Sec. 54F: Mother can’t be deemed as owner of house purchased by minor-daughter out of her own income

Facts:

a)   Assessee had sold a capital asset and invested a part of sales consideration in a new residential house so as to claim exemption under section 54F.

b)  She owned more than one residential house on date of transfer of original asset. However, one residential house was owned by her minor daughter.

c)   Commissioner denied Section 54F exemption on the ground that assessee would be deemed as owner of house owned by her minor daughters. The aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1)  By virtue of fiction created by Section 64(1A), the incomes of properties owned by the two minor daughters were clubbed in the hands of the assessee since the date of purchase of the said properties.

2)  The investment for purchase of said properties has come from the independent sources of these daughters, which has been accepted by the department.

3)  Simply by virtue of inclusion of rental income of minor daughters under Section 64(1A) in the income of assessee, it could not be presumed that the assessee was owner of property purchased by minor daughters. Thus, the findings of the learned CIT were factually incorrect and legally unsustainable. Hence, assessee would be eligible for exemption under Section 54F. - SMT. S. UMA DEVI v. COMMISSIONER OF INCOME-TAX [2015] 62 taxmann.com 64(Hyderabad - Trib.)