Capital Gain Exemption if the investment is done in the name of Son

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Capital Gain Exemption if the investment is done in the name of Son

Whether capital gain exemption is available if the investment is done in the name of Son or wife or daughter is one of the common questions asked by many.

There are various cases of Denial of capital gain exemption u/s.54 for the reason that the new asset is purchased in the name of the son. There are contrary views of various high courts on similar issues.

The same issue was involved in a case before Pune ITAT as under:

 

 ITAT PUNE

 

URMILA MADHUKAR VED VERSUS ITO, WARD-14 (3) , PUNE

 

ITA No.1891/PUN/2019

The issue before the ITAT was as to whether exemption u/s.54 can be allowed when the new property purchased by the assessee in the name of someone else other than self? It may be noted that there are diversified decisions on the issue.

ITAT, Pune held as under:

  1. When discordant views are rendered by different High Courts, an inferior authority under one of such High Courts is bound to follow its jurisdictional High Court notwithstanding that the other view of the non-jurisdictional High Court may sound more appealing on individual level vis-a-vis the view of the jurisdictional High Court.
  2. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion for or against  on that point.
  3. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court – we bound to follow the view taken by the Hon’ble jurisdictional High Court.
  4. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon’ble Bombay High Court in favour of the assessee on this issue.
  5. Therefore, hold that the authorities below were justified in denying the benefit of exemption u/s 54. The court observed as under:“We are bound to follow the view taken by the Hon’ble jurisdictional High Court. – Exemption was rightly denied”.
  1. With above observation, the appeal was decided against assessee and in favour of the income tax department.

Conclusion:

The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion for or against -on that point.

Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court.

1 Comment

  1. July 5, 2022
    Hitesh MERCHANT

    Thanks for sharing this 🙏

    Reply

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