The Delhi Bench of the Income Tax Appeal Tribunal (ITAT)composed of Saktijit Dey (judicial member) and BRR Kumar (accounting member) ruled that farmland purchased by assessee on behalf of his wife is not eligible for deduction under Section 54B of the Act income tax.
The person being assessed has filed a statement declaring income. The case was assessed by calculating capital gains. The assessee claimed a deduction under Section 54B of the Income Tax Act 1961. The assessee purchased four properties in the name of the assessee’s wife.
The issue raised was whether properties purchased by the assessee in the name of the assessee’s wife are eligible for deduction under Section 54B or not.
The ITAT relied on the Supreme Court’s decision in Commissioner of Customs (Imports) v. Dilip Kumar. It was held that, while conferring a benefit on the assessee, the provision must be interpreted strictly. If there is ambiguity, the person being evaluated cannot claim the benefit of the ambiguity and it must be interpreted in favor of the department.
The ITAT observed that the word “assessed” appearing in Section 54B must be interpreted to accord with the context and subject of its use. A reading of article 54B does not suggest anywhere that the legislator intended to advance the benefit of the article to an insured person who purchased the agricultural land, even in the name of a third party. Wherever the legislature intended it to be so, it expressly provided for it under the provision. The term “taxable person” is qualified by the expression “has purchased any other land for the purpose of being used for agricultural purposes”. This necessarily means that the new asset that is purchased must be in the name of the assessee itself to claim an exemption under Section 54B of the Act. The purchase of agricultural land by the assessee on behalf of a third party does not qualify for exemption under Section 54B.
The court dismissed the assessee’s appeal and denied the claim for a deduction under Section 54B with respect to farmland.
Case Title: Karamvir v Income Tax Officer Ward 2(2)
Reference: ITA n° 2023/Del/2017
Appellant’s Counsel: None
Counsel for the Respondent: Sr. DR Bhagwati Charan
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