Case Law Details

Case Name : Vandana Maruti Pathare Vs ITO (ITAT Pune)
Appeal Number : ITA No. 2223/PUN/2017
Date of Judgement/Order : 16/03/2022
Related Assessment Year : 2011-12

Vandana Maruti Pathare Vs ITO (ITAT Pune)

Succinctly, the factual panorama of the case is that the assessee transferred certain agricultural lands and claimed exemption u/s 54B of the Act amounting to Rs.18 lakhs. During the course of assessment proceedings, the assessee submitted that she purchased new agricultural land in the name of her sons, Swapnil M. Pathare and Sonal M. Pathare. Relying on certain decisions, it was put forth that the exemption u/s 54B was available inasmuch as the assessee utilized the sale consideration in purchase of agricultural lands even though the same was in the name of her sons. The Assessing Officer (AO) came to hold that the condition precedent for claiming exemption u/s 54B of the Act was that the new property should be purchased in the name of the assessee only. Relying on the judgment of the Hon‟ble Bombay High Court in the case of Prakash Vs. ITO and Others (2009) 312 ITR 40 (Bom), the AO held that exemption u/s 54B could not be allowed because the property was not purchased in the name of assessee. The ld. CIT(A) affirmed the action of the AO. Aggrieved thereby, the assessee has preferred the appeal before the Tribunal.

It is seen that the Hon’ble Delhi High Court in CIT vs. Shri Kamal Wahal (2013) 351 ITR 4 (Del) and the Hon’ble Punjab & Haryana High Court in CIT vs. Gurnam Singh (2010) 327 ITR 278 (P&H) have decided similar issue in favour of the assessee by allowing exemption u/s 54B observing that the assessee having invested sale proceeds of his agricultural land in purchasing another agricultural land, though in a joint name with his son, was eligible for exemption. Identical view in favour of the assessee has been canvassed by certain other Hon’ble High Courts also.

On the contrary, the Hon’ble jurisdictional High Court in Prakash Vs. ITO and others (supra) has disentitled the assessee to the claim of exemption when a new property is not purchased in the name of assessee, who transferred the original property. The Hon’ble Punjab & Haryana High Court in a later decision in the case of CIT vs. Dinesh Verma (2015) 233 Taxman 409 (P&H) considered a case in which the new property was not purchased in the name of the assessee who transferred the original property. The Hon’ble High Court did not grant the benefit of exemption u/s 54B to that extent.

ITAT held that Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court. In that view of the matter, I am bound to follow the view taken by the Hon’ble jurisdictional High Court. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon’ble Bombay High Court in favour of the assessee on this issue. I, therefore, hold that the authorities below were justified in making the assessee not eligible to exemption u/s 54B of the Act.

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal by the assessee is directed against the order dated 30-06-2017 passed by the CIT(A), Pune-5, Pune in relation to the assessment year 2011-12.

2. The only issue pressed by the ld. AR is about not granting exemption u/s 54B of the Income-tax Act, 1961 (hereinafter referred to as the Act‟).

3. Succinctly, the factual panorama of the case is that the assessee transferred certain agricultural lands and claimed exemption u/s 54B of the Act amounting to Rs.18 lakhs. During the course of assessment proceedings, the assessee submitted that she purchased new agricultural land in the name of her sons, Swapnil M. Pathare and Sonal M. Pathare. Relying on certain decisions, it was put forth that the exemption u/s 54B was available inasmuch as the assessee utilized the sale consideration in purchase of agricultural lands even though the same was in the name of her sons. The Assessing Officer (AO) came to hold that the condition precedent for claiming exemption u/s 54B of the Act was that the new property should be purchased in the name of the assessee only. Relying on the judgment of the Hon‟ble Bombay High Court in the case of Prakash Vs. ITO and Others (2009) 312 ITR 40 (Bom), the AO held that exemption u/s 54B could not be allowed because the property was not purchased in the name of assessee. The ld. CIT(A) affirmed the action of the AO. Aggrieved thereby, the assessee has preferred the appeal before the Tribunal.

No Section 54B exemption if property not purchased in the name of assessee

4. I have heard both the sides and gone through the relevant material on record. At the outset, it is necessary to mention that the ld. AR did not press any other ground, except the ground No.2 through which the denial of exemption u/s 54B has been assailed. All other grounds are, therefore, dismissed as not pressed. Coming to the exemption u/s 54B, it is seen that the assessee sold her agricultural land and purchased new agricultural land in the name of her sons, Swapnil M. Pathare and Sonal M. Pathare. The only question is as to whether exemption u/s 54B can be allowed when the new property is purchased in the name of someone other than the assessee. The AO has relied on the judgment of Hon’ble jurisdictional High Court in the case of Prakash Vs. ITO and others (supra), in which it has been held that when a new property is purchased in the name of son with clear intention to transfer the property to him and the son becomes the full owner of property for all the purposes, the assessee cannot claim the benefit of exemption u/s 54B.

5. It is seen that the Hon’ble Delhi High Court in CIT vs. Shri Kamal Wahal (2013) 351 ITR 4 (Del) and the Hon’ble Punjab & Haryana High Court in CIT vs. Gurnam Singh (2010) 327 ITR 278 (P&H) have decided similar issue in favour of the assessee by allowing exemption u/s 54B observing that the assessee having invested sale proceeds of his agricultural land in purchasing another agricultural land, though in a joint name with his son, was eligible for exemption. Identical view in favour of the assessee has been canvassed by certain other Hon’ble High Courts also.

6. On the contrary, the Hon’ble jurisdictional High Court in Prakash Vs. ITO and others (supra) has disentitled the assessee to the claim of exemption when a new property is not purchased in the name of assessee, who transferred the original property. The Hon’ble Punjab & Haryana High Court in a later decision in the case of CIT vs. Dinesh Verma (2015) 233 Taxman 409 (P&H) considered a case in which the new property was not purchased in the name of the assessee who transferred the original property. The Hon’ble High Court did not grant the benefit of exemption u/s 54B to that extent.

7. Ergo, it is overt that the decisions have been rendered at variance by the two sets of the Hon’ble High Courts – one in favour of the assessee and other in favour of the Revenue. It goes without saying that the decision of a High Court is binding on the all subordinate Courts and authorities or Tribunal under its superintendence throughout the territories in relation to which it exercises jurisdiction. When discordant views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that other view of the non-jurisdictional High Court may sound more appealing on individual level vis-a-vis the view of the jurisdictional High Court. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion – for or against – on that point. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court. In that view of the matter, I am bound to follow the view taken by the Hon’ble jurisdictional High Court. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon’ble Bombay High Court in favour of the assessee on this issue. I, therefore, hold that the authorities below were justified in making the assessee not eligible to exemption u/s 54B of the Act.

8. In the result, the appeal is dismissed.

Order pronounced in the Open Court on 16th March, 2022.

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