Capital Gain Exemption & Reinvestment made in the name of assessee alone vis a vis in the name of Wife or in the name of son: Interesting case by Pune ITAT

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Capital Gain Exemption & Reinvestment made in the name of assessee alone vis a vis in the name of Wife or in the name of son: Interesting case by Pune ITAT

Capital Gain Exemption & Reinvestment made in the name of assessee alone vis a vis in the name of Wife or in the name of son: Interesting case by Pune ITAT
Sakharam Bhondve Vs ITO
– Assessee’s appeal partly allowed: PUNE ITAT
The assessee executed a Development Agreement along with his family members in favour of M/s Rishi Constructions & Others on their ancestral agricultural land at Ravet. The total consideration was Rs.96 lacs. The assessee was holding 50% share in his ancestral property along with his uncle & other family members. Thereafter, the assessee executed sale deed for the same property for the agreed consideration as per Development Agreement & registered the same. The assessee had 50% share and accordingly, he received 50% of the sale consideration being Rs.48 lacs. This was adopted as the gross sale consideration by the AO as well as the assessee. The transfer of land took place in the present assessment year through a Development Agreement dated 07.09.2006, which was subsequently registered as a sale deed on 21.04.2008. On examination of the development agreement registered on 07.09.2006 and the sale deed, AO found that the total consideration of Rs.96,00,000/- was paid in installments. In the return of income, assessee adjusted his share of consideration and reduced the sum of Rs.11.50 lakhs out of Rs.48 lakhs. This amount of Rs.11.50 lakhs was paid to the daughters and sisters of the father of the assessee. Assessee claimed that these payments was needed to reduce the likely litigation from the relatives. The AO disallowed the same and adopted the net sale consideration at Rs.48 lakhs instead of Rs.36,50,000/- (Rs.48 lakhs – Rs.11.50 lakhs) claimed by the assessee. Further, the assessee claimed a deduction u/s 54F. The AO disallowed the claim u/s 54B. Thus, the AO disallowed the claim of deduction from the sale consideration of Rs.48 lakhs and restricted the claim of deduction u/s 54F of the Act to the extent of Rs.5,44,184/- on account of re-invested in his residential house. In fact, the reinvestment claimed in the names of both the sons, wife are not in accordance with the law. Another reinvestment of Rs.18 lakhs being only an advance was also denied. On appeal, CIT(A) confirmed the order of the AO.
On appeal, Tribunal held that,
Whether reinvestment made in the name of assessee alone is eligible for deduction u/s 54F – NO: ITAT
++ on this issue of investment of capital gains in the assessee’s wife, it was found that the judgement of the Bombay High Court in the case of Kamal Wahal and the judgement of the Delhi High Court in the case of Ravinder Kumar Arora helps the assessee. In these cases also, the reinvestment was made by the assessee in the residential house in the name of his wife. The purposive construction of the provisions preferred as against the literal construction of the same;
++ regarding the investment in the hands of the sons, it is the submission of the Counsel for the assessee that the said decision applies to the investment in the names of the sons also. Revenue submitted that the investment in the hands of the wife and daughters cannot be compared with that of the investment in the hands of the sons. In the present case, the assessee’s investment made in the names of Shri Rahul Sakaram Bhondve (son), Shri Tarachand Sakaram Bhondve (son). The above decisions are relevant for the case of spouse only not to the son’s cases. Considering the same, it was held that the discussion given by the CIT(A) and the Assessing Officer in their respective orders is fair and reasonable and it does not call for any interference.
ITA No.951/PUN/2019
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