Case Law Details
Shri Surta Ram Vs ITO (ITAT Chandigarh)
ITAT Chandigarh held that exemption under section 54B of the Income Tax Act is not available when property was not purchased in the name of the assessee.
Facts- During the year under consideration, the assessee had sold urban agricultural land for a sum of Rs.49,60,000/-, earning a Long Term Capital Gain of Rs.46,93,099/-. The Long Term Capital Gain was invested by the assessee in the purchase of another agricultural land, for Rs.55,49,242/-, including Stamp Duty and Registration Charges, in the name of his wife. The assessee claimed exemption u/s 54B of the Income Tax Act. The Assessing Officer (AO), however, refused to allow the claim made.
AO held that if the subsequent property is purchased by a person other than the assessee, including his close relative, even his wife and children, the assessee would not be entitled to the benefit conferred by the provisions of Section 54B of the Income Tax Act. Accordingly, the AO made addition of Rs.46,93,099/- to the income of the assessee.
On appeal, by virtue of the impugned order, the ld. CIT(A) has dismissed the assessee’s appeal. Aggrieved, the assessee is in further appeal.
Conclusion- Held that in the case at hand, exemption u/s 54B of the Act was not allowed to the assessee on the ground that the land was not purchased by the assessee in his own name; that the CIT(A) as well as the Tribunal, both dismissed the appeals filed by the assessee and that since the issue stood already concluded against the assessee by the Punjab & Haryana High Court in Jai Narain’s case and the Tribunal had also followed the said judgement, the applicability of the said decision did not stand controverted, nor had any error been shown in the finding recorded by the Tribunal.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is assessee’s appeal for assessment year 2012-13 against the order dated 27.03.2022 passed by the ld. CIT(A) NFAC (NFAC) Delhi. The following grounds have been taken :
1. That the order of Ld. CIT(A) is against the law and facts of the case.
2. That the Ld. CIT(A), has grossly erred in upholding the illegal order passed by the AO, whereby he has denied the legitimate claim of the appellant u/s 54B of the Act.
3. That the Ld. CIT(A) has grossly erred in dismissing the appeal of the assessee and thereby denying the exemption of Rs. 46,93,099/- u/s 54B of the Act, particularly when the assessee has duly reutilized the sale proceeds/consideration in purchase of new property and fulfilled all the conditions of Section 54B.
4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off.
5. As per the Registry, there is delay of 35 days in filing the appeal. According to the application for condonation of delay, there is a delay of 35 days in filing the appeal. In the application, it has been contended that the assessee is a villager, an agriculturist and an uneducated person who is not at all tax savvy; that presently, Shri Rakesh Dhall, a practicing Chartered Accountant at Kurukshetra, Haryana is handling all the income tax matters of the assessee and he is also the assessee’s Taxation Advisor; that earlier, the e-mail put on the e-portal of the Income Tax Website was incometaxconsultantsca@gmail.com which neither belonged to the office of the said Shri Rakesh Dhall,C.A., nor to the assessee; that it might be the email Id of some earlier counsel; that the ld. CIT(A)’s order dated 27.03.2022 might have also been sent on the said email Id; that now, the email Ids on the Income Tax Portal have been corrected and two email Ids namely dhallca@yahoo.com and rakeshvedansh@gmail.com have been put as registered email Ids on the profile of Income Tax Portal of the assessee; that the ld. CIT(A)’s aforesaid order dated 27.03.2022 was not received by either the assessee, or Shri Rakesh Dhall, C.A. because of the bonafide reason that the email Ids were corrected later on and in the month of June,2022 at the time when the said C.A., namely, Shri Rakesh Dhall was checking on the e-portal of the assessee, he found that the order had been passed by the ld. CIT(A); that thereafter, immediately the counsel at Chandigarh was contacted and the appeal was filed without any further delay; that it is in this process, that the delay of 35 days has occurred; that further, the assessee is a villager, an agriculturist and an illiterate person, who is not at all tax savvy; and that therefore, the delay of 35 days in filing the appeal be condoned.
3. The application is accompanied by an affidavit of the assessee.
4. In view of the contents of the application for condonation of delay, we find that the assessee was prevented by sufficient cause from filing the appeal in time. Otherwise too, it cannot be said that the assessee would have stood to gain anything by delaying the institution of his own appeal. Accordingly, the delay of 35 days is hereby condoned.
