RANJI DHAWAN,NEW DELHI vs. ACIT, NEW DELHI

This appeal by the assessee arises out of the order passed by the CIT(A) on 15.1.2015 in relation to the assessment year 2007-08.

The only issue arises in this appeal is against the confirmation of addition of Rs. 33,02,880/- by not allowing the benefit under section 54 of the Income Tax Act, 1961 (hereinafter referred to as the Act).

Briefly stated facts of the case are that the assessee furnished return declaring total income of Rs. 1.26 crore and odd. During the course of assessment proceedings, the Assessing Officer observed that the assessee declared long term capital gain of Rs. 2.42 crore and odd, out of which exemption under section 54 was claimed for a sum of Rs.49,54,320/-. It was found that investment was made in plot and construction of residential house jointly with his wife Smt. Kavita Dhawan and daughter Ms. Anika Dhawan. He, therefore, restricted the benefit of exemption under section 54 at one third, being, the share pertaining to the assessee and disallowed the remaining amount of Rs.33,02,880/-. No relief was allowed for the first appeal, against which the assessee has come up in appeal before the Tribunal.

We have heard the rival submissions and perused the relevant material on record. It is not in dispute that the assessee in fact invested the requisite amount for claiming benefit under section 54 for a sum of Rs. 49.54 Lac. The only reason given by the authorities below in denying the proportionate amount of exemption under section 54 is that the new property was purchased in joint names of self, wife and daughter. In our considered opinion, the benefit of exemption under section 54 cannot be denied simply for the reason that the assessee made investment in the new property in names of his relatives also, when it is an undisputed position that the investment was made out of the proceeds of the property sold resulting into computation of capital gain. The Hon'ble jurisdictional High Court in CIT vs. Kamal Wahal (2013) 351 ITR 4 (Delhi) has held that for the purposes of claiming the benefit of deduction under section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. In that case too, the assessee purchased the property in the name of his wife for which the benefit of section 54F was denied. Accepting the assessee’s claim, the Hon'ble High Court decided this issue in assessee’s favour. Similar view has been taken by the Hon'ble jurisdictional High Court in CIT vs. 3 Ravinder Kumar Arora (2012) 342 38 ITR (Delhi). The reliance of the learned CIT(A) on the judgment in Vipin Malik (HUF) vs. CIT (2011) 330 ITR 309 (Delhi) is misplaced inasmuch as that was the case in which the residential house was not purchased either within one year before the sale of agricultural land or within two years after the sale.