Case Law Details
Ravinder Kumar Vs ITO (ITAT Delhi)
Introduction: The Income Tax Appellate Tribunal (ITAT) Delhi recently ruled in the case of Ravinder Kumar vs ITO, addressing the eligibility of capital gain deduction under section 54B of the Income Tax Act. The appellant, Ravinder Kumar, challenged the decision of the Commissioner of Income Tax (Appeals) related to the Assessment Year 2011-12.
Detailed Analysis: Ravinder Kumar had sold agricultural land, resulting in Long Term Capital Gain (LTCG) of ₹12,78,456. Seeking exemption under section 54B, he asserted that the amount was reinvested in the purchase of another agricultural land, albeit in his spouse’s name. The Assessing Officer (AO) denied the deduction, contending that the property was acquired in the wife’s name.
In the appeal before the CIT(A), various case laws were referred to, and the order of the AO was upheld. The appellant then approached the ITAT, arguing that section 54B doesn’t prohibit purchasing property in the name of a family member. Additionally, the appellant highlighted the spouse’s illiteracy and lack of income, emphasizing that the land purchase was solely funded by the proceeds from the original asset sale.
The ITAT considered the decision in the case of Ashok Kumar ITO, where it was held that purchasing agricultural land in the spouse’s name is eligible for deduction under Section 54B. The ITAT rejected the dismissal of Special Leave Petition (SLP) by the Supreme Court in another case, emphasizing that the dismissal doesn’t merge the order with that of the High Court. The tribunal favored the assessee, citing precedents and directed the AO to allow the deduction under Section 54B.
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