Sitaram Pahariya (HUF) Vs I.T.O (ITAT Agra)
The bare reading of section 54B,( prior to amendment ) make it abundantly clear that the benefit of section 54 are available to assessee or a parents of his. However, the assessee has been defined in section 2(7) means every person in respect of whom any proceeding under this Act has been taken for the assessment of his income. The person has been defined under section 2(31) which include an individual, Hindu Undivided family etc . The conjoined reading of the above said provisions make it abundantly clear that an individual , Hindu undivided family etc is a person which is subjected to proceedings under the income tax act for the assessment of income and is therefore an assessee within the meaning of section 2(7) of the Act.
As the Hindu undivided family, can be an assessee for the purposes of the Income Tax Act, Therefore the assessee used in section 54 B, can be interpreted to mean, even the Hindu undivided family beside being an individual, etc would fell within the realm of assessee used in this provision, as and when context so required. Both i.e an individual assessee and HUE can be used to represent assessee in isolation in this provision depending upon the facts of the case. However the Hon’ble HC had pointed out some absurdity which would result in permitting reading of HUE as against assessee and had only restricted it to an individual assessee only. In our view, ratio laid down by the HC had been subsequently expanded and clarified by the subsequent amendment brought in by the Einance Act 2013, whereby the scope of section 54B had been clarified to include the assessee being an individual or his parent, or a Hindu undivided family. Beside that there are contrary views of various other authorities .Thus the controversy had been put to rest by the subsequent amendment of 2013 in section 54B, by the finance Act 2013, whereby even HUE was found to be entitle to take the benefit of 54B.
In our considered opinion, the Hindu undivided family, entitled to the benefit of 54B, even prior to insertion of“the assessee being an individual or his parent, or a Hindu undivided family” by the finance act 2013. In our view the assessee is a person subjected to tax under the income tax act. And the person includes even the individual as well as the Hindu undivided family. Therefore, the benefit of provisions of 54B, cannot be restricted to only individual assessee. Further we are of the opinion that the revenue is duty-bound to make out a clear case of debarring the HUF from availing the benefit of section 54F/54B, and the assessee cannot be denied the benefit merely based on the interpretation. If the revenue wanted to tax, the assessee(HUF), then the statute should have provided specifically that the assessee used in 54B, is only restricted to living individual and is not applicable to Hindu undivided family. Further the High Court had not considered that the individual assessee and HUF, can both be used as and when context so desires and it will not lead to any absurdity. In case the assessee is Hindu undivided family, the second part of section 54B i.e “of parents of his”, would not applicable. However, in the case of individual assessee, the parents of the assessee fulfill criteria, then the benefit can be given. In our considered opinion harmonious interpretation is required to invoked so that the word used in the provisions would not become redundant or otiose . In our view , in case of doubt or confusion ,the benefit of any doubt in respect to taxability or exemption should be given to the assessee rather than to revenue. On facts of the present case , we find that the assessee within two years of sale of agricultural land, had invested the amount and purchase of land in accordance with the requirement of section 54B and is entitle to the benefit of 54B of the ACT.
FULL TEXT OF THE ITAT JUDGEMENT
Present appeal was filed by the assessee feeling aggrieved by the order passed by the Commissioner appeal, whereby the relief sought by the assessee under section 54B was denied to the assessee. The grounds raised by the assessee before us are as under:
1 That the order passed by the learned commissioner of income tax (Appeals-2), Agra is based baseless facts, erroneous in law and against the natural justice which seems arbitrary and unjustified.
2 The learned assessing officer has erred in law and in facts while disallowing the exemption u/s 54B amounting to Rs. 36,39,000/-as he does not consider the material available on record of the appellant which seems arbitrary, unjustified and against the natural justice.
3 The appellant can amend or elucidated the ground of appeal at the time of hearing of appeal.
Brief facts
The Ld. Commissioner of appeal had captured the brief facts of the case in the order impugned before us in the following manner:
“Briefly stated, the appellant (HUF) had filed its return of income declaring income at NIL with the department on 03.08.2013. During the assessment stage, while examining the assessee’s claim of capital gain, the AO had noted that the assessee has declared Nil income under the head capital gains on sale of property, whereas as per the examination of the sale deed conducted by the AO, the AO while recording his factual findings had come a finding that there was a positive capital gain instead of the NIL capital gain which was shown by the assessee as per the following details:
