Shirish Vinayak Godbole Vs. ITO (ITAT Pune), ITA No. 1320/PN/2010 dated 13-02-2013
In the instant case, the assessee sold his residential property for a consideration of Rs. 50 lakhs and purchased two flats, one flat for his self occupation and another flat for a consideration of Rs. 29,60,000 in the name of his wife for the residence of his wife and daughter.
It is the submission of the learned counsel for the assessee that the amount incurred for purchasing the flat for the wife of the assessee at Rs. 29,60,000 should be allowed as an expenditure being encumbrance on the property. The alternate contention of the learned counsel for the assessee that since the property is purchased in the name of the wife, therefore, in view of the decision of Hon’ble Karnataka High Court in the case of DIT (International Taxation) Vs. Mrs. Jennifer Bhide (Supra), benefit of deduction u/s. 54(2) should be allowed to the assessee in respect of the said flat instead of the flat purchased in the name of the assessee.
Since the flat purchased in the name of the wife is higher and it is beneficial to the assessee we find the alternate contention of the learned counsel for the assessee is acceptable.
The Hon’ble Karnataka High Court in the case of DIT (International Taxation) Vs. Mrs. Jennifer Bhide (Supra) at Para 7 of the order observed as under:
“7. On careful reading of s. 54 as well as s. 54EC on which reliance is placed makes it clear that when capital gains arise from the transfer of long term capital asset to an assessee and the assessee has within the period of one year before or two years after the date on which the transfer took place purchase or has within the period of three years after the date of construction of residential house then instead of capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the provision made under the section which grants exemption from payment of capital gains as set out thereunder. Therefore, in the entire s. 54, the purchase to be made or the construction to be put up by the assessee, should be there in the name of the assessee, in not expressly stated. Similarly even in respect of s. 54EC, the assessee has at any time within a period of six months after the date of such transfer invested the whole or any part of the capital gains in the longterm specified asset then she would be entitled to the benefit mentioned in the said section. There also it is not expressly stated that the investment should be in the name of the assessee. Therefore, to attract s. 54 and s. 54EC of the Act, what is material is the investment of the sale consideration in acquiring the residential premises or constructing a residential premises or investing the amounts in bonds set out in s. 54EC. Once the sale consideration is invested in any of these manner the assessee would be entitled to the benefit conferred under this provision. In the absence of an express provision contained in these sections that the investment should be in the name of the assessee only any such interpretation were to be placed, it amounts to Court introducing the said word in the provision which is not there. It amounts Court legislating when the Parliament has deliberately not used those words in the said section. That is the view taken by the Hon’ble Madras High Court and Hon’ble Punjab & Haryana High Court and we respectfully agree with the view expressed in the aforesaid judgment.”
Respectfully following the decision of the Hon’ble Karnataka high Court cited (Supra), we are of the considered opinion that the flat purchased by the assessee in the name of his wife out of the sale consideration of flat in the name of the assessee should be considered as allowable deduction u/s.54(2) of the Income Tax Act. Since in the instant case the flat in the name of the assessee was sold on 08-05-2006 for Rs. 50 lakhs and since flat in the name of the wife and daughter has been purchased on 22-03-2006 for a consideration of Rs. 28 lakhs, plus registration expenses etc, therefore, the assessee is entitled to benefit of deduction u/s.54(2) in respect of the property purchased in the name of his wife. However, since the total cost of the property including stamp duty and registration expenses is not verifiable, we deem it proper to restore the issue to the file of the AO with a direction to verify the details and allow the deduction accordingly in respect of the flat purchased by the assessee in the name of his wife instead of the flat purchased in his name. We hold & direct accordingly.
Source : TaxGuru