5. Apropos the merits of the case as per the material on record, during the year under consideration, the assessee had sold urban agricultural land for a sum of Rs.49,60,000/-, earning a Long Term Capital Gain of Rs.46,93,099/-. The Long Term Capital Gain was invested by the assessee in the purchase of another agricultural land, for Rs.55,49,242/-, including Stamp Duty and Registration Charges, in the name of his wife. The assessee claimed exemption u/s 54B of the Income Tax Act. The Assessing Officer (AO), however, refused to allow the claim made. He relied on the decision of the Hon’ble Punjab & Haryana High Court in the case of “CIT, Faridabad Vs Dinesh Verma” passed on 06.07.2015, in ITA No. 3812 of 2014(60 taxmann.com 461(P&H), wherein, it was held that if the subsequent property is purchased by a person other than the assessee, including his close relative, even his wife and children, the assessee would not be entitled to the benefit conferred by the provisions of Section 54B of the Income Tax Act. Accordingly, the AO made addition of Rs.46,93,099/- to the income of the assessee.
6. On appeal, by virtue of the impugned order, the ld. CIT(A) has dismissed the assessee’s appeal. Aggrieved, the assessee is in further appeal.
7. Challenging the impugned order, the ld. Counsel for the assessee has contended that the ld. CIT(A) has erred in confirming the illegal order passed by the AO, denying the legitimate claim of the assessee u/s 54B of the Income Tax Act; that both the authorities below have failed to consider that the assessee had duly re-utilized the sale proceeds/Long Term Capital Gain in purchase of a new property, thereby fulfilling all the requisite conditions of the provisions of Section 54B of the Act. As before the ld. CIT(A), the assessee has placed reliance on the following case laws :
(i) CIT Vs Podar Cement (P) Ltd [1997] 92 Taxman 541/226 ITR 625 (SC).
(ii) Mir Gulam AN Khan Vs CIT [1987] 165 ITR 228
(iii) Jagpal Singh Vs ITO [2010] 186 Taxman 26 (Delhi)
(iv) CIT vs Kamal Wahal [2013] 351 ITR 4/214 Taxman 287/ 30 com34 (Delhi)
(v) CIT Vs Ravinder Kumar Arora [2012] 342 ITR 38/ [2011] 203 Taxman 289/ 15 com307 (Delhi)
(vi) CIT Vs Natarajan [2006] 287 ITR 271 /154 Taxman 399 (Mad)
(vii) Grandhi Kamaraj Mangaraj [ITA no.432/CIT(A)A/JA/10-11
(viii) Ram Kumar Vs Asst CIT [2012] 138 ITD 317/25 Taxman.com337 (Hyd)
(ix) Jt. CIT Vs Smt Armeda K Bhaya [2005] 95 ITD 313 (Mum)
8. The ld. CIT(A), on the other hand, has placed strong reliance on the impugned order. It has been contended that the CIT(A)’s reliance on the decisions of the Hon’ble jurisdictional High Court in the cases of “CIT, Faridabad Vs Dinesh Verma” 60 taxmann.com461 (P&H) and “Jai Narain Vs Income Tax Officer”, has not successfully been rebutted on behalf of the assessee; that these decisions were also reiterated by the Hon’ble High Court in the case of “Kamal Kant Kamboj Vs Income Tax Officer, Ward-3, Jagadhari, Yamuna Nagar, Haryana”, order dated 24.05.2017, passed in ITA No. 104 of 2017. It has been contended that accordingly, there being no merit whatsoever in the appeal filed by the assessee, the same be dismissed while confirming the order passed by the ld. CIT(A).
