D.b. Income Tax Appeal v. The Commissioner Of Incometax & Others

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JAIPUR BENCH, JAIPUR D.B. Income Tax Appeal No. 112/2012D.B. Civil Misc. Stay Application No.1180/2012(Shri Kalya Versus The Commissioner of IncomeTax & Others) Dated :: 19[th] May, 2012 HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRAHON'BLE MR. JUSTICE MAHESH BHAGWATI Mr. Naresh Gupta, counsel for the appellant BY THE COURT(PER HON'BLE BHAGWATI, J.): Challenge in this Income Tax Appeal isto the order dated 22[nd] November, 2011, wherebythe Income Tax Appellate Tribunal, JaipurBench, Jaipur partly allowed the appeal filedby the assessee-appellant, while the appealfiled by revenue was allowed for statisticalpurposes. 2.Shorn of unnecessary details, thefacts of the case, in nub, are thatagricultural land ad-measuring 1.40 ha.,situated in village Balmukandpura was inheritedby the assessee-appellant and the same wasmutated in his name in the year 1956. Theaforesaid land was sold to M/s. Vatika Limitedfor a total consideration of Rs. 1,61,09,100/- vide registered sale deed dated 12.10.2006. Inorder to claim various exemptions includingexemption under Section 54B of the Income TaxAct, the assessee purchased new agriculturalland for a total consideration of Rs.1,22,71,440/- in the name of his son anddaughter-in-law. The Assessing Officer, havingconsidered the matter ad-longum, vide its orderdated 18.12.2009, assessed the capital gain ofRs. 1,59,83,761/-, in the hands of the assesse-appellant, liable for charging to tax.Dissatisfied with the order of AssessingOfficer, the appellant-assessee preferred anappeal before the Commissioner of Income Tax(Appeal). The learned Commissioner of IncomeTax (Appeal) vide his order dated 28.2.2011affirmed the order of the Assessing Officer andrejected the claim of the appellant-assesseeseeking exemption under Section 54B of the Act,albeit the learned Commissioner of Income Taxallowed the claim under Section 54B of the Act.3.Being aggrieved with the order dated28.2.2011 passed by the Commissioner of IncomeTax Appeal, both assessee as well as revenuepreferred appeals before the Income TaxAppellate Tribunal. The Tribunal vide its orderdated 22.11.2011, while dealing with the appeal of the assessee, disallowed the claim of theassessee under Section 54B and upholding thefindings of CIT (A) observed that no deductionunder Section 54(B) would be available on theissue of purchase of land in the name of hisson and wife. The Tribunal is found to haveplaced reliance on the judgments of variousHigh Courts and held thus: “The Hon'ble Delhi High Courtin the case of Vipin Malik (HUF)Vs. CIT, 330 ITR 309 has held thatresidential house which waspurchased or constructed had to beof the same assessee whoseagricultural land was sold. In thecase before Hon'ble Delhi HighCourt, the residential house wasin the individual name of theassessee and his mother while theland belonged to HUF. Thededuction u/s. 54F was not allowedin the case of Jai Narain Vs. ITO,306 ITR 335 in which it was heldthat term 'assessee' mentioned inSection 54B is quantified by theexpression ''Purchased any otherlandforbeingusedforagriculturalpurposeswhichnecessarily means that the newasset should be in the name of theassesseee himself. In the case ofGurnam Singh (supra), it wasnoticed by the Tribunal that the assessee's son was shown in thesale deed as co-owner. The Hon'blePunjab & Haryana High Court heldthat no substantial question oflaw is involved because it is notthe case of the revenue that theland in question was exclusivelyused by the son of the assessee.We therefore, uphold the findingsof the ld. CIT (A) that nodeduction u/s 54B will beavailable on the issue of purchaseof land in the name of his son andwife.”” assessee's son was shown in thesale deed as co-owner. The Hon'blePunjab & Haryana High Court heldthat no substantial question oflaw is involved because it is notthe case of the revenue that theland in question was exclusivelyused by the son of the assessee.We therefore, uphold the findingsof the ld. CIT (A) that nodeduction u/s 54B will beavailable on the issue of purchaseof land in the name of his son andwife.”” 4.The appellant-assessee has filed theinstant appeal challenging the order passed bythe learned Income Tax Appellate Tribunal. 5.Learned counsel for the appellant 5.Learned counsel for the appellantcanvassed that the object of granting exemptionunder Section 54B of the Act of 1961 is that aperson who sells agricultural land for thepurpose of purchasing another agricultural landmust be given exemption so far as capital gainsare concerned. The word “assessee” used insection 54B of the Act for fulfilling thecondition and subsequently enabling theassessee to claim exemption under Section 54Bof the Act must be given a wide and liberalinterpretation so as to include his legal heirsalso. The provisions contained in Section 54B of the Act being socio-welfare and beneficialin nature were required to be construedliberally in favour of assessee, but thelearned Tribunal arbitrarily disallowed theclaim of the appellant-assessee and upheld thefindings of the CIT (A) observing that nodeduction under Section 54B of the Act would beavailable to the assessee-appellant on theissue of purchase of land in the name of hisson and daughter-in-law, hence the impugnedorder needs to be set-aside. 6.Having heard the learned counsel forthe appellant and carefully perused therelevant material on record including theimpugned order, it is noticed that theappellant-assess sold the agricultural land,which was mutated in his name, for a saleconsideration of Rs. 1,61,09,100/-. Thereafterout of the selling price, the appellant-assessee purchased land in the name of his sonand daughter-in-law for a total considerationof Rs. 1,22,71,440/-. It is relevant to notethat the land sold was in the name ofappellant-assessee, while the land purchasedwas in the name of his son and daughter-in-law.7.A bare reading of Section 54B of theIncome Tax Act does not suggest that assessee would be entitled to get exemption for the landpurchased by him in the name of his son anddaughter-in-law. In the facts and circumstancesof the case also aforesaid inference has notbeen drawn. Same is question of fact. Nosubstantial question of law arises in appeal.Question whether purchase was by assessee or byson, is a question of fact. 8.Secondly, the word “assessee” used inthe Income Tax Act needs to be given a 'legalinterpretation'andnota'liberalinterpretation', as contended by the learnedcounsel for the appellant. If the word'assessee' is given a liberal interpretation,it would be tantamount to giving a free hand tothe assessee and his legal heirs and it shallcurtail the revenue of the Government, whichthe law does not permit. 9.The Income Tax Appellate Tribunal,having considered all the facts andcircumstances of the case, is found to haverightly disallowed the exemption under Section54B of the Act. 10.The impugned order passed by thelearned Tribunal is just and apposite, based oncogent findings, with which we fully concur andthus, the same warrants no intervention. 11. For the reasons stated above, the income tax appeal fails and the same beingbereft of any merit deserves to be dismissed,which stands dismissed accordingly. 12.Consequent upon the dismissal of 12.Consequent upon the dismissal ofincome tax appeal, the stay application, filedherewith, does not survive and the same alsostands dismissed. (MAHESH BHAGWATI),J. (ARUN MISHRA), C.J. DK All Corrections made in the judgment/order have been incorporated in the judgment/order being emailed.