SOHAN SINGH vs. CIT JALANDHAR AND ANR.

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ITA/354/2010HC Punjab & HaryanaPHHC01093279201020 August 2010Author: MR. JUSTICE M.S. SULLAR,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, holding that the substantial questions of law proposed by the assessee did not arise. The Court referred to its earlier decision in Jai Narayan v. Income Tax Officer (2009) 221 CTR 255 = (2008) 306 ITR 335. In that case, the Court had interpreted Section 54B and held that the word 'assessee' must be interpreted in context. The Court concluded that Section 54B does not extend its benefit to an assessee who purchases agricultural land even in the name of a third person. The term 'assessee' is qualified by the expression 'purchased any other land for being used for agricultural purposes,' necessarily implying that the new asset must be in the name of the assessee himself to seek exemption. Therefore, the purchase of agricultural land by the assessee in his son's name cannot be held entitled to exemption under Section 54B. Consequently, the appeals were dismissed.

What were the facts?

The assessee, Sohan Singh, is appealing against an order of the Income Tax Appellate Tribunal (ITAT), Amritsar Bench, for the assessment year 1999-2000. The Assessing Officer (AO) issued a notice under Section 148 on March 16, 2006, and assessed the assessee's income at Rs. 78,93,896 by an order dated November 1, 2006. A penalty notice under Section 271(1)(c) was also issued. The Commissioner of Income Tax (Appeals) [CIT(A)] partly allowed the appeal on May 7, 2007. The assessee's claim for deduction under Section 54B for purchasing agricultural land in his son's name for Rs. 19,75,773 was rejected. Both the assessee and the Revenue filed appeals before the ITAT, which dismissed both appeals. The assessee has now filed this appeal before the High Court.

What were the issues?

1. Whether the authorities below were legally justified in not allowing the deduction under Section 54B, ignoring the ratio laid down in (2005) 95 ITD 313 (MUMBAI)? (Question of law) 2. Whether the authorities below were legally justified in ignoring the fact that the purchase consideration, along with expenses, was borne by the assessee, given that his son has no independent source of income? (Question of mixed law and fact) 3. Whether the impugned orders (A-1 to A-3) are legally sustainable? (Question of law) Assessee's Contentions: The assessee argued that the deduction under Section 54B should be allowed, relying on the ratio in (2005) 95 ITD 313 (MUMBAI). The assessee also contended that the purchase consideration was borne by him as his son had no independent income, and this fact should have been considered. The assessee sought to challenge the sustainability of the orders passed by the authorities below. Revenue's Contentions: The judgment records no specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 148,Section 271(1)(c),Section 54B

AI-generated summary — verify with the full judgment below

Income-tax Appeal No. 354 of 2010 -1- In the High court of Punjab and Haryana at Chandigarh --- Income-tax Appeal No. 354 of 2010 Date of decision: 20.8.2010 Sohan Singh --- Appellant Versus Commissioner of Income-tax, Jalandhar, Punjab and another --- Respondents --- CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE MEHINDER SINGH SULLAR --- Present: Mr. Aman Bansal, Advocate for the appellant. --- AJAY KUMAR MITTAL, J, This order will dispose of Income-tax Appeal Nos. 354 and 355 of 2010, filed at the instance of the assessee, as identical questions of law have been raised in these appeals. The facts, however, have been taken from ITA No. 354 of 2010. This appeal filed under Section 260-A of the Income Tax Act, 1961 (for short “the Act”) at the instance of the assessee challenges the order of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short “the Tribunal”) passed on 25.1.2008 in Income-tax Appeal No. 338/ASR/2007, pertaining to the assessment year 1999-2000. Income-tax Appeal No. 354 of 2010 -2- The assessee has claimed that the following substantial questions of law arise for the consideration of this Court: 1- Whether in the facts and circumstances of the present case, the action of the authorities below not to allow the deduction under Section 54B and thereby totally ignoring the ratio as laid down in (2005) 95 ITD 313 (MUMBAI) is legally sustainable in the eyes of law? 2- Whether in the facts and circumstances of the present case, the action of the authorities below in ignoring the factum that the purchase consideration with expenses has been borne by the assessee/ appellant, as son of the assessee/appellant has no source of independent income, is legally sustainable in the eyes of law? 3- Whether in the facts and circumstances of the present case, the impugned orders A-1 to A-3 are legally sustainable in the eyes of law? The facts necessary for adjudicating the present appeal are that the appellant received compensation in 1998 in respect of his land that had been acquired in the year 1995. The Assessing Officer issued a notice dated 16.3.2006, under Section 148 of the Act and assessed the income of the assessee to the tune of Rs. 78,93,896/-, vide assessment order dated 1.11.2006, Annexure A-1. Notice under Section 271(1)(c) of the Act for imposition of the penalty was also issued to the assessee. The assessee preferred appeal before the Commissioner of Income Tax, (Appeals), Jalandhar, Punjab [in short “the CIT(A)”]. Appeal was partly allowed vide order dated 7.5.2007, Annexure A-2. The claim of the assessee in respect of deduction under Section 54B of the Act for the purchase of the agricultural land in the name of his son, amounting to Rs. 19,75,773/- was rejected. The assessee as well as the Revenue filed separate appeals before the Tribunal. The Tribunal dismissed both the Income-tax Appeal No. 354 of 2010 -3- appeals vide Annexure A-3. This is how the assessee is again in appeal before us.

We have heard learned counsel for the appellant and have gone through the record with his assistance. The issue that arises for consideration in this appeal is, whether the assessee who has purchased agricultural land in the name of his son from the amount of compensation received on account of acquisition of his land, is entitled to get deduction under Section 54B of the Act. This matter is no longer res integra. This Court earlier had an occasion to consider the provisions of Section 54-B of the Act in Jai Narayan v. Income Tax Officer, (2009) 221 CTR 255= (2008) 306 ITR 335, and after examination thereof had held as under: “In interpreting the words contained in a statute, the Court has not only to look at the words but also to look at the context and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. The word “assessee” occurring in s. 54B must be interpreted in such a manner as to accord with the context and subject of its usage. A reading of s. 54B of the Act nowhere suggests that the legislature intended to advance the benefit of the said section to an assessee who purchased the agricultural land even in the name of a third person. Wherever the legislature intended it to be so, it had specifically provided under the provision. The term “assessee” is qualified by the expression “purchased any other land for being used for agricultural purposes”, which necessarily means that the new asset which is purchased has to be in the name of the assessee himself for seeking exemption under s. 54B of the Act. The purchase of agricultural land by the assessee in his son or grandson’s name, therefore, cannot be held entitled to exemption under s. 54B of the Act.”

Income-tax Appeal No. 354 of 2010 -4- In view of the observations of this Court, noticed above, there is no scope for interference by this Court in the present appeal. The substantial questions of law as proposed do not arise in this appeal. The appeals are consequently dismissed. (AJAY KUMAR MITTAL) JUDGE (MEHINDER SINGH SULLAR) August 20, 2010 JUDGE *rkmalik*

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