Under section 54F of the Income Tax Act, 1961 the Income Tax Appellate Tribunal (ITAT) Bangalore in its proceeding said towards the assessing officer to permit the exclusion to the taxpayer upon the invested amount towards buying the house in the name of the daughter. Under Section 54F of the Income Tax Act, the person post selling the residential house can claim the tax privileges from the capital gains if the same is been invested in buying or construction of the residential property, with respect to some situations.
For instance, the taxpayer availed the deduction section 54F towards the investment made in the residential property towards the name of his widowed daughter but it was not been permitted until it was opted by the Income Tax Appellate Tribunal (ITAT).
The situation for the event that the taxpayer had sold out the property along with the legal heirs in the amount of Rs 2,60,46,754. The taxpayer has furnished that prior to the assessing officer that the property beneath the question was taken through the legacy through the partition. The legal legacy of the property is the taxpayers his wife, son, and widowed daughter.
The wholesale consideration taken was been invested in the residential house property towards the widowed daughter. The taxpayer availed that the deduction u/s 54F of the Act on the capital gains in his return however the assessing officer refused the deduction of the claim and recognized the total taxpayer income of Rs 2,07,75,230. The taxpayer availed the deduction under section 54F of the Act towards the investment build inside the residential property, towards the widowed daughter.
But it was questioned that the sale consideration taken through the taxpayer was being invested with respect to the widowed daughter where the taxpayer availed the privilege u/s. 54F of the Act that is not been allowed. The taxpayer in his name has done the investment for himself and not on his widowed daughter.
The judicial members directed that the matter of the fact under section 54F of the act in terms did not want that the new property will be bought in the name of the taxpayer, instead, it directs that the new property will have no be bought or constructed a residential house. Also, since the provisions permit economic growth has to be interpreted liberally, restriction on it to has to be construed so as to advance the objective of the provisions not to frustrate it.
As per the judicial members of ITAT has the choice that the taxpayer had invested the sale consideration on the transfer of the capital asset in buying the new residential property towards the daughter who is dependent on the taxpayer and is the legal legacy of the taxpayer. The widowed daughter of the taxpayer has no income source and is been dependent upon the taxpayer post his husband’s death. As per them, they stated that the assessing officer to permit the privilege u/s. 54F of the Act upon the invested amount in the buying of the residential house for his daughter’s name.
