition of new house at Prestige Nottinghill.3. AO's Disallowance and CIT(A) Decision:- AO disallowed claim due to ownership of more than one house and disputed cost of acquisition.- CIT(A) allowed deduction of 50% of new property's cost at Rs. 91,58,083.4. Revenue Appeal and Assessee's Appeal:- Revenue challenged CIT(A) direction granting 50% relief under section 54F.- Assessee appealed against disallowance of exemption.5. Consideration of Exemption under Section 54F:- Issue of whether assessee is eligible for exemption under section 54F due to husband's release of property.- AO considered transaction a device to avoid tax, citing lack of proof of consideration and unregistered deed.6. Decision and Conclusion:- Tribunal held assessee failed to prove acquisition of new asset for relief under section 54F.- Assessee's appeal dismissed, revenue's appeal allowed.In conclusion, the tribunal dismissed the assessee's appeal and allowed the revenue's appeal, holding that the assessee failed to establish the acquisition of a new asset for claiming relief under section 54F. The decision emphasized the importance of genuine transactions and proper documentation to support claims for exemptions under the Income Tax Act.