2012 (6) TMI 239 - HC - Income Tax

Deduction u/s 54B - denial - sale of agricultural land standing in assesee s name - purchases of land in name of son and daughter-in-law - Held that - Bare reading of Section 54B does not suggest that assessee would be entitled to get exemption for the land purchased by him in the name of his son and daughter-in-law. In the facts and circumstances of the case also aforesaid inference has not been drawn. Same is question of fact. No substantial question of law arises in appeal. Secondly, word assessee cannot be given a liberal interpretation, as it would be tantamount to giving a free hand to the assessee and his legal heirs and it shall curtail the revenue of the Government, which the law does not permit. Thus, Tribunal has rightly disallowed the exemption u/s 54B - Decided against the assessee.

Summary

Issues:
Challenge to Income Tax Appellate Tribunal's order allowing the appeal partially and disallowing the claim under Section 54B for exemption on the purchase of agricultural land in the name of the assessee's son and daughter-in-law.

Analysis:

Issue 1: Claim of Exemption under Section 54B
The case involved the inheritance and subsequent sale of agricultural land by the assessee, with the proceeds used to purchase new land in the name of the assessee's son and daughter-in-law. The Assessing Officer assessed capital gains, disallowing the exemption under Section 54B. The Commissioner of Income Tax (Appeal) affirmed this decision, allowing the claim under Section 54B. The Income Tax Appellate Tribunal, in its order, disallowed the exemption under Section 54B, citing judgments from various High Courts. The appellant argued for a liberal interpretation of the term "assessee" to include legal heirs, but the Tribunal upheld its decision.

Issue 2: Interpretation of "Assessee"
The appellant contended that the term "assessee" in Section 54B should be liberally interpreted to include legal heirs, enabling them to claim exemptions. However, the Court disagreed, emphasizing the need for a legal interpretation to prevent revenue loss to the Government. The Court highlighted that the land sold was in the name of the appellant, while the purchased land was in the name of the son and daughter-in-law. The Court held that no substantial question of law arose, and the question of whether the purchase was by the assessee or the son was a factual matter.

Conclusion:
The Court found that the Income Tax Appellate Tribunal's decision to disallow the exemption under Section 54B was justified. The Court emphasized that a liberal interpretation of the term "assessee" would not be appropriate and upheld the Tribunal's findings. Consequently, the income tax appeal was dismissed, with no merit found for intervention. The stay application was also dismissed following the dismissal of the appeal.