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In the instant case, assessee has purchased property in his wife name out of the amount of capital gain for the purpose of exemption u/s 54F. The AO considered the fact that the house is in the name of assessee’s wife and therefore, he disallowed the claim of deduction u/s 54F on this ground. Held that—the object of granting exemption u/s 54F of the Act, is that the house should have been purchased for residential purposes, must be given exemption so far as capital gains are concerned that the word "assessee" must be given a wide and liberal interpretation so as to include his legal heirs also and there is no warrant for giving too strict interpretation on the word "assessee" as that would frustrate the object of granting the exemption. The assessee and his wife are independent income tax assessee’s and the assessee already owned one house at Kilpauk, Chennai. The assessee therefore, cannot be said to have invested in order to avoid capital gains to tax in his hands, as u/s 54F(1), the assessee is entitled to exemption u/s 54F even if he already holds one property in his name. Therefore, the investment by the assessee of the capital gains in purchase or construction of a residential house at Alagappa Nagar, Chennai in the name of his wife will not disentitle the assessee from exemption u/s 54F of the Act. In view of the same, we allow the assessee’s appeal.

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Section 54F of Income Tax Act, 1961—Disallowance of exemption u/s 54F—In the instant case, assessee has purchased property in his wife name out of the amount of capital gain for the purpose of exemption u/s 54F.

The AO considered the fact that the house is in the name of assessee’s wife and therefore, he disallowed the claim of deduction u/s 54F on this ground.

Held that—the object of granting exemption u/s 54F of the Act, is that the house should have been purchased for residential purposes, must be given exemption so far as capital gains are concerned that the word "assessee" must be given a wide and liberal interpretation so as to include his legal heirs also and there is no warrant for giving too strict interpretation on the word "assessee" as that would frustrate the object of granting the exemption.

The assessee and his wife are independent income tax assessee’s and the assessee already owned one house at Kilpauk, Chennai. The assessee therefore, cannot be said to have invested in order to avoid capital gains to tax in his hands, as u/s 54F(1), the assessee is entitled to exemption u/s 54F even if he already holds one property in his name. Therefore, the investment by the assessee of the capital gains in purchase or construction of a residential house at Alagappa Nagar, Chennai in the name of his wife will not disentitle the assessee from exemption u/s 54F of the Act. In view of the same, we allow the assessee’s appeal.[SHRI RAJKUMAR MANDHANI CHENNAI VERSUS DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 (3) HYDERABAD] [2018] [7] [ITCD Online] [51] [ ITAT HYDERABAD]

In the instant case, assessee has purchased property in his wife name out of the amount of capital gain for the purpose of exemption u/s 54F. The AO considered the fact that the house is in the name of assessee’s wife and therefore, he disallowed the claim of deduction u/s 54F on this ground. Held that—the object of granting exemption u/s 54F of the Act, is that the house should have been purchased for residential purposes, must be given exemption so far as capital gains are concerned that the word "assessee" must be given a wide and liberal interpretation so as to include his legal heirs also and there is no warrant for giving too strict interpretation on the word "assessee" as that would frustrate the object of granting the exemption. The assessee and his wife are independent income tax assessee’s and the assessee already owned one house at Kilpauk, Chennai. The assessee therefore, cannot be said to have invested in order to avoid capital gains to tax in his hands, as u/s 54F(1), the assessee is entitled to exemption u/s 54F even if he already holds one property in his name. Therefore, the investment by the assessee of the capital gains in purchase or construction of a residential house at Alagappa Nagar, Chennai in the name of his wife will not disentitle the assessee from exemption u/s 54F of the Act. In view of the same, we allow the assessee’s appeal.

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The AO considered the fact that the house is in the name of assessee’s wife and therefore, he disallowed the claim of deduction u/s 54F on this ground.