ITAT disallows exemption u/s 54 when new property purchased in the name of assesse’s wife

The Income Tax Appellate Tribunal (ITAT) in the case of Jayawant Gajanan Sutar Vs ITO held that benefit of exemption u/s 54 of the Income Tax Act, 1961 (The Act) cannot be claimed when new property purchased is in the name of the assessee’s wife.

The brief facts of the case were that during the year the assessee had sold certain immovable property jointly held with the other two members
and received his share. In the return, the assessee claimed exemption under Section 54 of the Act for a sum of Rs. 13,21,000/- and purchased the new flat in the name of his wife, Ms. Smita Jaywant Sutar. During assessment proceedings assessing officer disallowed exemption u/s 54 because the new property was purchased in the name of the assessee’s wife.

The ld. CIT(A) also affirmed the order passed by AO. Aggrieved by the order passed by CIT(A), the assessee preferred to appeal before the tribunal.

ITAT placed reliance on various judgments and held that the authorities below were justified in denying the benefit of exemption u/s 54 of the Act.