The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the agricultural land purchased in the name of the wife is eligible for capital gain deduction under Section 54B of the Income Tax Act, 1961.
The assessee has sold agricultural land wherein Long-Term Capital Gain (LTCG) came to Rs.12,78,456/-. Assessee claimed that he has purchased land and under Section 54B of the Income Tax Act, the Long-Term Capital Gain is to be exempt.
The Assessing Officer (AO) denied the same as he noted that the said land was purchased in the wife’s name. Hence, the AO denied the claim of deduction under Section 54B of the Income Tax Act.
The counsel for the assessee referred the decision of Ashok Kumar vs. ITO in ITA.
The Departmental Representative referred to the dismissal of the Special leave petition (SLP) by the Supreme Court in the case of Bahadur Singh vs. CIT(A)wherein the Supreme Court dismissed the SLP against the order of Punjab and Haryana High Court, wherein the purchase of agricultural land in the name of assessee’s wife was not to be allowed under Section 54B of the Income Tax Act relief to assessee.
The Two-member bench comprising of Shamim Yahya (Accountant member) and Kul Bharat (Judicial member) held that the dismissal of SLP simpliciter by the Supreme Court does not merge the order of the High Court with that of the Supreme Court.
There was no jurisdictional High Court decision on this issue. Further, in case of conflict, the High Court decision in favour of the assessee has to be adopted as per the Supreme Court decision on vegetable products. Accordingly, we follow the precedent relied upon by the assessee which also draws support from Hon’ble High Court decisions referred therein. Hence, the order of the Revenue authorities was set aside, and decided the issue in favour of the assessee.
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