Real ownership governs capital gains tax on land, with funding and sale proceeds determining the taxable person.

Capital gains on land sold in directors' names depend on the real owner, which is determined by who funded the purchase and who received the sale proceeds; a board resolution alone is not enough to establish de facto ownership. Because the record did not contain the necessary material, the matter was remitted for fresh verification by the Assessing Officer. The deduction issue under section 80IA(4)(iii) was confined to verification of expenditure bifurcation between owned and sold portions and was upheld, as the later giving-effect order had allowed the claim after verification.

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Issues: (i) Whether capital gains arising from sale of the impugned lands were taxable in the hands of the company or in the hands of the individual directors; (ii) Whether the direction relating to deduction under section 80IA(4)(iii) called for interference.

Issue (i): Whether capital gains arising from sale of the impugned lands were taxable in the hands of the company or in the hands of the individual directors.

Analysis: The lands were purchased in the names of the directors, but the case of the assessees was that the purchases were funded by the company and that the directors only acted as facilitators because of the restriction on corporate ownership of agricultural land. The question depended on identifying the real owner of the properties, which in turn required verification of who funded the purchase and who received the sale consideration. The Board resolution by itself was held to be insufficient to conclude de facto ownership. As the necessary material was not on record, the matter was restored to the Assessing Officer for fresh examination of the funding and receipt of sale proceeds.

Conclusion: The issue was remitted for verification, and if the company is found to have funded the purchase and received the sale proceeds, the capital gains would be assessable substantially in the hands of the company.

Issue (ii): Whether the direction relating to deduction under section 80IA(4)(iii) called for interference.

Analysis: The appellate direction was confined to verification of the bifurcation of expenditure between the owned and sold portions and grant of deduction to the extent found admissible. The subsequent order giving effect had already allowed the claim in full after verification. No error was found in the appellate direction.

Conclusion: The direction regarding deduction under section 80IA(4)(iii) was upheld.

Final Conclusion: The connected appeals were disposed of by remand on the capital gains issue, while the revenue challenge to the deduction issue failed.

Ratio Decidendi: Where legal title stands in another's name, real ownership for capital gains purposes depends on the actual funding of acquisition and receipt of sale consideration, and a board resolution alone is not determinative.

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