2024 (6) TMI 62 - AT - Income Tax

LTCG - deduction u/s 54B - Agricultural lands purchased in the name of wife out of sale proceeds of original asset - entire investments/payment has been made by the assessee from his own account - HELD THAT - In the case in hand the lands were purchased by the assessee in his own name, his wife, two minor daughters and one minor son but the entire purchase consideration of all the lands has been made by the assessee from his own bank account and out of the sale consideration of existing agricultural land. As decided in SHRI LAXMI NARAYAN, 2017 (11) TMI 1622 - RAJASTHAN HIGH COURT, JAIPUR it is true that the contentions which have been raised by the department is that the investment is made by the assessee in his own name but the legislature while using language has not used specific language with precision and the second reason is that view has also been taken by the Delhi High Court that it can be in the name of wife. In that view of the matter, the contention raised by the assessee is required to be accepted with regard to Section 54B Accordingly when it is evident from the record that the entire investments has been made by the assessee from his own account and utilizing the sale consideration of the transfer of existing agricultural land then the benefit of the provisions of section 54B cannot be denied merely on the ground that some of the lands were purchased by the assessee in the name of wife, two minor daughters and one minor son. Assessee appeal allowed.

Issues Involved:

1. Disallowance of part deduction u/s 54B for agricultural lands purchased in the name of wife.
2. Disallowance of part deduction u/s 54B for agricultural lands purchased in the name of minor children.
3. Interpretation of Section 54B regarding the obligation to buy agricultural land without specifying in whose name the land should be bought.
4. Legal incompetence of minors to be buyers and the role of the assessee as a natural/legal guardian.
5. Recognition of purchases under the Benami Transaction Prohibition Act.
6. Compliance with statutory recognition for purchasing property in the name of wife and minor children.

Summary:

Issue 1: Disallowance of part deduction u/s 54B for agricultural lands purchased in the name of wife.

The Tribunal held that the entire payment for the purchase of new agricultural lands was made by the assessee from his own bank accounts, including the land purchased in the name of his wife. The Tribunal referenced the Hon'ble jurisdictional High Court decision in Pr. CIT vs. Balmukund Meena, which allowed the deduction u/s 54B for land purchased in the name of the assessee's son, emphasizing that funds from the assessee's account were used. The Tribunal found that the assessee is entitled to the deduction u/s 54B when the new agricultural lands were purchased by the assessee from the sale proceeds of the existing agricultural land.

Issue 2: Disallowance of part deduction u/s 54B for agricultural lands purchased in the name of minor children.

The Tribunal observed that the entire purchase consideration of all the lands, including those purchased in the name of the assessee's minor children, was made by the assessee from his own bank account and out of the sale consideration of existing agricultural land. The Tribunal cited the Hon'ble Rajasthan High Court in Laxmi Narayan vs. CIT, which held that the benefit of Section 54B cannot be denied merely because the land was purchased in the name of family members. Consequently, the Tribunal allowed the claim of the assessee u/s 54B.

Issue 3: Interpretation of Section 54B regarding the obligation to buy agricultural land without specifying in whose name the land should be bought.

The Tribunal emphasized that Section 54B does not specify that the new agricultural land must be purchased in the name of the assessee alone. The Tribunal referenced various judicial pronouncements, including the Hon'ble Delhi High Court in CIT vs. Kamal Wahal, which supported the view that the benefit under Section 54B can be availed even if the land is purchased in the name of the assessee's family members, provided the funds are from the assessee.

Issue 4: Legal incompetence of minors to be buyers and the role of the assessee as a natural/legal guardian.

The Tribunal acknowledged that minors are legally incompetent to be buyers and that the assessee, being the natural/legal guardian, made the purchase on their behalf. The Tribunal found that this did not affect the eligibility for deduction u/s 54B, as the entire investment was made by the assessee.

Issue 5: Recognition of purchases under the Benami Transaction Prohibition Act.

The Tribunal noted that the purchases in the names of the wife and minor children are allowed under Section 2(9) of the Benami Transaction Prohibition Act 1988 and its amendment in 2016. This statutory recognition supports the assessee's claim for the deduction u/s 54B.

Issue 6: Compliance with statutory recognition for purchasing property in the name of wife and minor children.

The Tribunal concluded that the statutory recognition for purchasing property in the name of wife and minor children is a good evidence which the respondent failed to comply with under the I.T. Act. The Tribunal allowed the appeal of the assessee, granting the deduction u/s 54B for the entire investment made in the names of the family members.

Conclusion:

The appeal of the assessee was allowed, and the Tribunal directed that the benefit of deduction u/s 54B should be granted for the entire investment made by the assessee, including the agricultural lands purchased in the names of his wife and minor children. The Tribunal emphasized the purposive construction of Section 54B and the judicial precedents supporting the assessee's claim.

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