Case Details:

Jeetendra Patidar vs. Pr. CIT

Appeal No.:

ITA No. 486/Ind/2019

Order pronounced by:

ITAT Indore

Date of order:

21-10-2020

Assessment Year:

2015-16

In favour of:

Assessee

• The assessment in the case of assessee was completed u/s 143(3) of the Income Tax Act wherein returned income of the assessee was accepted by the Ld. A.O. The claim of exemption under section 54B of Rs. 1,40,18,850/- of the assessee for purchase of new agricultural land in the name of his son was also accepted by the A.O.

• Later, the Ld. Pr. CIT issued notice u/s 263 of the Act as he was of the view that the A.O. passed order without making required investigation resulting in an erroneous order prejudicial to interest of revenue. The Ld. Pr. CIT was of the view that exemption u/s 54B is not allowable as the purchase of agricultural land was not in the name of the assessee himself.

• Explanations offered by the assessee were not accepted and disallowed the claim of the assessee u/s 54B. Aggrieved against this, the assessee preferred an appeal before Tribunal.

• The Ld. Counsel for the assessee vehemently argued that the Ld. Pr. CIT has not applied his mind on the facts of the case and preceded against the assessee mechanically.

• The land as sold by the assessee was with the consent of his sons and therefore new lands in dispute were purchased by the assessee in the name of his son’s and also in the name of his son’s wife. That as the per the provisions of section 64 of the Act, the amount as invested by the assessee in the name of his son’s wife is to be clubbed with the assessee. Hence, investment as made by the assessee in the name of his son’s wife is eligible for deduction u/s 54B of the Act.

• That the land as sold by the assessee was inherited by the assessee and therefore his son’s also having interest in this land. Thus, the investment made in the name of his sons was also eligible under section 54B of the Act.

• That it is now stand settled in favour of the appellant, that if any agricultural land is purchased in the name of the spouse of the appellant, in the name of son or son’s wife is eligible for deduction u/s 54B of the Income Tax Act. 

CIT vs. Kamal Wahal [Appeal No. ITA 4/2013] Delhi High Court

For the purposes of section 54F, the new residential house need not be purchased by the assessee in his own name nor it is necessary that it should be purchased exclusively in his own name. The assessee has purchased it only in the name of his wife and not in name of stranger and there is also no dispute that the entire investment has come out of the sale proceeds of old residential house.

Similar view was taken by Hon’ble Madras High Court in case of CIT vs. Natarajan 154 Taxmann 399 where the Hon’ble High Court allowed exemption u/s 54 on investment of sale proceeds of residential house in the name of wife.

Hon’ble jurisdictional High Court in the case of Pr. CIT vs. Balmukund Meena [Appeal No. ITA 118/2016 dated 16-02-2017]:

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 conclusion that it does not make any difference because the purchased land is being used by the assessee for agricultural purposes. It is not the case of the revenue that the said land is being used exclusively by his son.

CIT vs. Gurnam Singh (2010) 327 ITR 278/ [2008] 170 Taxman 160 Punjab and Haryana High Court:

Same view was taken with reference to section 54F.

Indore Bench of ITAT in case of Shri Raja Ram Patidar [Appeal No. ITA No. 371/Ind/2015]:

The above provision contemplates that the benefit is available if an agricultural land is purchased out of the sale consideration of sale of agriculture land. In the instant appeal, the assessee applied the same to purchase another agriculture land in name of self and in name of wife and children. The revenue authorities and Ld. CIT(A) have already accepted the claim for purchase of agriculture land in the name of assessee as well as wife. We don’t find any reason that why the benefit should not be given for purchase of agriculture land in the name of his son and daughter who are not someone not connected or strangers to the assessee and as held by the Hon’ble High Court that the assessee includes his legal heirs also so as to give the vide and legal interpretation. We therefore are of the view that the Ld. CIT(A) erred in denying the exemption u/s 54B of the Act to assessee for purchase of agricultural land in the name of his son and daughter.