DIRECTOR OF IT, INTERNATIONAL TAXATION Vs. JENNIFER BHIDE

JUDGEMENT

(1.) THIS appeal is by the Revenue challenging the order passed by the Tribunal which has held that the assessee is entitled to exemption under S. 54 as well as under S. 54EC of the Act.

(2.) THE assessee is a non-resident individual. She filed her return of income on 31 July, 2007 for the year 2007-08 declaring taxable income of Rs. 62,41,068. During the assessment proceedings under S. 143(3) of the IT Act, 1961 (for short hereinafter referred to as "the Act"), the assessing authority noticed that the assessee has derived income from house property, income from long-term capital gains on sale of property at Bangalore and income from other sources such as interest and dividend income. The assessee sold her residential property for Rs. 2,21,00,000 and had invested an amount of Rs. 49,09,804 on purchase of residential property and claimed exemption under S. 54 of the Act. On verification of the purchase deed of the said property dt. 25th Dec., 2006 registered in the Officer of the sub-registrar, Haveli, Pune, he found that the above property was not in the name of the assessee alone but was also in the name of her husband. He therefore, held that if the ownership of the property is shared with someone else, then the property cannot be said to be purchased by the assessee alone and therefore only 50 per cent of the investment is to be allowed as exempt in the hands of the assessee. He further observed that similar investment was made for Rs. 50 lakhs in Rural Electrification Corporation Ltd., bonds in the names of Mrs. Jennifer Bhide and Mr. Vikram Anil Vasant Bhide and exemption for the entire amount of Rs. 50 lakhs under S. 54EC was claimed. Therefore, he disallowed 50 per cent of the investment in the Bonds also which was made in the name of her husband. Aggrieved by the same, the assessee preferred an appeal before the CIT(A), who confirmed the order of the assessing authority. Aggrieved by the same, the assessee preferred an appeal to the Tribunal.

(3.) LEARNED counsel appearing for the Revenue assailing the impugned order contended that the original asset sold is in the name of the assessee. Unless the assessee invests the sale consideration in acquisition of an immovable property or the bonds in her name exclusively, she is not entitled to the benefit of deduction as in the sale deed she has included the name of her husband and in the bonds also her husband's name is included jointly. The assessee would be entitled to only 50 per cent of such investment and therefore should be entitled to the benefit of deduction only to the extent of 50 per cent. Therefore, he submits that the Tribunal committed a serious error in interfering with the orders passed by the assessing authority as well as the Appellate CIT.