Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘F’, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘F’, NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA No.6394/Del/2016 Assessment Year: 2007-08
Shri Randhir Singh, Vs. Income Tax Officer, Kirti Karan Goel & Ward-3, Associates, Opp. Thana Civil Karnal Lines, Near Ambedkar Chowk, Old G.T. Road, Karnal PAN :BRHPS5866H (Appellant) (Respondent)
Appellant by Shri Kirti Karan Garg, CA Respondent by Shri Surender Pal, Sr.DR
Date of hearing 12.09.2019 Date of pronouncement 15.11.2019
ORDER PER O.P. KANT, AM:
This appeal by the assessee is directed against order dated 07/10/2016 passed by the Ld. Commissioner of Income-tax (Appeals), Karnal [in short ‘the Ld. CIT(A)’] for assessment year 2007-08, raising following grounds: 1. That the Ld. Commissioner of Income Tax (Appeals), Karnal has erred in upholding the action of the Assessing Officer in assessing the long term capital gain at Rs. 1,31,55,507/- 2. That the Ld CIT(A) has erred in upholding in not giving the benefit of exemption u/s 54 B for the purchase of Agricultural land in the name
2 ITA No.6394/Del/2016
of his spouse by placing reliance upon the judgment of the Hon'ble Punjab & Haryana High Court where the judgment was proceeded on the basis that the spouse has invested the amount from herself and not on the basis of purchase of asset benami in the name of wife. 3. That the Worthy CIT(A) has failed to consider that there is a direct nexus of investment in the agricultural land purchased by the assessee from the sale proceeds of the agricultural land used by him for agricultural purpose land sold and because the investment has been made in the name of the assessee's wife it could not mean that the investment in the land is not made by the assessee. As such, there was due compliance of the provisions of section 54 B. 4. That the Ld. CIT(A) has erred in placing reliance upon the findings of Hon'ble Punjab & Haryana High Court as reported in 306 ITR 335 and not following the later judgments of other Hon’ble High Court Decisions and Hon’ble Delhi ITAT decision in TTA No. 5456/Del./20i4.
That the Worthy CIT(A) has failed to consider the fact that agricultural land, though, purchased in the name of the wife, but assessee is the absolute owner of the same since the entire purchase consideration is paid by the assessee“ouTof the amount received from the sale of the land.
That the Ld. CIT(A) has erred in considering the spouse as the third party or a stranger and not relying upon the findings of Hon’ble Delhi High Court Decision in ITA 4/2013. 7. That the addition has been upheld against the facts and circumstances of the case and submission made during the course of hearing has not been considered properly.
The Appellant prays that the disallowance of Rs 1,31,55,507/- made in respect of capital gain be deleted. The Appellant craves leave to add, amend, alter vary and/ or withdraw any or all the above grounds of appeal.
The briefly stated facts of the case are that the assessee filed return of income on 31/03/2008, declaring income of ₹ 99,500/- besides agriculture income of ₹ 1,70,000/-. Subsequently, the Assessing Officer recorded reasons for escapement of income from assessment and issued notice on 13/03/2014, under section 148 of the Income-tax Act, 1961 (in short ‘the Act’). The assessee
3 ITA No.6394/Del/2016
responded that return of income already filed might be treated as return in response to notice under section 148 of the Act. The assessment was completed under section 143(3) read with section 147 of the Act, wherein the Assessing Officer made addition of ₹ 1,33,55,507/- for long-term capital gain on sale of the agricultural land. The claim of deduction under section 54B of the Act for investment in agricultural land of ₹ 15,97,793/- in the name of the assessee was allowed whereas the deduction under section 54B of the Act for the investment in the name of wife of the assessee was not allowed by the Assessing Officer. Before the learned CIT(A), the assessee was aggrieved on the disallowance of deduction under section 54B of the Act. The Ld. CIT(A) rejected the contention of the assessee and upheld the disallowance relying on the decision of the Hon’ble Punjab and Haryana High Court (Jurisdictional High Court) dated 06/07/2015 in the case of Dinesh Verma, passed in ITA 381 of 2014. The relevant finding of learned CIT(A) is reproduced under: “2.2 Findings:- After going through the facts and submissions, the provision of the Income Tax Act as .well as various judicial pronouncements on this issue this ground is being finalized after making the following submissions:- 1) On going through the facts of the present case, it is clear that the assessee had made investment amounting to Rs. 1,31,55,507/- ,in the name of his wife and has subsequently claimed exemption u/s 54B of the Income Tax Act. The AO has highlighted that since the conditions laid down in section 54B has not been fulfilled, this claim could not be allowed. In this regard, the relevant portion of the provision of section 54B are reproduced as under:- 54B. "[Subject to the provisions of sub-section (2), where the capital gain arises] from the transfer of a capital asset being land which, in the two years immediately preceding the date on which* the transfer took place, was being used by [the
4 ITA No.6394/Del/2016
Assessee being an individual or his parent, or a Hindu undivided family] for agricultural purposes [(hereinafter referred to as the original asset)], and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section."
