Jaspalsingh Oberoi (HUF), Aurangabad V. Income-tax Officer,

ITA 302/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7342 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-10-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Question of law; Benefit of exemption
• Section: 143(3); 54B; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 302 /P U N/201 5 / ASSESSMENT YEAR : 20 10 - 11 JASPALSINGH OBEROI (HUF), H. NO. 5 - 1 - 71, GURUNANAK MARG, OSMANPURA, AURANGABAD - 431005 PAN : AAEHJ2127F ....... / APPELLANT / V/S. INCOME TAX OFFICER, WARD 2(2), AURANGABAD / RESPONDENT ASSESSEE BY : S HRI C.H. NANIWADEKAR REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 11 - 10 - 2017 / DATE OF PRONOUNCEMENT : 13 - 10 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, AURANGABAD DATED 19 - 12 - 2014 FOR THE ASSESSMENT YEAR 2010 - 11. THE SOLITARY ISSUE RAISED IN THE APPEAL 2 ITA NO . 302/PUN/2015, A.Y. 2010 - 11 BY THE ASSESSEE IS AGAINST DENIAL OF DEDUCTION U/S. 54B O F THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT ). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A HINDU UNDIVIDED FAMILY (HUF) ENGAGED IN THE AGRICULTURAL ACTIVITIES. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE HAD SOLD AGRICULTURE LAND AND HAS EARNED LONG TERM CAPITAL GAIN (LTCG) OF RS.2,29,93,680/ - . THE ASSESSE E THEREAFTER INVESTED LONG TERM CAPITAL GAIN IN PURCHASE OF AGRICULTURE LAND AND CLAIMED BENEFIT OF DEDUCTION U/S. 54B OF THE ACT. THE ASSESSING OFFICER REJECTED ASSESSEES CLAIM OF DEDUCTION U/S. 54B ON THE GROUND THAT IN THE IMPUGNED ASSESSMENT YEAR HUF IS NO T ELIGIBLE TO CLAIM DEDUCTION U/S. 54B OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28 - 03 - 2013 , PASSED U/S. 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE FINDINGS OF ASSESSING OFFICER AND REJECTED THE CONTENTIONS OF ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI AJAY MODI REPRESENTING THE DEPARTMENT STATED AT THE OUTSET THAT THE ISSUE IDENTICAL TO THE GROUNDS RAISED BY ASSESSEE IN APPEAL HAS ALREADY BEEN ADJUDICATED BY THE TRIBUNAL IN THE CASE OF ASHOK KISAN BAHIRAT (HUF) VS. INCOME TAX OFFICER IN ITA NO. 382/PUN/2015 FOR THE ASSESSMENT YEAR 2007 - 08 DECIDED ON 24 - 08 - 2017 IN FAVOUR OF REVENUE. THERE FORE, THE APPEAL OF ASSESSEE IS LIABLE TO BE DISMISSED. 3 ITA NO . 302/PUN/2015, A.Y. 2010 - 11 4. SHRI C.H. NANIWADEKAR APPEARING ON BEHALF OF THE ASSESSEE FAIRLY ADMITTED THAT THE TRIBUNAL IN THE CASE OF ASHOK KISAN BAHIRAT (HUF) VS. INCOME TAX OFFICER (SUPRA) HAS DECIDED IDENTICAL IS SUE IN FAVOUR OF THE REVENUE. 5. BOTH SIDES HEARD. ORDERS OF AUTHORITIES BELOW PERUSED. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS; WHETHER THE ASSESSEE - HUF IS ELIGIBLE FOR CLAIMING DEDUCTION U/S. 54B IN THE ASSESSMENT YEAR UNDER APPEAL. THE PROV ISIONS OF SECTION 54B HAVE BEEN AMENDED BY THE FINANCE ACT, 2012 W.E.F. 01 - 04 - 2013. AFTER THE AMENDMENT HUF HAS BEEN MADE ELIGIBLE FOR CLAIMING THE BENEFIT OF DEDUCTION U/S. 54B . PRIOR TO AMENDMENT , THE BENEFIT OF SECTION 54B WAS AVAILABLE TO THE INDIVID UAL S ONLY . 6. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASHOK KISAN BAHIRAT (HUF) VS. INCOME TAX OFFICER (SUPRA) HAS DEALT WITH THIS ISSUE IN DETAIL. