Assessee Ineligible for Deduction under Section 54B  in lieu of land purchases in Wife’s name: ITAT [Read Order]

The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT ) held that the assessee was ineligible for deduction under Section 54B of the Income Tax Act, 1961 in lieu of land purchases in the wife’s name.

The assessing officer ( AO ) had completed the assessment under Section 144 of the Income Tax Act, 1961 and made an addition of long term capital gain ( LTCG ) amounting to Rs. 2,49,21,043.

The aggrieved assessee had appealed before the Commissioner of Income Tax ( Appeals ) [ CIT( A ) ]. As the claim under Section 54B and 54F of the Income Tax Act was made for the first time during the appellate proceedings, the CIT( A ) stated that it could not be entertained as the assessee had filed his income tax returns for the year under dispute.

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It is pertinent to note that the AO did not have any dispute regarding the deduction for agricultural land purchased in the assessee’s name. Here the issue arises when the land is bought in the wife’s name.

The AO, relying on the judgements of the Punjab and Haryana High Court in ai Narain, Dinesh Verma, and Kamal Kant Khamboj, contends that a Section 54B deduction is not allowed for assets purchased in a family member’s name.

The bench after relying on the judgments of the High Courts reached a conclusion that the assessee cannot claim any deduction under section 54B for the agricultural land purchased in the name of the wife.

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The ITAT bench comprising Paresh M Joshi ( Judicial Member ) and Vikram Singh Yadav ( Accountant Member ) upheld the decision of the AO in not allowing the assessee to claim a deduction of Rs. 36.7 lakhs under Section 54B of the Income Tax statute on the agricultural land purchased in the assessee’s wife’s name.

In this case, several grounds were raised and thus the appeal filed by the assessee was partly allowed by the bench.

To Read the full text of the Order CLICK HERE

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