No capital gains exemption on agriculture land purchased in the name of assessee’s wife, says Income Tax Appellate Tribunal

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) in the case Karamvir Versus Income Tax Officer, the bench consisting of Saktijit Dey (Judicial Member) and B.R.R. Kumar (Accountant Member) observed and has held that the agricultural land purchased by the assessee in the name of his wife is not eligible for deduction under Section 54B of the Income Tax Act.

A return declaring an income has been filled by the assessee. The case was assessed by computing the capital gains and a declaration was claimed by the assessee that under section 54B of the Income Tax Act, 1961. In the name of the assessee’s wife, the assessee has purchased four properties.

In the present case, the issue raised was weather the properties purchased by the assessee in the name of the assessee’s wife are eligible for deduction under section 54B or not.

The ITAT bench relied upon the decision of the Supreme Court in the case of Commissioner of Customs (Imports) vs. Dilip Kumar, wherein it was held that while giving benefits to the assessee, the provision needs to be interpreted strictly and if there is ambiguity, the assessee cannot claim the ambiguity benefit, and the same must be interpreted in favour of the department.

It was observed by the ITAT that in section 54B the word “assessee” occurring must be interpreted in such a manner as to accord with the context and subject of its usage and nowhere the reading of section 54B suggests that the Legislature intended to advance the benefit of the section to an assessee who purchased the agricultural land, even in the name of a third person. Wherever the Legislature intended it to be so, under the provision, it specifically provided.

However, the term “assessee” is qualified by the expression “purchased any other land for the purpose of being used for agricultural purposes.” and it necessarily means that the new asset which is purchased has to be in the name of the assessee himself for seeking an exemption under section 54B of the Act. Under section 54B, the purchase of agricultural land by the assessee in a third person’s name cannot be held entitled to exemption to the said provision.

The appeal of the assessee was dismissed by the tribunal and the same was disallowed by the claim of deduction under section 54B with regard to the agricultural land.