9. We have heard the parties and have perused the material on record. In “Kamal Kant Kamboj” (supra), relying on its earlier decisions in “CIT, Faridabad Vs Dinesh Verma” (supra) and “Jai Narain Vs Income Tax Officer” (supra), the Hon’ble jurisdictional High Court has held that as held in Jai Narain’s case, Section 54B of the Income Tax Act nowhere suggests that the legislature intended to advance the benefit of the said Section to an assessee who purchases agricultural land in the name of a third person; that the term “assessee” is qualified by the expression “purchased any other land for being used for agricultural purposes”, which necessarily means that the new asset has to be in the name of the assessee himself; that therefore, purchase of agricultural land by the assessee in the name of his son or grandson etc. does not qualify for exemption u/s 54B of the Act; that in interpreting the words contained in a Statute, the Court has not only to look at the words, but also to look at the context and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances; that the word “assessee” occuring in Section 54B must be interpreted in such a manner as to accord with the context and subject of its usage; that wherever the legislature intended to advance the benefit of a Section to an assessee, it had specifically provided so under the concerned provision; that as held in “Commissioner of Income Tax, Faridabad Vs Dinesh Verma “ (supra), in the case of purchase of agricultural land in the name of the wife of the assessee, the relief u/s 54B of the Act would not be allowed; that in the case of “Commissioner of Income Tax Vs Gurnam Singh”, 327 ITR 278 (P&H), the assessee, out of the sale proceeds of the agricultural land sold by him, had purchased some other piece of land in his name and in the name of his only son who was bachelor and depending upon him, for being used for agricultural purposes within the stipulated period; that the pure finding of fact had been recorded by the Tribunal that merely because in the Sale Deed, his only son was also shown as co-owner, it did not make any difference because the purchased land was being used by the assessee for agricultural purposes; that thus, on the basis of the finding recorded by the Tribunal, it had been concluded by the High Court that no substantial question of law arose, and the appeal had been dismissed; that in the case at hand, however, the land had been purchased by the assessee in the name of his wife only; that in the case of “Commissioner of Income Tax Vs Kamal Wahal” 351 ITR 4 (Delhi), it had been held that for the purpose of claiming deduction u/s 54F of the Act, the new residential house need not be purchased by the assessee in his own name, nor is it necessary that it should be purchased exclusively in his name; that a purposive construction is to be preferred as against a literal construction; that in view of the binding precedents of the Punjab & Haryana High Court in the cases of “Jai Narain” (supra) and “Dinesh Verma” (supra), the said view in “Kamal Wahal” was not being subscribed to; that similar was the position in the case of “Commissioner of Income Tax Vs V.Natarajan” 287 ITR 271 (Madras); that therein, the decision in Jai Narain’s case (supra) had not been accepted; that the opinion in “Director of Income Tax, International Taxation, Bangalore Vs Mrs. Jennifer Bhide” 15 taxmann.com 82 (Kar) being contrary to the decisions of the Punjab & Haryana High Court in the cases of “Jai Narain” (supra) and “Dinesh Verma” (supra), the assessee could not derive any advantage therefrom; that in “Commissioner of Income Tax Vs Vegetable Products Ltd “ 88 ITR 192 (S.C), the decision of the Court is to read the Section, understand its language and give effect to the same; that if the language is plain, the fact that the significance of giving effect to it may lead to some absurd result is not a factor to be taken into account in interpreting a provision; that it is for the legislature to step in and remove the absurdity; that on the one hand, if two reasonable constructions of a taxing provision are possible, then the construction which favours the assessee must be adopted; that there is no quarrel with this proposition; that that was a case in respect of Section 271(1)(a)(i) of the Act and the principle of law enunciated therein is well recognized; that however, the situation in the case at hand being different, the assessee could not derive any advantage from the said decision; that in the case at hand, exemption u/s 54B of the Act was not allowed to the assessee on the ground that the land was not purchased by the assessee in his own name; that the CIT(A) as well as the Tribunal, both dismissed the appeals filed by the assessee and that since the issue stood already concluded against the assessee by the Punjab & Haryana High Court in Jai Narain’s case (supra) and the Tribunal had also followed the said judgement, the applicability of the said decision did not stand controverted, nor had any error been shown in the finding recorded by the Tribunal.
10. It is seen that the case of the present assessee is squarely covered by the decision of the Hon’ble jurisdictional High Court of Punjab & Haryana in “Kamal Kant Kamboj” (supra). No later decision contrary to “Kamal Kant Kamboj” rendered by the Hon’ble Punjab & Haryana High Court or by the Hon’ble Supreme Court has been cited before us. “Kamal Kant Kamboj” (supra) itself has also not been shown to have been over-turned, or even stayed. “Podar Cement” (supra) relied on by the assessee does not lay down any law to the contrary. All the other decisions on which reliance has been placed by the assessee, cannot be of any use to the assessee in the light of “Kamal Kant Kamboj” (supra), which is a decision rendered by the Hon’ble jurisdictional High Court qua the assessee.
11. In view of the above discussion, we do not find any error whatsoever in the order passed by the ld. CIT(A). The same is, thus, hereby confirmed. The grievance sought to be raised by the assessee is found to be shorn of merit. The same is, accordingly, rejected.
12. In the result, the appeal is dismissed.
Order pronounced in the Open Court on 10th May,2023.
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