2010 (8) TMI 153 - HC - Income Tax

Deduction under Section 54B - purchase consideration with expenses has been borne by the assessee as son of the assessee - no source of independent income - Held that - The purchase of agricultural land by the assessee in his son or grandson s name, therefore, cannot be held entitled to exemption under s. 54B of the Act - Appeal is dismissed

Summary

Issues:
1. Deduction under Section 54B for purchase of agricultural land in the name of son.
2. Legality of authorities' action in disallowing deduction under Section 54B.
3. Legality of impugned orders A-1 to A-3.

Analysis:
1. The appellant received compensation in 1998 for land acquired in 1995. The Assessing Officer assessed income at Rs. 78,93,896, disallowing deduction under Section 54B for purchasing agricultural land in son's name. CIT(A) partly allowed the appeal but rejected the deduction claim. Both parties appealed to the Tribunal, which dismissed the appeals. The issue is whether the appellant, buying land in son's name from compensation, is entitled to Section 54B deduction. The Court cited precedent (Jai Narayan v. ITO) holding that the land must be purchased in the assessee's name for exemption under Section 54B. As the law does not allow purchasing in a third party's name, the appellant's claim is not valid. The substantial questions of law proposed by the appellant do not apply here. The appeals were dismissed.

2. The Tribunal's decision to dismiss both appeals, upholding the disallowance of the Section 54B deduction, was based on the legal interpretation that the land must be purchased in the assessee's name to qualify for the exemption. The Court found no grounds for interference in this matter based on the precedent and legal provisions. Therefore, the action of the authorities in disallowing the deduction was deemed legally sustainable.

3. The impugned orders A-1 to A-3, including the Assessing Officer's assessment, CIT(A)'s partial allowance, and the Tribunal's dismissal of appeals, were challenged by the appellant. However, based on the legal interpretation provided by the Court regarding Section 54B deductions, the orders were found to be legally sustainable. As a result, the Court dismissed the appeals, affirming the decisions of the lower authorities.

This comprehensive analysis of the judgment addresses the issues raised in the appeal, the legal interpretations applied, and the reasons for the dismissal of the appellant's claims.