TaxTMI 
TaxTMI 
TaxTMI 
2012 (6) TMI 230
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..../- for the relevant Assessment Year under consideration. The return was initially processed under sec. 143(1) of the Act. Thereafter, the case was selected for scrutiny and notice under sec. 143(2) dated 23.07.2008 was issued and served upon the assessee. Further, notice under sec. 143(2) and 142(1) along with questionnaire was issued by the AO on 25.09.2009, in response to which, the assessee's Authorized Representative appeared before the AO and filed replies from time to time. Books of account of the assessee were produced, which were put to test-check. 4. In the assessment proceedings, it was noticed by the AO that the assessee is proprietor of Arora Service Station and is running a petrol pump. During the relevant year the assessee has shown long term capital gain of Rs. 45,49,045/- on sale of plot of land bearing Khasra No. 526/1, Min and Old No. 526, Min Khata No. 552 and Old Khata No. 37 situated at Mohuddinpur Kanwani, Tehsil Dadrai, District Gautam Budh Nagar, U.P. This plot of land was purchased by the assessee in his name on 27.01.1989. As per the details filed by the assessee, it was noticed by the AO that this land was sold for a sale consideration of Rs. 4,33,00,000....
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.... assessee preferred an appeal before the learned CIT(A). 8. Before the learned CIT(A), the assessee placed reliance upon the decision of ITAT Madras D-Bench in the case of Third ITO v. S. Vardarajan [1989] 33 TTJ 466, where it has been held that the wife of the appellant was holding the property only in trust of the assessee and the assessee must be accepted as the real owner though the name of the wife was also included in the purchase deed. However, the learned CIT(A) has not followed this decision but followed the decision of ITAT Nagpur Bench in the case of ITO v. Prakash Timaji Dhanjode [2003] 81 TTJ 694. The CIT(A) also relied upon the decision of Hon'ble Punjab & Haryana High Court in the case of Jai Narayan v. ITO [2008] 306 ITR 335. The decision of Hon'ble Bombay High Court in the case of Prakash v. ITO [2009] 312 ITR 40/[2008] 173 Taxman 311 was also relied upon by the learned CIT(A). The learned CIT(A) stated that the decision of ITAT Madras D-Bench in the case of S. Vardarajan (supra) is not applicable to the present case being distinguishable on facts. 9. Hence, the assessee is in further appeal before us. 10. The learned counsel for the assessee has submitted that ....
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.... extent of 50% thereof inasmuch as the AO was of the view that the new residential house was purchased by two persons i.e. the assessee and his wife and exemption under sec. 54F is available only with reference to the assessee's share. The AO, therefore, restricted the deduction of Rs. 3,18,59,260/- claimed u/s 54F of the Act by the assessee to Rs. 1,59,29,368/- only. The controversy between the assessee and the department is with regard to the question whether the assessee is entitled to exemption under sec. 54F with reference to the total amount invested by the assessee in the new residential house or only to the extent of 50% thereof because of the reason that name of the assessee's wife is also included in the purchase deed. To decide this question, we would like to refer to the provisions of sec. 54F of the Act. Section 54F provides that subject to the conditions laid down in the section itself, in the case of an assessee being an individual or a Hindu Undivided Family, the capital gain arises from the transfer of any long term capital asset, not being a residential house, and the assessee has, within a period of one year before or two years after the date on which the transfe....
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....n the affidavit that the assessee's wife's name was stated in the purchase deed only for 'Shagun' purposes a because of the assessee being physically handicap. In the case of S. Varadarajan (supra), the assessee, an individual, claimed exemption under sec.54 of the Act on account of purchase of a flat. In that case, t document for the purchase of the flat was executed in the name of assessee's wife. The AO rejected the assessee's claim for the reason that the assess had not satisfied the conditions of sec. 54 of the Act because he had himself not purchased the property in his name and that his wife has not confirmed that she was holding benami for him. The claim of the assessee under sec. 54 was allowed by the Tribunal after observing that the total amount invested in the property was provided by the assessee and the property purchased in the name of the wife was only in trust for the assessee and the assessee must be accepted to be the real owner. This case is squarely applicable to the facts of the present case. In the present case, the property has been purchased in the name of the assessee himself and his wife's name has also been included, whole of the consideration has been p....
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....ash Timaji Dhanjode (supra) has been looked into by us, and we find that the distinguishing feature pointed out by the Tribunal in the case of Prakash Timaji Dhanjode (supra) is not present in the present case. The facts of the present case are more identical to the case of S. Varadarajan (supra) inasmuch as, in the present case, the assessee has categorically stated that his wife's name was included in the purchase deed in trust for the assessee and that he was the real owner of the property and all the consideration for purchase of the property has been provided by him. Therefore, facts of the present case are identical to the facts of the case of S. Varadarajan (supra) and not to the case of Prakash Timaji Dhanjode (supra) where the property was purchased in the name of assessee's son only. In that case, the assessee's name was not even included in the purchase deed and the property was purchased in the name of son and that was the reason that ITAT Nagpur Bench in the case of Prakash Timaji Dhanjode (supra) has not followed the decision of ITAT Madras Bench in the case of S. Varadarajan (supra). We, therefore, hold that the decision of ITAT Nagpur in the case of Prakash Timaji ....
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....was rejected. Independent of this view, the Hon'ble High Court has also considered another aspect of the matter that the agricultural land which was sold was of the assessee HUF and the flat purchased in the cooperative society was not in the name of the assessee HUF but in the individual name of the Karta along with his mother. It was therefore, held that the assessee was not entitled to claim the benefit of sec. 54F of the Act. In the present case, the amount received from the sale of land has been utilized by the assessee for the purchase of a flat though it was registered in the assessee's name along with his wife. The land was sold by the assessee and the house has also been purchased by the assessee and the assessee has contributed the cost of the house to the extent of Rs. 3,28,15,000/-. Therefore, the assessee is entitled to a benefit of sec. 54F to the extent of the cost incurred by him. 19. In the case of Jai Narayan (supra), the assessee claimed deduction under sec. 54B in respect of the investment made in the property in the name of son or grandson. The Hon'ble Punjab & Haryana High Court therefore, held that reading of sec. 54B of the Act nowhere suggests that the leg....
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.... of the sale proceeds of the agricultural land, which was used only for agricultural purposes and merely because the assessee's son was shown in the sale deed as co-owner, it did not make any difference. In that case, it was not the case of the revenue that the land in question was exclusively used by his son. Therefore, the Hon'ble High Court held that the assessee was entitled to deduction under sec. 54B of the Act. In the present case, the new residential house has been purchased out of the sale proceeds of the land sold by the assessee. It is also not the case of the revenue that the house purchased was exclusively used by his wife. Therefore, merely because the wife's name was included in the sale deed as co-owner, it would not make any difference. 22. Further, in the case of Jt. CIT v. Smt. Armeda K. Bhaya [2005] 95 ITD 313 Mumbai Bench has allowed the benefit of section 54, where the house was purchased jointly in the names of the assessee, his mother and father, and, mother and father did not have any right, title or interest in the property and purchase consideration was borne by the assessee himself. This decision of ITAT, Mumbai is squarely applicable to the facts of th....