ITAT's Women Friendly Decision, Exempts Amount invested in Purchasing property in Widowed Daughter's name

ITAT's Women Friendly Decision, Exempts Amount invested in Purchasing property in Widowed Daughter's name

The Income Tax Appellate Tribunal (ITAT), Bangalore bench ruled on 22 February 2021, in the case titled Shri Krishnappa Jayaramaiah (Appellant/Assesee) v. Income Tax Officer (Respondent/ Revenue) that the amount invested in the purchase of a residential house in widowed daughter's name is eligible for exemption under Section 54F of the Income Tax Act, 1961 (IT Act).

The ITAT Judicial member George George K and Accountant member Chandra Poojari partly allowed the appeal of the assessee and directed the Assessing Officer (AO) to grant an exemption to the assessee u/s. 54F of the IT Act on the amount invested in the purchase of a residential house in his widowed daughter's name.

The assessee had filed a 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'.

It was claimed by the assessee that deduction under Section 54F of the IT Act for the investment made in a residential property, in the name of his widowed daughter J. Shylaja.

It was further alleged before the 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 a sale deed in favor of the purchaser.

It was mentioned that the entire sale consideration received was invested in the residential property that was purchased in the name of his widowed daughter and claimed deduction on the capital gains in his return.

The said claims of the assessee were denied by the AO and hence claim of reduction was also declined. The total assessed income was determined at Rs 2,07,75,230 and hence the assessee went for appeal.

An appeal was filed against the said order before the ITAT and it observed that "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 Shailaja J and the assessee dt. 11.12.2018."

It opined that the statute should be construed liberally; since the provisions permit economic growth has to be interpreted liberally, restriction on it has to be construed so as to advance the objective of the provisions not to frustrate it.

The ITAT further stated that the assessee had invested the sale consideration on transfer of Capital Asset in purchasing a new residential property in the name of Shailaja J was the dependent daughter of the assessee and also a legal heir of the assessee. Considering this the ITAT granted an exemption to the assessee.