By TIOL News Service

CHANDIGARH, OCT 26, 2017: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether benefit of exemption u/s 54B can be claimed by purchaser, if the new agricultural land has been purchased in name of his spouse without even disclosing capital gains. NO is the verdict.

Facts of the case:

The Assessee is an individual. He alongwith his brother Shri Sanjay Kumar Kamboj sold agricultural land situated in Village Ratoli, Yamuna Nagar for Rs. 72,00,000/-, during the subject year. The taxable half share of Assessee in this regard was Rs. 26,45,750/-. The assessee thereafter purchased another agricultural land of Rs. 35,51,000/- in the name of his wife Ms. Manjeet Kaur. As the value of the new agricultural land purchased by Assessee was more than that of the land sold, the assessee did not disclose any long term capital gain in regard to the same and claimed exemption u/s 54B. Accordingly, a notice u/s 148 was issued on the ground that Assessee had not disclosed the long term capital gain in his return of income, and therefore, he disallowed exemption u/s 54B on the ground that the land was purchased in the name of wife and not in the name of Assessee himself. On appeal, the CIT(A) as well as ITAT confirmed the order of AO.

High Court held that,

++ the issue that arises for consideration, is whether the assessee is entitled for exemption u/s 54B on account of agricultural land purchased by him in the name of his wife. This issue has been considered bt this court in Jai Narayan's case and stands concluded against the assessee. It was held by this Court therein that Section 54B nowhere suggests that the legislature intended to advance the benefit of the said section to an assessee who purchases agricultural land even in the name of a third person. The term "assessee" is qualified by the expression "purchased any other land for being used for agricultural purposes", which necessarily means that the new asset has to be in the name of the assessee himself. Therefore, purchase of agricultural land by the assessee in the name of his wife does not qualify for exemption u/s 54B;

++ in the present case, the assessee alongwith his brother sold agricultural land in Village Ratoli, Yamuna Nagar for Rs. 72,00,000/-. Out of his half share, he purchased another agricultural land for Rs. 35,51,000/- in the name of his wife. As the value of the said land was more than that of the land sold, he did not disclose any long term capital gain and claimed exemption u/s 54B. This exemption was denied on the ground that the land was not purchased by Assessee in his own name. Since the issue has already been concluded against the assessee by this Court in Jai Naryan's case, and the Assessee's counsel has not been able to controvert the applicability of the said decision, the appeal merits diallowance.

(See 2017-TIOL-2232-HC-P&H-IT)