On going through the provision it is clear that the assessee had to purchase agricultural land and there is no provision for any other person who can make investment on his behalf to enable the assessee to claim the exemption u/s 54B.
2) It is crucial to keep in mind that if the Income Tax Act intended to provide such liberty of making investment in the name of wife or close relatives, there would have been specific mention of such provision in the Act itself. In this regard, reliance is placed upon the decision of Jai Narain vs ITO (2008) 306 ITR 335 (P&H), where the following observations have been made:-
In interpreting the words contained in the 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 section 54B must be interpreted in such a manner as to accord with the contest and subject of its usage. A reading to section 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 section 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 section 54B of the Act. We may make a brief reference to the decision relied upon by counsel for the assessee. Learned counsel mainly relied upon the decision in V. Natarajan [2006] 287 ITR 271 (Mad), with reference to section 54 of the Act. The Madras High Court V. Natarajan's case [2006] 287 ITR 271 was dealing with a case relating o section 54 of the act wherein the assessee who after selling his residential house had
5 ITA No.6394/Del/2016
purchased another residential house in his wife's name, the court had concluded that the assessee in such circumstances was entitled to exemption under section 54 of the Act. After giving our thoughtful consideration, we are unable to accept the view aslaid down V. Natrajan’s Case [2006] 287 ITR 271 (Mad.)”
The Hon'ble Court has clearly highlighted that there was no such intention to extend the benefit either to the wife or other close relatives of the assessee. ;
3) It is also important to consider that if the logic extended by the AR of the appellant is accepted, that the investment can be made in the name of any other person and the only condition required was that investment should be made in agricultural land, then the investment be could be made even in the name of any stranger without exception. Even though the provision of the Act has not used the word related to ownership, there is no doubt that the intention of the Act was clearly that the assessee himself should have purchased the agricultural land. It is always important to appreciate that the language of the legal provisions are very crucial and in the present case the Act does not provide any liberty to the assessee for making investment in agricultural land relating to purchase made in the name of wife of any other person.
4) Reliance is also placed upon the decision of Dinesh Verma in ITA No. 381 of 2014 dated 06.07.2015 (P&H) where the Hon'ble jurisdictional High Court held that there was no provision in the Income Tax Act for conferring such a benefit, in the name of wife of the assessee and therefore claim u/s 54B was not justified.
5) The reliance placed upon by the AR of the appellant on different judicial pronouncements cannot be accepted since the ITAT decision of different courts as also the decision of the Madras High Court in the case of V. Natarajan cannot over rule the findings of the jurisdictional High Court in the case of Jai Narain vs ITO (2008) 206 ITR (Supra).
The AR also relied upon the decision of Delhi High Court which relates to the claim of exemption u/s 54F of the Income Tax Act and is thus different on facts.
2.3 After careful consideration of the various decisions as well as the provision of the Income Tax Act and also the factual matrix of the case, I am convinced that the disallowance of exemption u/s 54B made in this case is fully justified and accordingly, the disallowance of Rs.1,31,55,507/- is upheld.”
6 ITA No.6394/Del/2016
In the grounds raised the only issue is disallowance of deduction under section 54B corresponding to the investment in agricultural land made by the wife of the assessee. 4. Before us, the Ld. counsel of the assessee reiterated the submission made before the Ld. CIT(A) and filed a written submission, which is reproduced under: “….The assessee had filed the appeal before your goodself. In this regard, it is hereby stated that the assessee had sold an agriculture land. And with respect to the capital gain tax computation in A.Y. 2007-08, it is hereby submitted that the assessee has sold agricultural land measuring 7 Acre 2 Kanal & 11 Marla against a consideration of Rs. 22688125.00. Its relevant cost index comes upto Rs. 3798430.00 (taking cost index as 519 of F.Y. 2006-07). The difference of sale price and index cost of the sold property came to Rs. 18889695/-.