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL ARE REPRODUCED HERE - IN - BELOW : 6. WE FIND THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. G.K. DEVARAJULU (SUPRA) HAD OCCASION TO DEAL WITH ELIGIBILITY OF HUF FOR CLAIMING EXEMPTION U/S. 54B OF THE ACT IN PERIOD PRIOR TO AMENDMENT. THE ASSESSMENT YEAR UNDER APPEAL WAS 197 2 - 73. THE QUESTION OF LAW BEFORE THE HONBLE COURT WAS : 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL'S VIEW THAT THE HINDU UNDIVIDED FAMILY IS ENTITLED TO EXEMPTION UNDER SECTION 54B(II) OF THE IT ACT, IS SUSTAINABLE IN LAW ?' THE HONBLE HIGH COURT ANSWERED THE QUESTION IN NEGATIVE BY HOLDING AS UNDER : 5. . THE WORDS 'ASSESSEE OR A PARENT OF HIS' OCCURRING IN S. 54B OF THE ACT, IN THE CONTEXT IN WHICH THE WORD 'ASSESSEE' HAS BEEN USED AND FROM THE MEANING OF THE WORDS ASSOCIATED WITH IT, WOULD APPEAR TO US TO 4 ITA NO . 302/PUN/2015, A.Y. 2010 - 11 CLEARLY INDICATE THAT ONLY AN 'INDIVIDUAL ASSESSEE' HAS BEEN CONTEMPLATED AND NOT ANY OTHER ENTITY OF ASSESSMENT. NO DOUBT, UNDER THE PROVISIONS OF THE ACT, AN HUF IS A DISTINCT TAXABLE ENTITY FOR THE PURPOSES OF T HE ACT, APART FROM THE INDIVIDUAL MEMBERS CONSTITUTING IT. EVEN SO, IF, IN PLACE OF THE WORD 'ASSESSEE' OCCURRING IN S. 54B OF THE ACT, THE WORDS 'HINDU UNDIVIDED FAMILYARE SUBSTITUTED AND THE SECTION IS READ, IT WILL LEAD TO ABSURD RESULTS. ON THE OTHER HAND, IF, FOR THE WORD 'ASSESSEE', ONE CLASS OF ASSESSEES, VIZ., AN INDIVIDUAL, IS SUBSTITUTED AND THE SECTION IS READ, THEN, SECTION 54B MAKES SENSIBLE READING. IN THE FORMER CASE, THE PROVISION WOULD READ 'USED BY AN HINDU UNDIVIDED FAMILY OR A PARENT OF HIS', WHILE, IN THE LATTER, IT WOULD READ AS 'USED BY AN INDIVIDUAL OR A PARENT OF HIS'. IT IS DIFFICULT TO CONCEIVE OF A PARENT OF OR FOR A HINDU UNDIVIDED FAMILY OR THE USER BY SUCH A PARENT OF A HINDU UNDIVIDED FAMILY. FURTHER, THE USE OF THE EXPRESSI ON 'BY A PARENT OF HIS' OCCURRING IN SECTION 54B OF THE ACT INDICATES THAT IN ORDER TO CLAIM BENEFIT THEREUNDER, THE USER MUST BE AN ASSESSEE, WHO HAS A PARENT, OR A PARENT OF HIS. THAT WOULD MEAN USER ONLY BY SUCH AN ASSESSEE, AS HAS A PARENT, OR, USER BY A PARENT OF THE ASSESSEE. THE USER 'BY HIS PARENT' CONTEMPLATED AND THE WORD 'HIS' EMPLOYED, CAN HAVE REFERENCE ONLY TO A LIVING PERSON LIKE AN INDIVIDUAL AND NOT TO AN ENTITY OR PERSON LIKE A HINDU UNDIVIDED FAMILY. THE USER BY THE PARENT, WHICH WOULD AL SO QUALIFY FOR CLAIMING THE BENEFIT OF SECTION 54B WOULD BE INAPPLICABLE TO A CASE WHERE THE ASSESSEE IS NONE OTHER THAN AN INDIVIDUAL. IN OTHER WORDS, WHEN THE MEANING OF THE WORD 'ASSESSEE' USED IS ASCERTAINED FROM THE MEANING OF THE WORDS ASSOCIATED WIT H IT, IT IS CLEAR FROM THE COMPANY THE WORD 'ASSESSEE' KEEPS, THAT WHAT HAD BEEN CONTEMPLATED IS ONLY AN INDIVIDUAL AND NOT A HINDU UNDIVIDED FAMILY. THE HONBLE HIGH COURT FURTHER HELD : 6. FURTHER, ON THE LANGUAGE EMPLOYED IN S. 54B OF THE ACT, AND LOOKING AT WHAT IS STATED THEREIN, IT IS DIFFICULT TO APPLY THIS PRINCIPLE, FOR IT IS NOT POSSIBLE IN OUR VIEW, FOR A PROPER, REASONABLE AND INTELLIGIBLE INTERPRETATION GIVING EFFECT TO THE WORDS EMPLOYED IN THE SECTION, THE CONTEXT AND THEIR COLLOCAT ION, TO CONSTRUE THE WORD 'ASSESSEE' AS APPLICABLE TO ALL CATEGORIES OF ASSESSEES AND THE WORDS 'A PARENT OF HIS' AS CONFINED IN ITS APPLICABILITY ONLY TO SUCH ASSESSEES, AS ARE CAPABLE OF HAVING A PARENT. WE HAVE EARLIER INDICATED THE INTERPRETATION WE AR E INCLINED TO PUT ON THE WORDS OCCURRING IN S. 54B AND THE SECTION SHOULD BE MADE WORKABLE WITH THE WORDS EMPLOYED, VIZ., 'THE ASSESSEE OR A PARENT OF HIS' AND THE SECTION COULD BE WORKED ONLY BY HOLDING THAT THE ASSESSEE CONTEMPLATED THEREIN IS AN INDIVID UAL OR A PARENT OF THAT INDIVIDUAL AND THAT CANNOT BE INTERPRETED AS INCLUDING ALL ASSESSEES, BY THE EXPRESSION 'ASSESSEE' AND EXCLUDING ALL THOSE OTHER THAN AN INDIVIDUAL BY THE WORDS 'A PARENT OF HIS'. TO ACCEPT THE 5 ITA NO . 