The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) recently disallowed the exemption under Section 54B property purchased in the name of the wife of assessee.
The Assessee Shri Surta Ram, had sold urban agricultural land for a sum of Rs.49,60,000/-, earning a Long Term Capital Gain of Rs.46,93,099/-. The Long Term Capital Gain was invested by the assessee in the purchase of another agricultural land, for Rs.55,49,242/-, including Stamp Duty and Registration Charges, in the name of his wife.
The assessee claimed exemption under Section 54B of the Income Tax Act. The Assessing Officer (AO), however, refused to allow the claim made. He relied on the decision of the Punjab & Haryana High Court in the case of “CIT, Faridabad Vs. Dinesh Verma”, wherein, it was held that if the subsequent property is purchased by a person other than the assessee, including his close relative, even his wife and children, the assessee would not be entitled to the benefit conferred by the provisions of Section 54B of the Income Tax Act. Accordingly, the Assessing Officer made an addition of Rs.46,93,099/- to the income of the assessee.
In appeal, CIT (A) has dismissed the assessee’s appeal. Aggrieved, the assessee further filed an appeal before the Tribunal. Counsel for the assessee contended that both the lower authorities failed to consider that the assessee had properly reinvested the sale proceeds/Long Term Capital Gain in the purchase of a new property, thereby fulfilling all the necessary conditions under Section 54B of the Income Tax Act.
The tribunal bench, consisting of two members, Vice President A.D.Jain and Accountant Member Vikram Singh Yadav, observed that exemption under Section 54B of the Income Tax Act was not allowable to the assessee on the ground that the land was not purchased by the assessee in his own name; that the CIT(A) as well as the Tribunal, both dismissed the appeals filed by the assessee and that since the issue stood already concluded against the assessee by the Punjab & Haryana High Court in Jai Narain’s case (supra) and the Tribunal had also followed the said judgment.
In result, appeal filed by the assessee was dismissed
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