TaxTMI 
TaxTMI 
2026 (9) TMI 519
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....eturn filed by the appellant for the assessment year 2011-12, the afore transactions were duly disclosed and exemption from payment of income tax under the head "capital gain" was claimed under Section 54-F of the Act. In the year 2018, a notice under Section 148 of the Act was issued through which the claim of the appellant for exemption under Section 54-F of the Act was questioned. The appellant did not file any reply and therefore, after the Assessing Officer came to the conclusion that the appellant had failed to discharge his onus, went on to pass the assessment order dated 06.12.2018 through which the exemption claimed by the appellant under Section 54-F of the Act was denied, resulting in the addition of Rs. 22 lakhs to his declared income. The appellant filed an appeal under Section 250 of the Act before the Commissioner of Income Tax (Appeals), Bengaluru [for short - the CIT(A)] which appeal of his was dismissed through order dated 16.10.2025. Aggrieved by the dismissal of the appeal by the CIT(A), the appellant then approached the ITAT through filing of an appeal under Section 252 of the Act but through the impugned order dated 19.02.2026, such appeal met the same fate as....
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....vs. Ravinder Kumar Arora (2012) 342 ITR 38 (Delhi) and CIT-XII vs. Kamal Wahal (2013) 214 Taxman 287 (Delhi), which directly hold that exemption under Section 54F cannot be denied merely because the new residential property is purchased in the name of the spouse out of the assessee's own funds, and which judgments continue to hold the field and have neither been overruled nor distinguished on facts? SUBMISSIONS 3. Learned counsel for the appellant contended that once the appellant had reinvested the entire amount of Rs. 22 lakhs, which was the sale consideration of the property sold by him in Rewari, into buying of a residential plot in Bawal, within three years of the afore sale, even though in the name of his wife, he is entitled to claim exemption under Section 54-F of the Act particularly when his wife did not contribute even a penny in the purchase of the residential plot at Bawal and that she also had no individual source of income. 4. In support of his afore submissions, learned counsel for the appellant relied on the following judgments:- 1. Pr. Commissioner of Income Tax-1, Chandigarh Vs. Jangpal Singh Tanwar, passed in ITA-293-2022 dated 09.08.2023. ....
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....apital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where - (a) the assessee - (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property". 8. In the case in hand, admittedly, the original asset and the new asset were both residential properties and therefore, to such transaction, no exemption under Section 54-F of the Act could have been claimed. This distinction has not been noticed by either the Assessing Officer or CIT(A) or the ITAT which, leas....
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....dential house within the stipulated time. 11. After reading Section 54 of the Act we unhesitantly conclude that exemption under Section 54 can be claimed only if the transactions of sale of the original asset and purchase of the new asset, within the stipulated time, both being residential properties, are executed by the same assessee as defined under Section 2(7) of the Act. Husband and wife are different individuals and distinct legal entities. One of the above transactions by the husband and the other by the wife cannot be clubbed for claiming exemption under Section 54 of the Act. 12. The afore view of ours finds support from the following observations made by a Division Bench of this Court in Jai Narain's case (supra):- "10. In interpreting the words contained in a statute, the court has not only to look at the words but also to look at the context and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. The word "assessee" occurring in section 54-B must be interpreted in such a manner as to accord with the context and subject of its usage. A reading of section 54-B of....
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....re intended conferring such a benefit, it would have provided for the same expressly. Indeed, an assessee can purchase an asset or a part thereof in the name of his wife but he would not be entitled then to the benefit of Section 54B. Moreover, it is not the case of the assessee that he purchased the asset benami in the name of his wife. We have proceeded on the basis that his wife invested the amount of Rs. 16,84,700/-herself. 19. A Division Bench of this Court in Jai Narayan vs. Income-Tax Officer, [2008] 306 ITR 335 (P&H) held: "10. In interpreting the words contained in a statute, the court has not only to look at the words but also to look at the context and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. The word "assessee" occurring in section 54B must be interpreted in such a manner as to accord with the context and subject of its usage. A reading of section 54B of the Act nowhere suggests that the Legislature intended to advance the benefit of the said section to an assessee who purchased the agricultural land even in the name of a third person. Wherever th....
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.... 54B of the Act to the assessee. 5. The issue has been considered by this Court in Jai Narayan's case (supra) and stands concluded against the assessee. The Tribunal has also passed the impugned order following the said judgment. In Jai Naryana's case, the question was whether the assessee who purchased the land in his son and grand son's names after the sale of the agricultural land would be entitled to the benefit of exemption under Section 54B of the Act. It was held by this Court that Section 54B of the Act nowhere suggests that the legislature ITA No.104 of 2017 5 intended to advance the benefit of the said section to an assessee who purchases agricultural land even in the name of a third person. The term "assessee" is qualified by the expression "purchased any other land for being used for agricultural purposes", which necessarily means that the new asset has to be in the name of the assessee himself. Therefore, purchase of agricultural land by the assessee in the name of his son or grandson does not qualify for exemption under Section 54B of the Act. The relevant observations read thus:- "10. In interpreting the words contained in a statute, the court has n....
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....ion under section 54 of the Act was to be allowed. In case of purchase of agricultural land in the name of his wife, the relief under section 54B of the Act would not be allowed. 7. In Gurnam Singh's case (supra), the assessee out of the sale proceeds of the agricultural land sold by him had purchased some other piece of land in his name and in the name of his only son who was bachelor and dependent upon him for being used for agricultural purposes within the stipulated period. A pure finding had been recorded by the Tribunal that merely because in the sale deed, his only son was also shown as co-owner, it did not make any difference because the purchased land was being used by the assessee for agricultural purposes. Thus, on the basis of the finding recorded by the Tribunal, this court concluded that no substantial question of law arose and dismissed the appeal. The situation in the present case is different. In the present case, the land was purchased by the assessee in the name of his wife only. 8. In Kamal Wahal's case (supra), it was held by the Delhi High Court that for the purpose of claiming deduction under Section 54F of the Act, the new residential house....
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....dy been concluded against the assessee by this Court in Jai Naryan's case (supra) and the Tribunal has also followed the said judgment, learned counsel for the appellant has not been able to controvert the applicability of the said decision or to show any error in the findings recorded by the Tribunal except to rely upon pronouncement of the High Courts referred to in the earlier part of this judgment. Consequently, finding no merit in the appeal, the same is hereby dismissed". 15. Bahadur Singh's case (supra), is another Division Bench judgment of this Court which decided a similar issue against the assessee by holding as follows:- "2. The case of the appellant is that he and his three brothers had sold jointly owned land and for his 1/4th share he purchased land in the name of his wife and claimed exemption under Section 54B of the Act. The authorities below declined the exemption in view of judgment of this Court in Commissioner of Income-Tax, Faridabad vs. Shri Dinesh Verma; ITA No. 381 of 2014, decided on 06.07.2015. 3. Learned counsel for the appellant states that in the afore-said judgment, this Court has not considered the case of CIT vs. Gurnam Singh, ....