2001 (11) TMI 268 - AT - Income Tax

Summary

Issues Involved:
1. Whether the sale of agricultural land constitutes a transfer of a capital asset.
2. Whether the assessee is entitled to claim exemption u/s 54F of the IT Act for investment made in the name of his adopted son.

Summary:

Issue 1: Sale of Agricultural Land as Transfer of Capital Asset
The assessee sold agricultural lands within 8 kms of the Municipal Corporation, which the AO considered as a transfer of a capital asset, making it liable for capital gains tax. The CIT(A) initially ruled that the sale did not involve a transfer of a capital asset, thus exempting the assessee from capital gains tax. However, the Tribunal reversed this decision, confirming that the sale constituted a transfer of a capital asset and remanded the case to the CIT(A) to consider the exemption claim u/s 54F.

Issue 2: Exemption u/s 54F for Investment in Adopted Son's Name
The CIT(A) held that investment in a residential property need not be in the assessee's name to qualify for exemption u/s 54F, citing the case of Late Mir Gulam Ali Khan vs. CIT. The AO disagreed, stating that the investment must be in the assessee's name. The Tribunal reviewed the provisions of s. 54F and concluded that the exemption requires the investment to be in the assessee's name. The Tribunal distinguished the cited cases, noting that they did not involve investments in the names of other persons. The Tribunal restored the AO's order, ruling that the assessee was not entitled to the exemption as the investment was made in the name of his adopted son.

Conclusion:
The Tribunal allowed the Revenue's appeal, confirming that the sale of agricultural land constituted a transfer of a capital asset and that the exemption u/s 54F requires the investment to be in the assessee's name. The assessee's cross-objection was dismissed.