Commissioner Of Income Tax, Ludhiana-I,Ludhiana v. Shri Gurnam Singh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A.No.616 of 2007 DATE OF DECISION: APRIL 01, 2008 Commissioner of Income Tax, Ludhiana-I,Ludhiana Versus .....APPELLANT Shri Gurnam Singh ....RESPONDENT CORAM:HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG--- Present:Mr.Sanjiv Bansal, Advocate,for the appellant. .. SATISH KUMAR MITTAL, J. The instant appeal filed by the revenue under Section 260Aof the Income Tax Act (hereinafter referred to as `the Act') is directedagainst the order dated 24.04.2006 passed by the Income Tax AppellateTribunal, Chandigarh Bench `A', Chandigarh (hereinafter referred to as`the ITAT') in IT/SS/No.5/Chandi/2003 in case of the respondent-assesseefor the Block Period 01.04.1988 to 15.07.1998 by raising the followingsubstantial question of law:- Whether on the facts and law, the Hon'ble Income TaxAppellate Tribunal was justified in allowing deduction u/s54B of the Income Tax Act, 1961 in respect of agriculturalland purchased in the name of son of respondent/assesseewhen Section 54B stipulated investment of capital gain inpurchase of another agricultural land by the assessee? I.T.A.No.616 of 2007 -2- In the present case, the respondent is an illiterateagriculturist. During the search which was conducted in the businesspremises of M/s S.S. Property Dealer on 15.07.1998, an agreement to selldated 26.03.1997 was seized. The said agreement revealed that GurnamSingh (respondent) sold 60 kanals of agricultural land situated in villageBhamia Kalan to one Sukhdev Singh @ Rs.8,00,000/- per acre. Theamount of Rs.5,00,000/- was obtained by him as earnest money. TheAssessing Officer on the basis of said agreement initiated the proceedingsunder Section 158BD of the Act by giving notice to show cause why therespondent had not paid the capital gains tax on the sale of the saidagricultural land. The Assessing Officer vide order dated 28.06.2002assessed the income at Rs.18,33,200/-. The claim made by the respondentfor deduction of Rs.16,33,200/- under Section 54B of the Act in respect ofthe agricultural land purchased by him along with his son was not allowedon the ground that exemption from capital gains was available in case thesame was invested by the assessee for the purposes of purchasing anotheragricultural land and not in respect of the land purchased by any otherperson. Feeling aggrieved against the aforesaid order, the respondentfiled an appeal before the Commissioner of Income Tax (Appeals), whovide his order dated 17.12.2002 allowed the same and set aside the actionof the Assessing Officer in denying the deduction under Section 54F ofthe Act to the respondent. Against the said order, the revenue filed anappeal before the ITAT, who vide its order dated 24.04.2006 hasdismissed the appeal, while observing as under:- “The issue before us revolves around allowability of I.T.A.No.616 of 2007 -3- Feeling aggrieved against the aforesaid order, the respondentfiled an appeal before the Commissioner of Income Tax (Appeals), whovide his order dated 17.12.2002 allowed the same and set aside the actionof the Assessing Officer in denying the deduction under Section 54F ofthe Act to the respondent. Against the said order, the revenue filed anappeal before the ITAT, who vide its order dated 24.04.2006 hasdismissed the appeal, while observing as under:- “The issue before us revolves around allowability of I.T.A.No.616 of 2007 -3- deduction u/s 54B and 54F of the Act. The land in questionwas purchased by the assessee in the name of his son. Thelearned Assessing Officer disallowed the deduction on theground that the land is in the name of the son of the assessee,so the deduction cannot be allowed, specially when the landwas purchased by Sh. Gurnam Singh out of the sale proceedsof agricultural land and since Palwinder Singh was bachelorand was not having any independent source of income wasdependent upon his father even for livelihood. Theconclusion of the learned Assessing Officer is available onpage 4 of the assessment order. Before coming to aconclusion, we are supposed to analyze section 54B which isapplicable where the capital gains arise from the transfer ofcapital asset and was being used for agriculture purposeswhich was invested in the purchase of any other land andagain being used for agricultural purposes. There is nodispute to the fact that the assessee sold his agricultural landand then purchased other agricultural land out of the saleproceeds and got registered some portion of the land in thename of his only son who was a bachelor at the relevant time.If the `ikrarnama'/agreement is analyzed which is available atpage 9 of the paper book, it clearly speaks that “Thepurchaser is at liberty to execute the sale deed in the name ofany member of his family. He is also at liberty to execute asmany as sale deeds as he desires........” If the contents of the`ikrarnama'/agreement to sale' is analyzed one undisputedfact is oozing out that the sale proceeds of the agriculturalland were in fact used to purchase another agricultural land.Section 54B speaks about transfer of capital asset being landwithin a specified period and another land is purchased foragricultural purposes, then it shall be dealt with inaccordance with the provision of this section. It is not thecase of the revenue that the capital gain was not utilized bythe assessee for the purchase of new asset before the date of I.T.A.No.616 of 2007 -4- furnishing the return of income u/s 139. In fact, if the facts asdetailed in the `ikrarnama' are analyzed, the capital gains wasutilized by the assessee for purchasi8ng the new asset.Section 54B is applicable as per the provision of clause 2 ofthe section. The only dispute raised by the revenue is that theland was got registered in the name of his son. This fact isnot disputed that the assessee was an old and illiterate personand never filed any return. At the same time, he was nothaving any other source of income also. It is not the case thatthe sale proceeds were used for any other purposes or beyondthe stipulated period. This fact was also not disputed that theson of the assessee was bachelor and was not having anyother source of income and was totally dependent upon hisfather. Undisputedly, the earlier land which was sold, alsobelonged to the assessee and the sale proceeds were alsoused for purchasing agricultural land. The possession of thesaid land was also taken by the assessee. The only objectionraised by the revenue was that the said land was registered inthe name of his son. In view of these facts, it cannot be saidthat the capital gains/sale proceed were in any way misusedfor any other purposes contrary to the provisions of law.” We have heard the counsel for the revenue and gone throughthe aforesaid impugned order. In our opinion, from the impugned order,no substantial question of law is arising for consideration of this court asthe ITAT while recording a pure finding of fact has dismissed the appealof the revenue. Undisputedly, in this case the assessee had sold theagricultural land which was being used by him for agricultural purposes.Out of sale proceeds of the said sale, the assessee has purchased otherpiece of land (land in question) in his name and in the name of his onlyson, who was bachelor and dependent upon him, for being used foragricultural purposes within the stipulated time. Further, it is not the case I.T.A.No.616 of 2007 -5- of the revenue that from the sale proceeds of the agricultural land earlierowned by the assessee, the land in question was purchased for any otherpurpose than the agricultural purpose. Undisputedly, the purchased land isbeing used by the assessee only for agricultural purpose and merelybecause in the sale deed his only son was also shown as co-owner, theITAT has rightly come to the conclusion that it does not make anydifference because the purchased land is being used by the assessee foragricultural purposes. It is not the case of the revenue that the said land isbeing used exclusively by his son. In our view, a pure finding of fact hasbeen recorded by the ITAT which does not require any interference in thisappeal. No substantial question of law is involved in this appeal.Dismissed. (SATISH KUMAR MITTAL) JUDGE April 01, 2008vkg (RAKESH KUMAR GARG) JUDGE