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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ : NEW DELHI
Before: SHRI H.S. SIDHU
The Assessee has filed the Appeal against the Order dated
15.11.2016 of the Ld. CIT(A), Muzaffarnagar pertaining to
assessment year 2013-14 and raised the following grounds:-
“1. That on facts and in the circumstances of the case
and in law the Ld. CIT(A) erred in rejecting the appeal
without appreciating the facts and legal provisions as
applicable in the case of appellant.
That the Ld. CIT(A) and assessing officer have
erred in disallowing the deduction as claimed under
section 54B by purchasing Agricultural Land in the
name of wife who is not having any source of income
and source of investment of her own.
That the Ld. CIT(A) has wrongly made his opinion
by observing that Section 54B does not anywhere
permit the purchase of agricultural lands in the name
of anyone other than the assessee and relied upon the
case law having different facts and discussions. The
appellant is a senior citizen and retired person having
income from pension and bank interest & agriculture.
He and his wife are the family and appellant has
purchased agricultural land in the name of wife, who is
never assessed to tax and the amount of investment
in purchase of agricultural land is investment of
appellant, which is accepted by the assessing officer.
That wife of appellant is dependent on appellant
and she will be only legal heir on the death of
appellant, who is an old person. The investment in the
name of wife is the investment of appellant and the
agricultural work is looked after by the appellant only.
That the capital gain as computed by the Ld.
CIT(A) and assessing officer are wrong and the
addition of capital gain as made is liable to be deleted.
That the Ld. CIT(A) has erred in not appreciating
the legal position as laid down by Hon'ble High Courts
in which exemption u/s 54B is allowable if the
investment in agricultural land is made in the name of
wife.
That the appellant seeks leave to add, amend,
alter, abandon or substitute any of the above grounds
during the hearing of the appeal.”
The brief facts of the case are that assessee is an individual
enjoys from pension, bank interest and has also shown long term
capital gain on sale agricultural land being capital asset as per sale
deed and as the land is within 8 KM from the municipal area. Notice
u/s. 142(1) of the I.T. Act, 1961 dated 24.12.2013 was issued to the
assessee. In compliance to notice issued, assesee filed a written rely
on 15.1.2014 stating therein that the return has been filed on
15.1.2014. On going through the same AO observed that the
assessee has claimed long term capital gain on sale of agricultural
land being capital assets. As per working of long term capital gain,
the land purchased by the wife Smt. Kesho urf Smt. Keshowati,
assessee has claimed deduction u/s. 54B of the Act which is not
allowable. Therefore, notice u/s. 148 of the Act was issued after
recording the reasons. In compliance to notice issued, assessee filed
written rely on 12.5.2015 stating therein that the return already
filed on 15.1.2014 declaring income of Rs. 20390/- may please be
treated as return filed in compliance to notice issued u/s. 148 of the
Act. The AO was of the opinion that the investment relating to
purchase of land in the name of wife is not allowable to be exempted
u/s 54B of the Income Tax Act, hence, he added back the addition in
dispute in the hands of the assessee and assessed the income of the
assessee u/s. 143(3)/148 of the Act vide order dated 20.10.2015.
Against the assessment order, assessee preferred an appeal before
the Ld. CIT(A) and filed various judgment and also distinguish the
judgements quoted by the AO, but Ld. CIT(A) has dismissed the
appeal of the assessee by upholding the action of the AO vide his
impugned order dated 15.11.2016.
Aggrieved with the impugned order, the assessee is in appeal
before the Tribunal.
Ld. Counsel of the assessee has submitted that lower
authorities have wrongly disallowing the deduction claimed under
section 54B by purchasing Agricultural Land in the name of wife who
is not having any source of income and source of investment of her
own. She further stated that Ld. CIT(A) has wrongly made his
opinion by observing that Section 54B does not anywhere permit the
purchase of agricultural lands in the name of anyone other than the
assessee and relied upon the case law having different facts and
discussions, without observing that assessee is a senior citizen and
retired person having income from pension and bank interest &
agriculture. He and his wife are the family and assessee has
purchased agricultural land in the name of wife, who is never
assessed to tax and the amount of investment in purchase of
agricultural land is investment of assessee, which was accepted by
the AO. It was further submitted that the wife of assessee is
dependent on assessee and she will be only legal heir on the death of
assessee, who is an old person. The investment in the name of wife
is the investment of assessee and the agricultural work is looked
after by the assessee only. In view of above, Ld. Counsel of the
assessee stated that lower authorities have wrongly computed the
capital gain and made the addition of capital gain which is liable to be
deleted. Lastly, she stated that lower authorities have not
appreciated the legal position as laid down by Hon'ble High Courts in
which exemption u/s 54B is allowable if the investment in agricultural
land is made in the name of wife.
On the contrary, Ld. DR relied upon the orders of the
authorities below.
I have heard both the parties and perused the records. I find
that assessee is a senior citizen and retired person having income
from pension and bank interest & agriculture. He and his wife are the
family and assessee has purchased agricultural land in the name of
his wife, who is never assessed to tax and the amount of investment
in purchase of agricultural land is investment of assessee, which was
accepted by the AO. The wife of the assessee is dependent on
assessee and she will be only legal heir on the death of assessee,
who is an old person. In the present case in my considered opinion,
the intention of the legislature is to make investment of the capital
gain and the purpose of the legislature is fulfilled if the land is
purchased either on his own name or in the name his closed family
member maybe a wife, minor daughter or in the name of his son or
his grandsons to whom it would directly go if a person dies intestate.
Hence, the exemption u/s 54B has to be allowed investment in
agricultural land is made in the name of wife, in view of the law laid
down by the Hon’ble High Courts as under:-
- Decision dated 15.2.2006 of the Hon’ble High Court of Madras in the case of CIT vs. Natarajan – wherein it was observed in the (Head Notes) that Section 54 of the Income Tax Act, 1961 – capital gains – profit on sale of property used for residential house – Assessment year 1990-91 – Assessee, who owned a house property, sold same and purchased a property in name of his wife – Assessee claimed exemption under section 54 – Whether since assessee was owner of a house property, he would be entitled to exemption under section 54 – Held, yes.
- Decision dated 11.1.2013 of the Hon’ble Delhi High
Court in the case of CIT vs. Kamal Wahal – wherein
it was observed in the (Head Notes) that – Section
54F of the Income Tax Act, 1961 – Capital Gains –
Exemption of, in case of investment in residential
house – Ownership of new property – assessment
year 2008-09 – whether for claiming deduction of
capital gains under section 54F, new residential
house needs to be purchased by the assessee
exclusively in his own name – Held, no – Whether,
where assessee purchased new house in name of
his wife and not in name of any stranger who was
unconnected with him, exemption could not be
denied, if entire investment had come out of
proceeds of old property – Held, yes (para 9) in
favour of assessee.
Keeping in view of the facts and circumstances explained above as well as the case laws, I am of the considered view that the issue in dispute is identical to the case law cited above. Hence, respectfully following the same, I delete the addition in dispute by accepting the appeal of the Assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced on 09-03-2018. Sd/-
(H.S. SIDHU) JUDICIAL MEMBER
Dated : 09-03-2018
SR BHATANGAR