2022 (3) TMI 1348 - AT - Income Tax

Tribunal Upholds Denial of Exemption for Property Purchase in Son's Name

The Tribunal upheld the denial of exemption u/s.54 for purchasing a property in the son's name, following the precedent set by the jurisdictional High ... Denial of exemption u/s.54 - purchasing a new house in the name of the assessee’s son - whether exemption u/s.54 can be allowed when the new property purchased by the assessee in the name of someone else other than self? - Diversified decisions - HELD THAT:- When discordant views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that the other view of the non-jurisdictional High Court may sound more appealing on individual level vis-a-vis the view of the jurisdictional High Court. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion – for or against - on that point. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court - we bound to follow the view taken by the Hon’ble jurisdictional High Court. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon’ble Bombay High Court in favour of the assessee on this issue. Therefore, hold that the authorities below were justified in denying the benefit of exemption u/s 54. - Decided against assessee. Issues:Denial of exemption u/s.54 for purchasing a new house in the name of the assessee's son.Analysis:Issue 1: Denial of exemption u/s.54The appeal pertains to the denial of exemption u/s.54 of the Income-tax Act, 1961 due to the purchase of a new house in the name of the assessee's son. The assessee sold an immovable property and invested in mutual funds. The Assessing Officer (AO) observed the sale and subsequent remittance to the son for purchasing a property in London. The AO disallowed the exemption u/s.54F as the new property was in the son's name. The CIT(A) upheld this decision citing a judgment of the jurisdictional High Court. The primary question was whether exemption u/s.54 could be granted when the new property was purchased in someone else's name. The Tribunal noted conflicting decisions by different High Courts on similar issues.Issue 2: Judicial PrecedentsThe Tribunal discussed various High Court judgments on similar matters. The Hon'ble Delhi High Court and Punjab & Haryana High Court favored the assessee in cases where the property was purchased jointly with the son, allowing exemption u/s.54B. However, the jurisdictional High Court in a previous case disallowed exemption when the property was not in the assessee's name. Subsequent decisions by the Punjab & Haryana High Court also aligned with this view. The Tribunal emphasized the binding nature of decisions by the jurisdictional High Court on subordinate authorities, stressing the need to follow such precedents.Issue 3: Binding PrecedentsThe Tribunal highlighted the importance of following the decisions of the jurisdictional High Court, even in the presence of conflicting views from other High Courts. It emphasized that subordinate authorities must adhere to the rulings of the jurisdictional High Court unless overruled by the Supreme Court. In the absence of any subsequent favorable decisions by the Bombay High Court, the Tribunal upheld the denial of exemption u/s.54 by the authorities below. The Tribunal concluded that the denial of the exemption was justified based on the binding precedent set by the jurisdictional High Court.Conclusion:The Tribunal dismissed the appeal, affirming the denial of exemption u/s.54 for purchasing a property in the son's name based on the precedent set by the jurisdictional High Court. The decision was made in accordance with the principle of following the rulings of the jurisdictional High Court, highlighting the importance of adhering to binding precedents in tax matters.Please let me know if you need further clarification or additional information.