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TMI Blog2021 (7) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... n that director is owner in substance. In substance, the Company will be treated as owner of the property. Likewise, HUF is also an artificial person which can not talk, walk and think, however, the Coparceners (member of HUF) do all the activities on behalf of the HUF. In substance, the HUF is owner of the said agricultural land though it is registered in the name of the Coparcener, as the HUF is enjoying all the fruits of the said agricultural land. Thus, the HUF is entitled to claim exemption/deduction under section 54B - Decided in favour of assessee. - ITA No.280/SRT/2018 - - - Dated:- 8-7-2021 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Kiran K. Shah - CA For the Respondent : Ms.Anupama Singla Sr.DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: By way of this appeal, the assessee has challenged correctness of the order dated 05.12.2017, passed by the learned CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act 1961, for the assessment year 2013-14. Grievances raised by the assessee are as follows. 1) The learned CIT (A) grossly erred in confirming the rejection of claim in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet of HUF. 2. Entire purchase consideration for agriculture land was paid by way of utilizing fund of HUF. 3. As per law and custom of hindu sucession Act, any property which is purchased out of fund or earning of HUF always remain under ownership of HUF and all members of HUF has right in that property. We are herewith producing judgment in the case of CIT vs. K. S. Subbiah Pillai HUF (1984) 147 ITR 87 (mad) pronounced by Madras High Court wherein it has been held that: It is one of the fundamental principles of Hindu law that property acquired by the Karta or a coparcener with the aid or assistance of Joint family assets, is impressed with the character of joint family property. To constitute self-acquired property in the hands of the karta or a coparcener, it should not have been acquired with the assistance, or aid of joint family property. In the above decision, the Division Bench, after referring to the various decisions of the Supreme Court on this aspect has observed as follows Further we submit that HUF is governed by Hindu Sucession Act and governed by custom and tradition of Joint hindu family where in whole family live together till partition and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur bona-fide belief, we are eligible to claim ₹ 2722022/- u/s 54B and may please be allowed in our case as per law. 4. However, ld.Assessing Officer rejected the contention of the assessee and noted that purchase deed is in the name of coparcener but property is owned by HUF and duly shown in balance sheet. Entire purchase consideration for agriculture land was paid by utilizing fund of HUF. Even though the fund of HUF has been utilized but the property is in the name of individuals and the fund appears to be in the form of loan to the individual in whose name the property has been purchased. The Assessing Officer also held that the Hindu Succession Act is not applicable in the present case as the property in question has been purchased in the name of individuals with their individual PAN. If the property has been purchased in the name of individual, the same can be sold only by that particular individual and not the karta or coparceners of HUF. Hence, the question of right over the property on partition does not arise. In view of the above facts, the submission of the assessee was rejected by Assessing Officer and the exemption claimed under section 54B of the Act to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was purchased and in the subsequent years. The agricultural income was not shown in the hands of individual, however, it is shown in the hands of HUF. The co-parcerner of the HUF may hold property on behalf of the HUF. We note that assessee purchased agricultural land out of the sale proceeds of the agricultural land sold and after that the assessee has claimed exemption under section 54B of the Income Tax Act to the tune of ₹ 27,22,020/- in respect of purchase of land situated at Vidhan, Block No.281. We further note that funds had been utilised which pertains to HUF and the same was transferred from bank account of HUF to bank account of Individual. We note that as per Hindu Succession Act, property purchased out of HUF funds or earning of HUF always remained under ownership of HUF and all members of HUF has right in that property. Thus, in the instant assessee`s case, the fruit of the property is enjoyed by the HUF. 10. We note that section 54B of the Act provides exemption in respect of capital gain on transfer of land used for agricultural purposes. Sub-section 1 of section 54B states that subject to the provisions of sub-section (2), where the capital gain arises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the act to the respondent. Against the said order, the revenue filed an appeal before the ITAT, who vide its order dated 24-4-2006 has dismissed the appeal, while observing as under :- The issue before us revolves around allowability of deduction under sections 54B and 54F of the Act. The land in question was purchased by the assessee in the name of his son. The learned Assessing Officer disallowed the deduction on the ground that the land is in the name of the son of the assessee, so the deduction cannot be allowed, specially when the land was purchased by Sh. Gurnam Singh out of the sale proceeds of agricultural land and since Palwinder Singh was bachelor and was not having any independent source of income was dependent upon his father even for livelihood. The conclusion of the learned Assessing Officer is available on page 4 of the assessment order. Before coming to a conclusion, we are supposed to analyze section 54B which is applicable where the capital gains arise from the transfer of capital asset and was being used for agriculture purposes which was invested in the purchase of any other land and again being used for agricultural purposes. There is no dispute to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. We have heard the counsel for the revenue and gone through the aforesaid impugned order. In our opinion, from the impugned order, no substantial question of law is arising for consideration of this Court as the ITAT while recording a pure finding of fact has dismissed the appeal of the revenue. Undisputedly, in this case the assessee had sold the agricultural land which was being used by him for agricultural purposes. Out of sale proceeds of the said sale, the assessee has purchased other piece of land (land in question) in his name and in the name of his only son, who was bachelor and dependent upon him, for being used for agricultural purposes within the stipulated time. Further, it is not the case of the revenue that from the sale proceeds of the agricultural land earlier owned by the assessee, the land in question was purchased for any other purpose than the agricultural purpose. Undisputedly, the purchased land is being used by the assessee only for agricultural purpose and merely because in the sale deed his only son was also shown as co-owner, the ITAT has rightly come to the conclusion that it does not make any difference because the purchased land is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural land. The HUF is doing agricultural activities. For example, in case of a company, a property may be registered in the name of the Director, because company is an artificial person which can not talk, walk and think, however, the Directors do all the activities on behalf of the Company, therefore, just because property is registered in the name of director does not mean that director is owner in substance. In substance, the Company will be treated as owner of the property. Likewise, HUF is also an artificial person which can not talk, walk and think, however, the Coparceners (member of HUF) do all the activities on behalf of the HUF. In substance, the HUF is owner of the said agricultural land though it is registered in the name of the Coparcener, as the HUF is enjoying all the fruits of the said agricultural land. Thus, the HUF is entitled to claim exemption/deduction under section 54B of the Act. Therefore, based on these factual position narrated above, we are not inclined to accept the contention of the ld CIT(A) and assessing officer in any manner and therefore the addition so made is deleted. Hence this ground of the assessee is allowed. 13. In the result, appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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