2023 (11) TMI 444 - AT - Income Tax

Deductions u/s 54B Permitted for Agricultural Land Bought in Spouse's Name, ITAT Rules in Favor of Assessee.

Ravinder Kumar C/o. M/s. Kartar Singh & Co. Versus ITO Ward – 2 (2) Meerut

The ITAT allowed the appeal, ruling in favor of the assessee regarding the interpretation of Section 54B of the Income Tax Act. The Tribunal held that ... Deduction u/s 54B - claim denied as said land is purchased in the wife’s name - HELD THAT:- As decided in ASHOK KUMR case [2022 (12) TMI 1320 - ITAT DELHI] as clearly and categorically held that deduction u/s 54B/54F of the Act is available in cases where investments are made in property purchased in the name of wife. Therefore, hold that the assessee is eligible for deduction u/s 54B. Decided in favour of assessee. Issues Involved:The appeal involves the interpretation of u/s 54B of the Income Tax Act regarding the eligibility for deduction when agricultural land is purchased in the name of the assessee's spouse.Issue 1: Interpretation of Section 54BThe appellant contended that the denial of the benefit of u/s 54B due to the agricultural land being purchased in the spouse's name was erroneous. It was argued that the section does not restrict the purchase to be in the name of the assessee only. The appellant emphasized that the land was bought solely from the proceeds of the original assets. The Commissioner of Income Tax (Appeals) upheld the AO's decision, citing various case laws. However, the ITAT considered the appellant's argument and referred to precedent cases where deductions were allowed even when the property was in the spouse's name. The ITAT held that the appellant is indeed eligible for deduction u/s 54B and directed the Assessing Officer to allow the deduction.Issue 2: Precedent and Jurisdictional High Court DecisionThe ITAT noted a dismissal of SLP by the Supreme Court in a similar case where agricultural land was purchased in the spouse's name. The ITAT clarified that a dismissal of SLP does not merge the High Court's decision with that of the Supreme Court. In the absence of a jurisdictional High Court decision, the ITAT followed the precedent favoring the assessee. Citing the principle of adopting the High Court decision in favor of the assessee in case of conflicting judgments, the ITAT set aside the order of the Revenue authorities and ruled in favor of the assessee.In conclusion, the ITAT allowed the appeal, emphasizing that deductions under u/s 54B can be claimed even if the agricultural land is purchased in the name of the assessee's spouse. The ITAT relied on precedent cases and the absence of a jurisdictional High Court decision to support its decision, ultimately ruling in favor of the assessee.