Landmark Judgement: For Capital Gain Exemption, it is not specified in the legislation that the investment is to be in the name of the assessee

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Landmark Judgement: For Capital Gain Exemption, it is not specified in the legislation that the investment is to be in the name of the assessee 

In 2021 (125) taxmann.com 347 (Jaipur – Trib) (Shankar Lal Kumawat v. ITO), it has been held that the capital Gain exemption couldn’t be disallowed if investment is made by assessee in his wife’s name 
Short overview 
Assessee sold a residential house. He did not file a return of income.
Subsequently, notice was issued under S 148 in response to which assessee filed return of income by claiming deduction under S 54.
Assessing Officer (AO) held that the fresh investment was made in the name of assessee’s wife, and no documentation has been submitted in support of the cost of construction thereon. Accordingly, assessee’s claim for deduction under S 54 was denied.
CIT(A) upheld the order passed by AO.
On further appeal, Jaipur ITAT held that to claim the deduction under S 54, what is required to be satisfied by the assessee is that firstly, there should be a transfer of a long-term capital asset, being a residential house. 
Secondly, the assessee has, within one year before or two years after the date on which the transfer took place purchased, or has within three years after that date constructed, one residential house in India. 
Assessee had sold a residential house and purchased a plot. After that, he had carried out the construction of a residential house thereon. 
As far as investment made in the name of the assessee’s wife was concerned, Rajasthan High Court, in the case of Mahadev Balai v. ITO Appeal No. 136 of 2017, dated 7-11-2017, held that it is the assessee who has to invest and it is not specified in the legislation that the investment is to be in the name of the assessee.
Where the investment is made in the name of the wife, the assessee shall be eligible for deduction.
Relying on the same, Jaipur ITAT held that deduction under section 54 could not be denied on the mere fact that the investment has been made in the wife’s name – 

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