2016 (3) TMI 1365 - AT - Income Tax

Denial of exemption of claim made by assessee u/s 54B - investment made in the name of wife and bhabhi - HELD THAT - In the present case, the instead of son the part investment has been made in the name of his wife, therefore, we agree with the contention of learned AR that investment in the name of wife was eligible u/s 54B of the Act. However, the investment in the name of his Bhabhi is not eligible for exemption u/s 54B, therefore, taxable capital gain in the case of the assessee is restricted to ₹ 2,02,955/-.

Summary

Issues:
- Appeal against order of learned CIT(A) allowing exemption u/s 54B
- Investment made in the name of wife and Bhabhi, not in the name of the assessee
- Disagreement between learned DR and learned AR on exemption eligibility
- Assessment completed u/s 144 due to non-cooperation of assessee
- Dispute over capital gains exemption u/s 54B for investment made in joint names
- Interpretation of judicial precedents regarding investment in the name of family members

Analysis:
The appeal was filed by the Revenue against the order of the learned CIT(A) allowing exemption u/s 54B for the Asst. Year 2009-10. The Revenue questioned the decision to permit exemption of &8377; 59.50 lacs where the investment was made in the name of the assessee's wife and Bhabhi, not in the name of the assessee himself. The learned DR initially sought adjournment but was directed to proceed with the case. The learned AR argued that the investment made in the joint names was eligible for exemption under section 54B, citing relevant case laws to support the contention.

The Assessing Officer had reopened the case under section 144 due to non-cooperation from the assessee during assessment proceedings. The assessee had earned capital gains on the sale of agricultural land and reinvested the proceeds in the purchase of another agricultural land, partly in the name of the assessee, his wife, and his Bhabhi. The learned CIT(A) admitted additional evidence and, based on the remand report, allowed relief to the assessee. The Assessing Officer accepted that the land sold and purchased was agricultural, and the assessee had made significant investments in the purchase of agricultural land.

After considering the facts and arguments presented, the Tribunal found that the investment made in the name of the wife was eligible for exemption u/s 54B based on judicial precedents. However, the investment made in the name of the Bhabhi was deemed ineligible for exemption. Therefore, the taxable capital gain for the assessee was restricted to &8377; 2,02,955. The Tribunal partly allowed the appeal filed by the Revenue, concluding the case on 9th March 2016.