2008 (4) TMI 28 - HC - Income Tax

Revenue appeal dismissed; s.54B deduction allowed where sale proceeds reinvested in jointly owned agricultural land used for farming.

HC upheld ITAT's factual finding and dismissed the revenue's appeal, holding no substantial question of law arose. The assessee sold agricultural land and ... Exemption/ Deduction u/s 54B of capital gain arising from sale of agricultural land and investment in the name of son by the assessee - Whether, the Hon'ble Income Tax Appellate Tribunal was justified in allowing deduction u/s 54B in respect of agricultural land purchased in the name of son of respondent/assessee when Section 54B stipulated investment of capital gain in purchase of another agricultural land by the assessee? HELD THAT:- In our opinion, from the impugned order, no substantial question of law is arising for consideration of this court as the ITAT while recording a pure finding of fact has dismissed the appeal of the revenue. Undisputedly, in this case the assessee had sold the agricultural land which was being used by him for agricultural purposes. Out of sale proceeds of the said sale, the assessee has purchased other piece of land (land in question) in his name and in the name of his only son, who was bachelor and dependent upon him, for being used for agricultural purposes within the stipulated time. Further, it is not the case of the revenue that from the sale proceeds of the agricultural land earlier owned by the assessee, the land in question was purchased for any other purpose than the agricultural purpose. Undisputedly, the purchased land is being used by the assessee only for agricultural purpose and merely because in the sale deed his only son was also shown as co-owner, the ITAT has rightly come to the conclusion that it does not make any difference because the purchased land is being used by the assessee for agricultural purposes. It is not the case of the revenue that the said land is being used exclusively by his son. In our view, a pure finding of fact has been recorded by the ITAT which does not require any interference in this appeal. No substantial question of law is involved in this appeal. Issues:1. Interpretation of Section 54B of the Income Tax Act regarding deduction for agricultural land purchase in the name of the son of the assessee.Analysis:1. The appeal filed by the revenue under Section 260A of the Income Tax Act challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding the deduction under Section 54B of the Act for agricultural land purchased in the name of the respondent's son. The central question was whether the deduction could be allowed when the land was bought by the son and not the assessee directly.2. The respondent, an illiterate agriculturist, had sold agricultural land and purchased new land in his and his son's name. The Assessing Officer disallowed the deduction under Section 54B, arguing that the exemption applied only if the assessee invested in purchasing agricultural land directly. The Commissioner of Income Tax (Appeals) later allowed the deduction, leading to the revenue's appeal before the ITAT.3. The ITAT dismissed the revenue's appeal, emphasizing that Section 54B requires the capital gains from the sale of land to be reinvested in another land for agricultural purposes. The ITAT noted that the land was bought using the sale proceeds, even though it was registered in the son's name. It highlighted that the son was dependent on the father, and the land was being used for agricultural purposes, meeting the conditions of Section 54B.4. The High Court reviewed the ITAT's decision and found no substantial question of law for consideration. It upheld the ITAT's findings, stating that the purchased land was used for agricultural purposes, and the son's inclusion in the ownership did not impact the eligibility for the deduction under Section 54B. The court emphasized that the land's actual usage for agricultural activities was the key factor, not the co-ownership arrangement.5. The High Court concluded that no substantial question of law arose from the case, as the ITAT's decision was based on factual findings and interpretation of Section 54B. The court affirmed that the land's intended agricultural use, the reinvestment of sale proceeds, and the dependency of the son on the assessee supported the allowance of the deduction, regardless of the son's ownership status.