2022 (5) TMI 365 - AT - Income Tax

Appeal denied for exemption under Income-tax Act; property registered in wife's name

Jayawant Gajanan Sutar Versus The ITO, Ward-1 (5), Kolhapur

The Tribunal dismissed the appeal, upholding the denial of exemption u/s.54 of the Income-tax Act, 1961, as the new property was registered in the name of ... Exemption u/s 54 - denial of claim as new property was purchased in the name of the assessee’s wife - diversified views - 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. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under neutral High Courts, namely, which have 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. In that view of the matter, we are bound to follow the view taken by the Hon’ble jurisdictional High Court in in Prakash [2008 (9) TMI 234 - BOMBAY HIGH COURT] therefore, hold that the authorities below were justified in denying the benefit of exemption u/s 54 of the Act. Assessee appeal dismissed. Issues:1. Delay in filing the appeal before the Tribunal.2. Denial of exemption u/s.54 of the Income-tax Act, 1961 due to the new property being purchased in the name of the assessee's wife.3. Interpretation of conflicting judgments by different High Courts regarding the eligibility for exemption u/s.54.Issue 1: Delay in filing the appeal before the TribunalThe appellant filed an appeal with a delay of 161 days, citing challenges due to the COVID-19 pandemic. Referring to Supreme Court judgments allowing an extension of time limits for filing appeals, the Tribunal condoned the delay and admitted the appeal for disposal on merits.Issue 2: Denial of exemption u/s.54 of the Income-tax Act, 1961The sole issue raised in the appeal was the confirmation of the addition of Rs.13,21,000 as long-term capital gain on the sale of immovable property, with exemption u/s.54 denied because the new property was purchased in the name of the assessee's wife. The assessee sold jointly held property, claimed exemption u/s.54 for the amount, but the new property was registered in the wife's name, leading to denial of the exemption by the authorities.Issue 3: Interpretation of conflicting judgments by different High CourtsThe Tribunal considered conflicting judgments by various High Courts on the eligibility for exemption u/s.54. While some High Courts ruled in favor of the assessee when the new property was purchased jointly with a family member, others disentitled the exemption if the property was not in the name of the transferor. The Tribunal emphasized the binding nature of the decision of the jurisdictional High Court on subordinate authorities, requiring adherence to its interpretation until overruled by the Supreme Court. Consequently, the Tribunal upheld the denial of exemption u/s.54 based on the precedent set by the jurisdictional High Court.In conclusion, the Tribunal dismissed the appeal, upholding the denial of exemption u/s.54 due to the new property being registered in the name of the assessee's wife. The decision was based on the binding nature of the jurisdictional High Court's interpretation, despite conflicting views from other High Courts.