No exemption on agricultural land purchased in name of wife under section 54B
Facts and Issues of the case
The assessee filed return declaring an income of Rs.8,72,370/-. The case was assessed computing the capital gains at Rs.1 ,07,50 ,047/-. The assessee claimed deduction u/s 54B of the Income Tax Act, 1961 of Rs.65 ,15,210/-. There is no dispute that the assessee is eligible for deduction u/s 54B in principle. The assessee has purchased four properties out of which two of the properties were purchased amounting to Rs.35 ,83 ,277/- and Rs.14 ,63 ,929/- in the name of the assessee’ s wife. The issue is whether the properties purchased by the assessee in the name of the assessee’ s wife are eligible for deduction u/s 54 B or not.
Observations by the Court
Section 54B requires the assessee to purchase the property from out of the sale consideration of the capital asset. It does not entitle the assessee to the benefit conferred therein if the subsequent property is purchased by a person other than the assessee including a close relative even such as his wife or children. Indeed, an assessee can purchase an asset or a part thereof in the name of his wife but he would not be entitled then to the benefit of Section 54B. Hence, keeping in view the facts of the case, provisions of the Act and the legal proposition, the court declines to interfere with the decision of the CIT(A) in disallowing the claim of deduction u/s 54 B with regard to the agricultural land purchased amounting to Rs.35 ,83 ,277/- and Rs.14 ,63 ,929/-.
A person can purchase an asset or a part thereof in the name of his wife or even close relatives but he would not be entitled then to the benefit of Section 54B.Karamvir-Vs-ITO-ITAT-Delhi