CAPITAL GAIN EXEMPTION U/S 54B
The assessee has purchased agriculture land in the name of Smt. Santosh Rani w/o Shri Randhir Singh worth Rs. 1,33,01,8101-
Rs 1,26,47,100 dated 08.01.2007) 2. Rs 2,64,710 dated 16.12.2008) 3. Rs 3,90,000 dated 19.12.2006)
Also the assesse has purchased agriculture land in his name worth Rs. 15,97.793/-
Rs5,70,310 dated26.09.2007
Rs1,18,800 dated31.01.2007 Rs 72,000 dated31.01.2007
Rs1,10,250 dated29.12.2006
Rs1,32,666 dated29.12.2006
Rs2,38,400 dated26.12.2006
Rs3,15,366 dated23.05.2006
7 ITA No.6394/Del/2016
The purchase of lands was made on different dates and no two purchases relates to each other. Moreover these lands were purchased within two years from the date of sale of agricultural land and therefore becomes eligible for capital gain exemption u/s 54B of Income Tax Act. Case Law: In the ITA No.6390/ DEL/ 2016, the assessee Mr. Rohtas Singh had sold an agriculture land for a consideration of Rs.38300000/- and the assessee had invested the sales consideration of Rs. 14330500/- in the agriculture land bought in the name of his spouse and Rs. 10876000/- in his own name, as the assessee had invested the sales consideration in the purchasing of agriculture land and the ITAT, Delhi in this case had restored the matter to the CIT(A) to pass a fresh speaking order in accordance with the law. The copy of the order of the ITAT, Delhi has been attached herewith. Conclusion: You are requested to kindly allow the assessee the exemption under sec.54B for purchase of the agriculture land in the name of his spouse. Further, as per the case of the Rohtas Singh, the appeal of the assessee to allow the exemption for investment made in the name of his spouse has been partly allowed. Now, you are requested to kindly allow the appeal of the assessee to avoid the genuine hardship to the assessee. Therefore the total capital gain exemption (including agricultural land) u/s 54B amounts to Rs 1,48,59,602/-.”
The Ld. DR, on the other hand, relied on the order of the learned CIT(A) and submitted that there is no provision in section 54B for considering investment by the person other than the assessee. 6. We have heard rival submission of the parties and perused the relevant material available on record. The only issue involved in the case is, whether the investment on agricultural made by the spouse of the assessee is allowable as deduction under section 54B of the Act in the case of the assessee. Before us, the learned counsel has relied on the decision of the Tribunal in the case of Rohitas Singh (supra), wherein the ex parte order passed by the learned CIT(A) was restored back to the file of CIT(A) with
8 ITA No.6394/Del/2016
the direction to pass a speaking order. In the said order, the Tribunal has not decided the issue in dispute whether the investment on agricultural made by the spouse of the assessee, can be allowed as deduction to the assessee under section 54B of the Act. The relevant part of the order of the Tribunal is reproduced as under: “2.1. The present appeals before us, filed by the two assessee in ITAT against the aforesaid impugned orders, each dated 07.10.2016. At the time of hearing before us, the two assessees were not represented. Ld. DR submitted that disputed issues in both the appeals may be restored to the file of Ld.CIT(A) with the direction to pass speaking orders. In the absence of any assistance from the side of the assessees, we are persuaded by the submissions of the Ld. DR. Accordingly, we set aside the orders of Ld.CIT(A) in the case of the two assessees, each dated 07.10.2016 and restore the disputed issues to the CIT(A) with the direction to pass a speaking order afresh in accordance with law, having regard to facts and circumstances of the case, after providing due opportunity to the assessee. Both these appeals filed by the assessees are disposed of in accordance with aforesaid direction. 3. Before we part, we explicitly clarify that the assessees will be at liberty to approach ITAT for restoration of the appeals in accordance with proviso to Rule 24 of Income Tax Appellate Tribunal Rules, 1963. If the assessee(s) do approach the Tribunal for restoration of the appeals, the matter will be considered in accordance with law as well as facts and circumstances.”
Section 54B of the Act requires the assessee to purchase any other land for being used for agricultural purposes within a period of two years from the date of the sale from transfer of the capital being land. In view of the clear provisions, investment made by any other person particularly the spouse of the assessee, cannot be entitled for deduction under section 54B of the Act. In our opinion, the learned CIT(A) has adjudicated the issue keeping in view the decision of the Jurisdictional High Court, which is binding on the authorities within the jurisdiction of the Hon’ble
9 ITA No.6394/Del/2016
High Court. The finding of the learned CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same. The finding of the learned CIT(A) on the issue in dispute is accordingly upheld. The grounds of appeal raised by the assessee are dismissed. 8. In the result, the appeal of the assessee is dismissed. Order is pronounced in the open court on 15th November, 2019.
Sd/- Sd/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15th November, 2019. RK/-(D.T.D.) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR
Asst. Registrar, ITAT, New Delhi