SMT. SHEELA SINGH,ROHTAK vs. ITO, ROHTAK

This appeal is preferred by the assessee against the order dated 5.1.2015 passed by the Ld. CIT (Appeals), Rohtak for assessment year 2010-11 wherein vide the impugned order, the Ld. CIT (A) has confirmed the addition of Rs. 24,00,000/- by disallowing the assessee’s claim u/s 54F of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

Assessment year 2010-11 2.0 Brief facts of the case are that as per the AIR information the assessee had sold an immoveable property for Rs. 90,00,000/-. Accordingly, a query letter was issued to the assessee to furnish information regarding the nature of transaction, PAN of the assessee and to inform whether the return of income was filed declaring the said transaction or not.

In response, the assessee informed the Assessing Officer that the return had been filed and a copy of return was also enclosed. A perusal of the return showed that the assessee had filed the return of income declaring pension of Rs. 3,79,632/- and had also disclosed the sale of property as well as purchase of other properties. The Assessing Officer noted that as per the sale deed, the assessee had sold a property other than residential house for Rs. 90,00,000/- and had purchased a commercial property (shop) bearing No. G-34 for Rs.18,80,000/-, another commercial property bearing no. G-35 for Rs. 32,80,000/- and another residential property bearing No. 22 for Rs. 24,00,000/-. The Assessing Officer noted that all the properties were purchased in the name of Dr. Sabina Singh and, therefore, since the assessee had not invested the entire sales consideration of Rs. 90,00,000/- for purchase of residential house, the capital gain was not exempt Assessment year 2010-11 u/s 54F as in the return, the assessee had claimed exemption u/s 54F to the tune of Rs. 24,00,000/- being the amount invested in purchase of residential house. The Assessing Officer proceeded to issue notice u/s 148 of the Act. It was submitted by the assessee that the residential house was purchased in the name of Dr. Sabina Singh who was the assessee’s daughter and, therefore, the assessee’s claim u/s 54F was allowable. However, the Assessing Officer did not accept the assessee’s contention and proceeded to disallow the exemption claimed by the assessee.

2.1 The appeal of the assessee before the Ld. CIT (A) was also dismissed. Now, the assessee is in appeal before the ITAT and has challenged the denial of claim of exemption u/s 54F of the Act.

3.0 The Ld. AR submitted that the exemption was denied on the ground that the residential house had been purchased in the name of the assessee’s daughter. It was submitted that this view was not correct as the assessee had utilized the sale proceeds of the property only for the purchase of this residential flat. It was submitted that the fact that the amount had been paid by the assessee was duly mentioned in the sale deed itself and our attention was drawn to page 15 of the paper Book wherein a copy Assessment year 2010-11 of the sale deed had been placed. The Ld. AR pointed out that the sale deed duly mentioned that the purchase price had been paid by Mrs. Sheela Singh, the assessee. The Ld. AR placed reliance on the judgment of the Delhi High Court in the case of CIT vs. Shri Kamal Wahal reported in 351 ITR 4 (Del) wherein the Hon’ble Delhi High Court had held that when there was no dispute that the entire investment had come out of the sale proceeds of property sold by the assessee, exemption u/s 54F was to be allowed even if the new residential property was acquired in the joint names of the assessee and his wife. The Ld. AR submitted that the Hon’ble Delhi High Court had held that the exemption was to be allowed having regard to the rule of purposive construction and the object which Section 54F sought to achieve.

It was prayed that the exemption be allowed to the assessee.

4.0 In response, the Ld. Sr. DR placed reliance on the judgment of the Hon’ble Punjab & Haryana High Court in the case of Kamal Kant Kamboj vs. ITO reported in 397 ITR 240 (P&H) and submitted that in this case the Hon’ble Punjab & Haryana High Court had held that the assessee’s claim for exemption u/s 54B of the Act was not allowable where the agricultural land was purchased by the assessee in the joint names of self and his son.

Assessment year 2010-11 It was submitted that the Hon’ble Punjab & Haryana High Court was the jurisdictional High Court for the assessee and, therefore, the Jurisdictional High Court being against the assessee, the assessee’s claim should not be allowed. The Ld. Sr. DR also submitted that in this case, the Hon’ble Punjab & Haryana High Court had duly considered the judgment rendered by the Hon’ble Delhi High Court in the case of CIT vs. Kamal Wahal (supra) and had held that they were unable to subscribe to the view in Kamal Wahal’s case.

5.0 We have heard the rival submissions and perused the material available on record. The facts are not in dispute. The only question arising for our consideration is as to whether the assessee will be entitled to the benefit of exemption u/s 54F of the Act for purchase of residential house in the name of her daughter or not. Although the Hon’ble Delhi High Court has, on identical circumstances, held in favour of the assessee in the case of CIT vs. Kamal Wahal (supra), we are afraid that the Hon’ble Jurisdictional High Court is against the assessee and has held in Kamal Kant Kamboj vs. ITO (supra) that a literal construction was to be preferred over purposive construction. Accordingly, respectfully following the binding precedent of the Hon’ble Assessment year 2010-11 Jurisdictional High Court in the case of Kamal Kant Kamboj vs. ITO (supra), we dismiss the grounds raised by the assessee.

Order pronounced in the open court on 11th October, 2018.