QUERY- 1) What if assesse purchase property entirely in the name of its spouse or legal heir. Wheather exemption u/s 54F would be available ? Provide Case Laws if possible The INCOME TAX APPELLATE TRIBUNAL, HYDERABAD in ITA No.1901/HYD/2011 – Assessment Year : 2008-09 (Shri N. Ram Kumar vs. ACIT) (Date of Pronouncement : 10-08-2012) has decided the issue in fvour of the assessee.The ITAT, Madras Bench in the case reported in 33 TTJ 466 while considering a case where the assessee purchased the property in the name of his wife and claimed exemption u/s 54, held that the assessee is entitled to exemption u/s 54 of the Act.
The A P High Court in Late Mir Gulam Ali Khan vs. CIT (165 ITR 228) while examining allow ability of exemption u/s 54, held that the word ‘assessee’ must be given a wide and liberal interpretation so as to include his legal heirs also. The AP High Court further held the provision contained u/s 54 of the Act also must be given a liberal interpretation.
However, the Punjab & Haryana High Court in the case of Jai Narayan vs. ITO 306 ITR 335 (P & H) and in the case of Prakash Vs. ITO 220 CTR 249 (Mumbai) and ITAT in the case of ITO vs. Prakash Timaji Dhanjode ITAT Nagpur 81 TTJ 694 have held a different view to the effect that for getting exemption u/s 54F, the property has to be purchased in assessee’s name.
QUERY 2) In the case CIT v V. Natarajan (2007) 287 ITR 271 (Mad), how it would be taxable if in future spouse transfer her its share to the assessee in consideration Rs. X amount ? Provide Case Laws if possible
THE transfer by the wife to the assessee would have no tax implication, as the investment in her name had already been claimed and considered as actually made by the assessee only. The situation is comparable to the transfer of the benami property by the benamidar to its real owner, at the admitted cost itself.