The Income Tax Appellate Tribunal (ITAT), Bangalore has ruled that amount invested in purchase of residential house in daughter’s name is eligible for exemption under section 54F of the Income Tax Act, 1961.
The assessee, Krishnappa Jayaramaiah had filed return of income declaring total income at Rs.2,96,430 under the head `house property’, `income from capital gain’ and `income from other sources’. The assessee claimed deduction under section 54F for the investment made in a residential property, in the name of his widowed daughter Smt. J. Shylaja. He submitted before the Assessing Officer (AO) that the property under question was received by inheritance by way of partition. The legal heirs of the property are the assessee, his wife, son and widowed daughter. All legal heirs had executed sale deed in favour of the purchaser. The entire sale consideration received was invested in residential house property in the name of his widowed daughter and claimed deduction on the capital gains in his return. The AO denied the claim of deduction and determined the total assessed income at Rs.2,07,75,230 and hence the assessee went for appeal.
Judicial member George George K and accountant member Chandra Poojari partly allowed the appeal of the assessee and held, “the assessee’s married widowed daughter is having no independent source of income and is fully dependent on the assessee, on the death of her husband on 20.12.2017. This fact was also clarified by filing a Joint Affidavit by Smt. Shailaja J and the assessee dt.11.12.2018. Being so, in our opinion, the statute should be construed liberally; since the provisions permit economic growth has to be interpreted liberally, restriction on it too has to be construed so as to advance the objective of the provisions not to frustrate it. Accordingly, we are of the opinion that the assessee has invested the sale consideration on transfer of Capital Asset in purchasing a new residential property in the name of Smt. Shailaja J who is being married widowed dependent daughter of the assessee and also legal heir of the assessee. Accordingly, we direct the Assessing Officer to grant exemption u/s. 54F of the Act on the amount invested in purchase of residential house in his daughter’s name. This ground of appeal of assessee is allowed.”
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