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2020 (1) TMI 245 - AT - Income TaxBenefit of exemption u/s 54B - Whether the investment on agricultural land made in the name of spouse of the assessee is allowable as deduction u/s 54B ? - HELD THAT - Section 54B of the Act requires the assessee to purchase any other land for being used for agricultural purposes within a period of two years from the date of the sale from transfer of the capital being land. In view of the clear provisions, investment made by any other person particularly the spouse of the assessee, cannot be entitled for deduction under section 54B of the Act. In our opinion, the learned CIT(A) has adjudicated the issue keeping in view the decision of the Jurisdictional High Court, which is binding on the authorities within the jurisdiction of the Hon ble High Court. The finding of the learned CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same. The finding of the learned CIT(A) on the issue in dispute is accordingly upheld. The grounds of appeal raised by the assessee are dismissed.
Issues Involved:
1. Assessment of long-term capital gain. 2. Denial of exemption under Section 54B for purchase of agricultural land in the name of the spouse. 3. Nexus of investment in agricultural land with the sale proceeds of the land. 4. Reliance on judicial precedents from different High Courts and ITAT decisions. 5. Ownership and investment considerations for Section 54B exemption. 6. Consideration of spouse as a third party. 7. Evaluation of facts and submissions during the hearing. Issue-wise Detailed Analysis: 1. Assessment of Long-Term Capital Gain: The Ld. Commissioner of Income Tax (Appeals), Karnal upheld the action of the Assessing Officer in assessing the long-term capital gain at ?1,31,55,507/-. The assessee filed a return declaring income of ?99,500/- besides agricultural income of ?1,70,000/-. The Assessing Officer recorded reasons for escapement of income and issued a notice under Section 148 of the Income-tax Act, 1961. The assessment was completed under Section 143(3) read with Section 147, making an addition of ?1,33,55,507/- for long-term capital gain on the sale of agricultural land. 2. Denial of Exemption under Section 54B for Purchase of Agricultural Land in the Name of the Spouse: The Ld. CIT(A) rejected the contention of the assessee and upheld the disallowance of deduction under Section 54B, relying on the decision of the Hon’ble Punjab and Haryana High Court in the case of Dinesh Verma (ITA 381 of 2014). The relevant finding stated that the assessee had to purchase agricultural land in his own name to claim the exemption, as the provision does not allow investment in the name of any other person, including the spouse. 3. Nexus of Investment in Agricultural Land with the Sale Proceeds of the Land: The assessee argued that there was a direct nexus of investment in the agricultural land purchased by him from the sale proceeds of the agricultural land used for agricultural purposes. However, the Ld. CIT(A) held that the conditions laid down in Section 54B were not fulfilled as the investment was made in the name of the spouse, not the assessee. 4. Reliance on Judicial Precedents from Different High Courts and ITAT Decisions: The Ld. CIT(A) placed reliance on the findings of the Hon’ble Punjab & Haryana High Court and did not follow the later judgments of other High Courts and ITAT decisions. The Ld. CIT(A) emphasized that the jurisdictional High Court's decision is binding and overruled the decisions of other courts and the Madras High Court in V. Natarajan’s case (287 ITR 271). 5. Ownership and Investment Considerations for Section 54B Exemption: The Ld. CIT(A) highlighted that if the Income Tax Act intended to provide the liberty of making investment in the name of the spouse or close relatives, it would have been specifically mentioned in the Act. The Act requires the assessee to purchase agricultural land in his own name to claim the exemption under Section 54B. 6. Consideration of Spouse as a Third Party: The Ld. CIT(A) considered the spouse as a third party or a stranger, emphasizing that the Act does not provide any liberty for making investments in the name of the spouse or any other person. The reliance placed by the AR on different judicial pronouncements was not accepted as they could not overrule the findings of the jurisdictional High Court. 7. Evaluation of Facts and Submissions During the Hearing: The Ld. CIT(A) carefully considered various decisions, provisions of the Income Tax Act, and the factual matrix of the case. The disallowance of exemption under Section 54B was upheld as justified. The Tribunal also noted that the decision in the case of Rohitas Singh (ITA No. 6390/DEL/2016) did not decide the issue in dispute but restored the matter to the CIT(A) for a fresh speaking order. Conclusion: The Tribunal concluded that Section 54B requires the assessee to purchase agricultural land in his own name, and investment made by the spouse cannot be entitled to deduction under Section 54B. The Tribunal upheld the finding of the Ld. CIT(A) and dismissed the grounds of appeal raised by the assessee. The appeal of the assessee was dismissed, and the order was pronounced in the open court on 15th November 2019.
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