302/PUN/2015, A.Y. 2010 - 11 CONTENTION OF LEARNED COUNSEL FOR THE ASSESSEE WOULD BE TO INTERPRET THE PROVISION IN A MANNER WHICH WOULD BE TOTALLY OUT OF CONTEXT AND TO DESTROY THE VERY PURPOSE FOR WHICH THE PROVISION HAD BEEN ENACTED AND WOULD ALSO LEAD TO INCONGRUOUS RESULTS. 7. THE HONBLE HIGH COURT FURTHER OBSERVED THAT THE INTENTION OF THE PARLIAMENT WAS NOT TO GRANT BENEFIT OF EXEMPTION U/S. 54B TO HUF AS SIMILAR AMENDMENT WAS CARRIED OUT BY THE PARLIAMENT IN SECTION 54 TO INCLUDE HUF. THE RELEVANT EXTRACT OF THE OBSERVATIONS OF THE HONBLE HIGH COURT IN THIS REG ARD READS AS UNDER : IT WOULD ALSO BE PERTINENT TO POINT OUT THAT, BY S. 19 OF THE FINANCE ACT, 1987, IN S. 54(1) OF THE ACT, AN HUF HAS ALSO BEEN INCLUDED. THE LEGISLATIVE CHANGE THUS BROUGHT ABOUT IS ALSO AN INDICATION THAT WHAT HAD BEEN CONTEMPLATED BY 'ASSESSEE' UNDER S. 54(1) OF THE ACT WAS NOT AN HUF, BUT ONLY AN INDIVIDUAL. WHILE A CHANGE HAD BEEN BROUGHT IN IN S. 54(1) OF THE ACT, S. 54B OF THE ACT HAD BEEN LEFT INTACT. THIS, IN OUR VIEW, ALSO CLEARLY INDICATES THAT THOUGH PARLIAMENT WAS FULLY ALIV E TO THE NEED FOR INCLUDING AN HUF WITHIN THE SCOPE OF S. 54(1) OF THE ACT, FOR SOME REASONS, IT HAD NOT THOUGHT IT FIT TO DO SO IN A CASE FALLING UNDER S. 54B OF THE ACT. THUS, ON A CAREFUL CONSIDERATION OF THE WORDS EMPLOYED AND INTERPRETING THE WORDS IN THE CONTEXT IN WHICH THEY HAVE BEEN USED AND THEIR COLLOCATION, WE HOLD THAT THE WORD 'ASSESSEE' USED IN S. 54B WOULD BE APPLICABLE ONLY TO THE CASE OF AN 'INDIVIDUAL' AND WOULD NOT TAKE IN A HINDU UNDIVIDED FAMILY. 8. THUS, IN VIEW OF THE PLAIN READIN G OF SECTION PRIOR TO AMENDMENT AND IN THE LIGHT OF RATIO LAID DOWN IN THE CASE OF COMMISSIONER OF INCOME TAX VS. G.K. DEVARAJULU (SUPRA) WE HOLD THAT THE ASSESSEE BEING HUF IS NOT ELIGIBLE FOR CLAIMING EXEMPTION U/S. 54B OF THE ACT DURING THE ASSESSMENT Y EAR UNDER APPEAL. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 9. THE ISSUE RAISED IN PRESENT APPEAL IS IDENTICAL TO THE ONE ADJUDICATED BY HONBLE MADRAS HIGH COURT. THERE IS NO SCOPE LEFT FOR THE TRIBUNAL TO FURTHER INTERPRET THE PROVISIONS O F THE SECTION ON THIS ASPECT OR TO DELIBERATE ON RETROSPECTIVE APPLICABILITY OF AMENDMENT TO SECTION 54B BROUGHT IN BY THE FINANCE ACT 2012. THE LD. AR HAS NOT BROUGHT TO OUR KNOWLEDGE ANY JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OR THE HONBLE APEX COURT SUGGESTING RETROSPECTIVE APPLICABILITY OF THE AMENDED PROVIS IONS OF SECTION 54B OF THE ACT. 6 ITA NO . 302/PUN/2015, A.Y. 2010 - 11 7. THUS, IN VIEW OF THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL AND THE FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DENYING THE BENEFIT OF SECTION 54B TO THE ASSESSEE. ACCORDINGLY, THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 13 TH DAY OF OCTOBER, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 13 TH OCTOBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, AURANGABAD 4. / THE CIT - 2, AURANGABAD 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE