2015 (3) TMI 1420

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....sallowance u/s 54F of the Income Tax Act, 1961 on the alleged ground that the appellant has invested the part of the capital gain amounting to Rs.8,00,000/- towards the construction of residential house of which the land is owned by her spouse. 2. That the appellant craves leave to alter, amend and add to substitute any grounds of appeals before or at the time of hearing." 2. The brief facts of the case as per AO's order are reproduced here under: "The assessee is a practicing Advocate of the J& K High Court. During the year under consideration gross receipts from practice have been shown at Rs.3,00,500/-. Out of this, after debit of various expenses, the income has been shown at Rs.1,40,213/-. Further, the assessee als....

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....owed that the said plot was allotted by J&K Housing Corporation Ltd., to the husband of the assessee Sh. G.D Wadhwa, Further, the permission accorded for construction of house on the said plot also revealed that the house was being constructed by the husband of the assessee Sh. G.D.Wadha as the said permission was in his name. There was no evidence which could suggest that the house under construction was actually owned by the assessee. As per the provisions of section 54F of the I.T. Act, 1961, deduction is allowed only when the new residential property is being constructed by the assessee itself. Deduction is not allowed if the investment is made in the construction of house belonging to the spouse of the assessee. Accordingly, t....

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....ontentions and perused the facts of the case. The undisputed facts of the present case are that the assessee has sold a plot for Rs.32 lacs on which long term capital gain was calculated at Rs.30,11,137/- and on 30.07.2009, the assessee deposited an amount of Rs.24,00,000/- in the Capital Gains account with State Bank of India and balance of the amount was spent for acquiring/construction a new residential house amounting to Rs.8,00,000/- and accordingly exemption u/s 54F of the Act was claimed for the said Rs.8,00,000/-. The said construction of the house for Rs.8,00,000/- was on a plot in the name of the husband of the assessee, Sh. G.D.Wadhwa. The plot was not owned by the assessee and the AO disallowed exemption u/s 54F of the Act and t....

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....ly for agricultural purpose and merely because in the sale deed his only son was also shown as co-owner, the Tribunal has rightly come to the conclusion that it does not make any difference because the purchased land is being used by the assessee for agricultural purpose. It is not the case of the Revenue that the said land is being used exclusively by his son. In our view, a pure finding of fact has been recorded by the Tribunal which does not require any interference in this appeal." 6.2. The Ld. CIT(A) also relied upon the decision of the Hon'ble Mumbai High Court in the case of Prakash vs. ITO (supra), which in fact has been dealt with and distinguished by the Hon'ble Delhi High Court in the case of Commissioner of Income Tax-Xii vs.....

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.... 2012)342 ITR 38 (Del.). That was also a case which arose under Section 54F of the Act. The new residential property was acquired in the joint names of the assessee and his wife. The Income Tax Authorities restricted the deduction under Section 54F to 50 percent on the footing that the deduction was not available on the portion of the investment which stands in the name of the assessee's wife. This view was disapproved by this Court. It noted that the entire purchase consideration was paid only by the assessee and not a single penny was contributed by the assessee's wife. It also noted that a purposive construction is to be preferred as against a literal construction, more so when even applying the literal construction, there is nothing in ....

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....tion and the object which Section 54F seeks to achieve and respectfully agreeing with the judgment of this Court, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the revenue." 6.3. Further, reliance was made by the ld. Counsel for the assessee in the case of Commissioner of Income Tax vs. Ravinder Kumar Arora, (Delhi) (supra), which in fact has been dealt by the Hon'ble Delhi High Court in the case of CIT vs. Kamal Wahal (supra). 6.4. In the facts and circumstances and in view of the judicial findings of various courts of law referred to hereinabove, we are of the view that the purpose of section 54F is that new residential house need not be purchased by the assessee in ....