2017 (8) TMI 285 - HC - Income Tax

Court reaffirms direct ownership requirement for tax exemption under Section 54B

Kamal Kant Kamboj Versus Income Tax Officer, Ward 3, Jagadhari, Yamuna Nagar, Haryana

The court reaffirmed the precedent that for an assessee to claim exemption under Section 54B of the Income Tax Act, the new agricultural land must be ... Exemption u/s 54B denied - capital gain from sale of agriculture land - investment in the new land made in the name of wife of the assessee - Held that:- Section 54B of the Act nowhere suggests that the legislature intended to advance the benefit of the said section 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”, which necessarily means that the new asset has to be in the name of the assessee himself. In the present case, the assessee alongwith his brother sold agricultural land in Village Ratoli, Yamuna Nagar for ₹ 72,00,000/- on 09.10.2006. Out of his half share, he purchased another agricultural land for ₹ 35,51,000/- in the name of his wife on 15.5.2007. As the value of the said land was more than that of the land sold, he did not disclose any long term capital gain and claimed exemption under Section 54B of the Act. Since the issue has already been concluded against the assessee by this Court in Jai Naryan’s case (2007 (8) TMI 295 - PUNJAB AND HARYANA HIGH COURT) and the Tribunal has also followed the said judgment, learned counsel for the appellant has not been able to controvert the applicability of the said decision or to show any error in the findings recorded by the Tribunal except to rely upon pronouncement of the High Courts referred to in the earlier part of this judgment. - Decided against assessee. Issues:1. Entitlement for exemption under Section 54B of the Income Tax Act based on agricultural land purchased in the name of the assessee's wife.Analysis:The appellant-assessee filed an appeal under section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal. The primary contention raised was the eligibility for exemption under Section 54B of the Act concerning the investment in new land not being made in the name of the assessee but in the name of the assessee's wife. The appellant argued that the provision does not explicitly require the land to be purchased in the assessee's name only, citing various judgments to support their claim. However, the Tribunal, following the precedent set in Jai Narayan's case, held that the new asset purchased must be in the name of the assessee himself to qualify for exemption under Section 54B.The case involved the sale of agricultural land by the assessee and the subsequent purchase of new agricultural land in the name of the assessee's wife. The appellant sought exemption under Section 54B of the Act, but the Assessing Officer denied the exemption, stating that the land was not purchased in the assessee's name. The Commissioner of Income Tax (Appeals) and the Tribunal upheld the decision, relying on the precedent established in Jai Narayan's case. The court reiterated that the term 'assessee' in Section 54B implies that the new asset must be in the name of the assessee for exemption eligibility, as clarified in Jai Narayan's case.Additionally, the court referenced other relevant judgments, such as Gurnam Singh's case and Kamal Wahal's case, to emphasize that the exemption under Section 54B cannot be extended to cases where agricultural land is purchased in the name of a spouse. The court highlighted the importance of interpreting statutes in line with their context and purpose, reinforcing the requirement for the new asset to be in the name of the assessee for claiming exemptions under Section 54B. Despite the appellant's reliance on various judgments, the court dismissed the appeal, affirming the decision that exemption under Section 54B is not applicable when the new agricultural land is purchased in the name of someone other than the assessee.In conclusion, the judgment reiterated the precedent set in Jai Narayan's case, emphasizing that for an assessee to claim exemption under Section 54B of the Income Tax Act, the new agricultural land must be purchased in the name of the assessee. The court dismissed the appeal, as the appellant failed to demonstrate any error in the Tribunal's findings or the applicability of the established legal principles, despite citing other High Court judgments.