Tuesday, January 6, 2015

Even on sale of land held jointly with son Sec. 54B relief to be allowed to father on purchase of land in son's name


Where son of assessee was also joint owner of land, which was sold and subsequently new land was purchased only in name of son because of assessee's old age and other technical reason, assessee was entitled to deduction under section 54B

Facts:


a) During assessment proceedings the Assessing Officer (‘AO’) noticed that proceedings under section 153C were initiated against assessee when documents regarding sale of land was unearthed during search. Ultimately capital gain was computed and the assessee had claimed deduction under section 54B of the Act.

b) The AO denied the deduction on the ground that new land was purchased by the assessee in the name of his son. The CIT(A) upheld the action of AO. The assessee contended that he was an old person and had only one son, who was going to be the legal heir, there was no purpose for purchasing the new land in the name of the assessee himself and that is why land was purchased in the name of his son.

c) The aggrieved assessee filed the instant appeal before ITAT.

The ITAT held in favour of assessee as under:

1) The land which was sold by the assessee was in the joint name of the assessee along with his son, which means the son was also part owner of the land, therefore the issue would stand covered by the decision of the hon'ble Punjab and Haryana High Court in the case of CIT v. Gurnam Singh [2008] 170 Taxman 160 (Punj. & Har.) wherein it was held as under :

"The Tribunal had recorded a pure finding of fact that the land in question was purchased out of the sale proceeds of the agricultural land which was used only for agricultural purposes and merely because the assessee's son was shown in the sale deed as co-owner, it did not make any difference. It was not the case of the Revenue that the land in question was exclusively used by his son. Therefore, the assessee was entitled to deduction under section 54B."

2) If the land was purchased in the name of the son of the assessee because of old age and other technical reasons, the assessee would still be entitled to deduction under section 54B. Accordingly, the order of the CIT(A) was to be set-aside and AO was to be directed to allow deduction under section 54B. - Bant Singh v. ITO [2014] 52 taxmann.com 364 (Chandigarh - Trib.)