ORDER 

PER V. DURGA RAO, JUDICIAL MEMBER:

This appeal filed by the Assessee is against the order of the learned Commissioner of Income Tax, (Appeals)-2, Chennai in I.T.A. No.193/CIT(A)-2/2015-16, dated 31.01.2017 relevant to the Assessment Year 2013 – 2014.

2. Facts are in brief that, the Assessee is an individual, filed his return of income for the year under consideration by declaring a total income of Rs.44,51,050/-. Subsequently, the case of the Assessee was selected for scrutiny and the assessment was completed after following due procedures of Section 143(3) of the Income Tax Act, 1961 dated 16.12.2015.

3. In the Assessment Order, the Assessing Officer had noted that the Assessee during the year under consideration had sold 50 cents of land at Kazhipattur village by way of two sale deeds dated 21.09.2012 for a consideration of Rs.1,74,40,000/- each. The Assessee had furnished the workings of the capital gains on the above sale of land which is at Page No.2 of the Assessment Order. The Assessee after claiming deduction u/s.54F of the Income Tax Act, 1961 to the tune of Rs.2,35,96,816/- had arrived at ‘NIL’ capital gains from the sale of the land. The Assessee vide his letter dated 20.11.2015 had stated as under:

“I have claimed exemption for the above property u/s.54F of the Income Tax Act, 1961, as I was owning the following properties only at the time of sale of the above land by sale deed dated 21.09.2012 a) Residential property at Desika Raod, Chennai b) Commercial property at Royapettah High Road, Chennai I was owning ½ share in two flats i.e. one at Bangalore and one at Chennai, along with my wife, Mrs. Kalyani kumar and subsequently, I have released my ½ share in the above flats in favour of my wife through settlement deeds dated 31.08,.2012 and 11.09.2012.”

4. The Assessing Officer after considering the above letter has observed as under:

“3.1 It is very clear that the Assessee was owning more than one property before the sale of land on 21.09.2012 and that the settlement of his share in the two flats; one at Bangalore and the other at Chennai was done only around 20 days before the sale of land took place. It is also pertinent to note that the entire transactions of settlement, sale and purchase of new property had taken place within a short span of eight months.

3.2 The Assessee, though made an investment in purchase of a new flat at Akkarai to the tune of Rs.2,58,75,120/- would not have been eligible to claim deduction u/s.54F of the Act, if he had been owner of more than one property on the date of sale. Hence, in order to claim deduction u/s.54F and avoid paying Long Term Capital gains tax, the Assessee had settled his ½ share of properties at Bangalore and Chennai in his wife‟s name. Therefore, it becomes evident that the settlement deed was clearly an afterthought and a tailor-made arrangement for evading payment of tax under capital gains.

3.3 It is to be pointed out that the object of the enactment of the section is to prevent avoidance of tax or reducing the incidence of tax on the part of the Assessee by transfer of his assets to his wife or minor child. It is a sound rule of interpretation that a statute should be so construed as to prevent the mischief and to advance the remedy according to the true intention of the makers of the statute. The Assessee could have been extended the benefit, if the property is settled in the name of his son or married daughter had not if it was settled in favour of his spouse.

3.4 The Hon‟ble Supreme Court in the case of Sevantilal Manekial Sheth (1968 AIR 697) had upheld the action of the Assessing Officer in a case where the Assessee had transferred the assets in his name to his wife‟s name and the income arising out of sale of such assets was assessed in Assessee‟s hands. Thus, for the purpose of income tax, though the assets were transferred, the income from sale of assets was assessed in Assessee‟s name deeming him as the owner of the shares. So transaction between husband an