2022 (10) TMI 276 - AT - Income Tax

Deduction u/s 54-B - money for the investment in the purchase of new asset was withdrawn from the account of Shri Ajmer Singh in Account number 18600 from Punjab Sind Bank Kharar - HELD THAT - Claim of deduction under section 54 in the hands of the legal representative on behalf of the deceased assessee where the subsequent transaction of purchase of new property was initiated by the late assessee during his life time for the purposes of his own residence however on account of death of the assessee, the said transaction was subsequently completed by and in the name of the legal representative. In that factual background, it was held that the word assessee must be given a wide and liberal interpretation so as to include his legal heirs and the legal heirs cannot be differentiated from the assessee and where he was liable to pay the tax, he cannot be denied the benefit of section 54 of the Act. In the instant case, we find that both the transaction of sale of agriculture land and subsequent transaction of purchase of another piece of agriculture land were undertaken by the deceased assessee himself during his life time and on account of death of the assessee, the legal heir was brought on record and proceedings were subsequently initiated in the hands of the legal heir, the grandson of the assessee. Therefore, we find that unlike the aforesaid two cases, as far as satisfaction of the conditions stipulated in section 54B are concerned, there is no question of any impossibility of performance by the assessee in the present case as he himself has purchased another agriculture land and paid the consideration during his lifetime and there was nothing left to be done and which has actually been done by the grandson after the expiry of the assessee. We therefore find that these two cases are distinguishable on facts and doesn t support the case of the assessee even though the assessment is made in the hands of the grandson as legal heir on behalf of the assessee. Now, coming back to the undisputed fact that where the fresh investment in purchase of another agriculture land, out of sale proceeds of the original agriculture land, was made by the late assessee during his lifetime, in individual name of his grandson, all we have to consider is whether the same satisfies the conditions stipulated in section 54B. It is a settled position that once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not reversed by the Hon ble Supreme Court. In that view of the matter, follow the consistent view taken by the Hon ble jurisdictional High Court in series of decisions as discussed above - therefore, hold that the authorities below were justified in making the assessee not eligible to exemption u/s 54B where the investment is made in the name of the grandson of the assessee. Assessee is dismissed.

Issues Involved:
1. Eligibility for deduction under Section 54B of the Income Tax Act, 1961 when the new agricultural land is purchased in the name of the assessee's grandson.
2. Interpretation of the term "assessee" for the purposes of Section 54B.
3. Applicability of various High Court and Tribunal decisions to the facts of the case.

Detailed Analysis:

1. Eligibility for Deduction under Section 54B:
The primary issue is whether the assessee is eligible for deduction under Section 54B when the new agricultural land is purchased in the name of his grandson. The assessee sold agricultural land and purchased another piece of agricultural land in the name of his grandson, claiming deduction under Section 54B. The Assessing Officer (AO) disallowed the deduction, stating that the land must be purchased in the name of the assessee himself.

2. Interpretation of the Term "Assessee":
The term "assessee" under Section 54B was scrutinized to determine if it could include legal heirs. The assessee argued that since the property would eventually devolve to his grandson as per his will, the purchase in the grandson's name should qualify for the deduction. However, the Ld. CIT(A) and the Tribunal held that the term "assessee" must be strictly interpreted to mean the individual who sold the original property, and not any other person, including legal heirs.

3. Applicability of Various High Court and Tribunal Decisions:
The assessee cited several High Court decisions to support his claim, including:
- Gulam Ali Khan (AP High Court): Held that the term "assessee" should be interpreted liberally to include legal heirs.
- Kamal Wahal (Delhi High Court): Allowed deduction under Section 54F even when the new asset was in the name of the assessee's wife.
- Gurnam Singh (Punjab & Haryana High Court): Allowed deduction when the new land was co-owned with the son.

However, the Tribunal distinguished these cases based on their facts and the specific wording of Section 54B. The Tribunal relied on the jurisdictional High Court decisions:
- Jai Narayan (Punjab & Haryana High Court): Held that the new asset must be purchased in the name of the assessee himself.
- Dinesh Verma (Punjab & Haryana High Court): Reiterated that Section 54B benefits do not extend to purchases made in the names of close relatives.
- Kamal Kant Kamboj (Punjab & Haryana High Court): Confirmed that investment in the name of the wife does not qualify for Section 54B benefits.

The Tribunal concluded that the consistent view of the jurisdictional High Court must be followed, which mandates that the new agricultural land must be purchased in the name of the assessee himself to qualify for deduction under Section 54B.

Conclusion:
The Tribunal upheld the findings of the lower authorities, stating that the assessee is not eligible for deduction under Section 54B of the Income Tax Act, 1961, as the new agricultural land was purchased in the name of the grandson and not in the name of the assessee himself. The appeal was dismissed, reinforcing the strict interpretation of the term "assessee" and adherence to the jurisdictional High Court decisions.

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