DCIT, MANDI GOBINDGARH vs. M/S C.S. CASTINGS PVT. LTD., MANDI GOBINDGARH

PER DIVA SINGH

The present appeal has been filed by the assessee assailing the correctness of the order dated 22.12.2017 of CIT(A)-2 Chandigarh pertaining to 2013-14 assessment year wherein the assessee has challenged the order of the CIT(A) wherein the disallowance of deduction claimed u/s 54B made by the AO has been confirmed in appeal. 2. The relevant facts of the case are that during the year, the assessee has sold land measuring 6 kanal 19 marlas in Village Santemajra vide Vasika No. 553 dated 17.04.2012 jointly with Late Sh. Nika Singh, Sukhminder Singh, Dalbir Singh and Sh. Gurdev Singh for a consideration of Rs. 65,26,000/-, the circle rate of which is 73,84,375/-. The assessee's share in sale consideration as per circle rate came to Rs. 4,51,562/-. While calculating the value as on 01.04.1981, the assessee it is seen had calculated the same on the basis of a Registry of land sold in the similar locality in the year 1985 by reducing the value on estimated basis to arrive at the value as on 01.04.1981. After reducing the indexed cost of acquisition, the long term capital gain had been declared at Rs. 4,08,962/-. The assessee has claimed, deduction u/s 54B in respect of land purchased in the name of his son Sh. Harjit Singh vide Vasika No.

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1615 dated 28.10.2011. The deduction claimed by the assessee in respect of land purchased in the name of son has been held to be not allowable in view of the provisions of section 54B of the Income Tax Act. The said fact was pointed out to the assessee. As per record, it is seen that it was submitted that the assessee was not physically fit, therefore he purchased the property in the name of son using the same funds, as received by assessee on sale of land. The plea taken by the assessee was not accepted by the AO as he was of the view that deduction in respect of investment in the name of son is not allowable under the Income Tax Act leading to the addition of the said amount in his hand. The assessee challenged the said action before the CIT(A) relying upon decision in CIT Vs Armeda K Bhaya (205) 95 ITD 313 amongst others without success. Aggrieved by this, assessee is in appeal before ITAT. 3. The ld. AR inviting attention to the statement of facts filed accompanied with the grounds raised submitted that the assessee at the relevant point of time was employed in the office of Chemical Examiner, Kharar. Specific piece of land sold was his ancestral agricultural land in his village where his only son Harjeet Singh was carrying out agricultural activities. It was submitted that the assessee's family members were cultivating agricultural land jointly, had a common kitchen. It was his submission that Shri Harjeet Singh his only son was 10th pass and was fully engaged in agriculture activity. The land which had been sold was agricultural land and from the sale proceeds within the stipulated time, agricultural land was purchased in the name of the son not only because he was the only son but also because he was the only one carrying out agricultural activity. Thus, the denial of deduction claimed u/s 54B in terms of the decision in Gurnam Singh 329 ITR 278 of Hon'ble Punjab & Haryana High Court and decisions of Rajasthan High Court in the case of Laxmi Narain Near Khor Darwaja Mori Walon Ki Dhani, Jaipur Vs CIT (copy filed in D.B./IT 20/2016) which has been followed by Jaipur Bench of the Tribunal in the case of Shri Vivek Jain V DCIT, Csircle-7, Jaipur in ITA 139/JP/2016 dated 08.12.2017 it was submitted was contrary to settled legal opinion available on record. 4. The ld. Sr.DR, on the other hand, relied upon the impugned order. Inviting attention to the decision of the jurisdictional High Court in the case of CIT Vs Gurnam Singh, it was his submission that in the facts of

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the said case, land had been jointly purchased in the name of the father and the son. Referring to the decision of Rajasthan High Court referred to and the order of the Jaipur Bench of the ITAT relied upon, it was his submission that these were in the background of properties purchased in the name of the wife. In the facts of the present case, it was his submission that it cannot be said that the land was HUF property as canvassed by the ld. AR, as it was his individual property. 5. We have heard the rival submissions and perused the material on record. Admittedly in the facts of the present case, agricultural land was sold by the assessee and an investment was made in the name of his son. On a perusal of the reasons recorded in the assessment order, it is seen that the specific piece of land measuring 6 Kanal 19 Marla was owned by the assessee alongwith his relatives Shri Nika Singh, Shri Dalbir Singh, Shri Sukhminder Singh and Shri Gurdev Singh at village Chajjumajra as per Registered Deed dated 17.04.l2012 which has been noticed by the tax authorities. It is also seen on perusal of para 4 of the assessment order that the assessee has explained that the purchase was made in the name of his only son as the assessee employed at Kharar was not physically fit to carry out the formalities. He has also canvassed that the very same funds had been used for acquiring the specific land. In the course of arguments before the Bench ld. AR has canvassed that this was ancestral property inherited alongwith other relatives and which would anyway devolve to his only son and the property, thus, was HUF property and not individual self acquired property. The said distinction has been drawn to justify that the purchase of the property in the name of his only son, thus, is acceptable under law. We find that to the extent the above claims are made, they appear to be allowable, however the allowability of the same would be addressed only after addressing the legal position. The HUF may come into existence naturally but whether there is any property with the HUF is a fact to be demonstrated. The assessee in the facts of the present case has consistently argued that he has not purchased the land in his own name as due to not being physically unfit, he did not venture to the Patwarikhana etc. for running around for Registry purposes; he has also consistently argued that even otherwise it is only son in whose name investment is made who did the actual agricultural activity in the land sold as well as the land purchased

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who anyway would have inherited his property as it was ancestral property. In the facts of the present case, there is nothing on record show that the land was actually purchased in the name of the only son who did agricultural activity on the land sold or the fact that the assessee was unfit to go for Registration etc. purposes to the Patwarkhana. The above facts, if proved, may make available to the assessee the benefit of the judicial precedents cited. Accordingly, in order to address the correct and complete facts, the issue is restored back to the file of the AO directing the assessee to place supporting evidences before the said activity. The AO, accordingly, in the light of facts made available shall then pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 30.10. 2018.

Sd/- Sd/- (ANNAPURNA GUPTA) ( DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

‘Poonam’ Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR

Asstt. Registrar ITAT,Chandigarh.