2016 (7) TMI 461 - AT - Income Tax

Entitlement for exemption under section 54B - agriculture land purchased by assessee in the name of assessee s wife Smt. Manjit Kaur - Held that - Following the decisions of Hon ble Punjab & Haryana High Court in the cases of Jai Narain 2007 (8) TMI 295 - PUNJAB AND HARYANA HIGH COURT and Dinesh Verma (2015 (7) TMI 486 - PUNJAB & HARYANA HIGH COURT) hold that purchase of agriculture land in the name of assessee s wife would not allow exemption under section 54B in favour of the assessee. - Decided against assessee.

Summary

Issues Involved:
1. Entitlement of the assessee to exemption under Section 54B of the Income Tax Act for agricultural land purchased in the name of his wife.

Detailed Analysis:

Issue 1: Entitlement to Exemption Under Section 54B of the Income Tax Act

Facts of the Case:
The assessee, along with another individual, sold agricultural land and did not declare any capital gain in the return of income. The sale proceeds were invested in the purchase of new agricultural land in the name of the assessee's wife. The Assessing Officer denied the exemption under Section 54B, citing that the land was not purchased in the assessee's name but in his wife's name.

Arguments by the Assessee:
The assessee argued that the sale proceeds were invested in new agricultural land and relied on judgments from various High Courts, including the Punjab & Haryana High Court in the case of Gurnam Singh, which allowed exemption under similar circumstances. The assessee contended that Section 54B does not explicitly require the land to be purchased in the assessee's name only and suggested a purposive construction of the law.

Findings of the Assessing Officer and CIT(A):
The Assessing Officer and CIT(A) distinguished the judgments cited by the assessee and relied on the Punjab & Haryana High Court's decisions in the cases of Jai Narain and Dinesh Verma, which denied the exemption when the land was not purchased in the assessee's name. The CIT(A) dismissed the appeal, following these precedents.

Tribunal's Analysis:
The Tribunal reviewed Section 54B of the Income Tax Act, which stipulates that the capital gain from the transfer of agricultural land must be reinvested in the purchase of new agricultural land within two years to claim exemption. The Tribunal referred to the Punjab & Haryana High Court's judgments in Jai Narain and Dinesh Verma, which clarified that the new agricultural land must be purchased in the name of the assessee to qualify for the exemption.

Key Judgments Referenced:
1. Jai Narain v. ITO: The court held that the term "assessee" in Section 54B means the new asset must be purchased in the name of the assessee himself.
2. CIT v. Dinesh Verma: The court reiterated that the benefit under Section 54B is not available if the new agricultural land is purchased in the name of the assessee's wife or any other person.

Conclusion:
The Tribunal concluded that the purchase of agricultural land in the name of the assessee's wife does not qualify for exemption under Section 54B. The Tribunal upheld the decisions of the lower authorities and dismissed the appeal, emphasizing that the decisions of the jurisdictional High Court are binding.

Order:
The appeal of the assessee is dismissed, and the order was pronounced in the Open Court.