Jile Singh Dalal and Jitender Singh Dalal V. Commissioner of Income Tax, Faridabad

ITA/237/2011

AI Insights

The case involves Jile Singh Dalal, the appellant, who contested the denial of exemption under Section 54B of the Income Tax Act, 1961, for a capital gain investment made in the name of his wife. The appellant had sold agricultural land and used part of the proceeds to purchase new agricultural land, which was registered in the name of his wife. The Assessing Officer initially denied the exemption, a decision later overturned by the CIT(A), but reinstated by the Tribunal based on the precedent that the new asset must be in the name of the assessee. The High Court, referencing the Jai Narayan case, upheld the Tribunal's decision, leading to the dismissal of the appeal.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 817077 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 26-07-2011
• Assessment Year: misc
• Other Referred Cases: Jai Narayan v. ITO, CIT v. Natarajan (V.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: AMAN BANSAL
• Keywords: Agricultural Land; Capital gain investment; Exemption; Income Clubbing; Long Term Capital Gains
• Section: 143(3); 142(1); 143(2); 64; 54B; 260A

Judgement Text

"ITA No. 237 of 2011 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 237 of 2011 (O&M) Date of Decision: 26.7.2011 Jile Singh Dalal ....Appellant. Versus Commissioner of Income Tax, Faridabad ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Aman Bansal, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. Delay in refiling condoned. 2. This order shall dispose of ITA Nos. 237 and 238 of 2011 as according to the learned counsel, common questions are involved therein. For brevity, the facts are being taken from ITA No. 237 of 2011. 3. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 13.8.2010 passed by the Income Tax Appellate Tribunal, Delhi Bench “D”, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 1199/Del/2010 relating to the assessment year 2006-07, claiming the following substantial questions of law:- “A. Whether on the facts and circumstances of the case ITA No. 237 of 2011 -2- and in law the exemption u/s 54B of the Income Tax Act, 1961 regarding capital gain investment made in the name of assessee's wife was available to the assessee? B. Whether in view of statutory law under Section 64 of the Income Tax Act that the income of spouse to be clubbed with the income of individual where such individual has substantial interest in income, the same principle of law should be applicable to exemption under Section 54B of the Income Tax Act?” 3. Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the assessee is an employee and notice under Section 142(1) of the Act dated 20.2.2007 was served upon him to file return for the assessment year 2006-07. In response thereto, the assessee filed his return on 19.3.2007 declaring an income of Rs.74,260/- which included salary income and income from other sources. Agricultural income of Rs.85,000/- was also disclosed and long term capital gains on sale of land was shown as nil after claiming deduction under Section 54B of the Act for purchase of agricultural land out of the sale proceeds. On 18.10.2007, notice under Section 143(2) of the Act was issued to the assessee and the assessment under Section 143(3) of the Act was completed vide order dated 1.12.2008. The Assessing Officer denied the claim of the assessee under Section 54B of the Act and made addition of the equivalent amount. During the year, the assessee sold his agricultural land held by him jointly with his ITA No. 237 of 2011 -3- brother for a total sale consideration of Rs.84,87,512/- and the assessee's share came to Rs.42,43,756/- in the land sold. Its index cost was at Rs.1,55,512/-. The assessee purchased agricultural land jointly with his brother for Rs.53,84,000/- including stamp duty charges and its half share i.e. Rs.26,92,400/- was claimed as deduction under Section 54B of the Act. The assessee also claimed deduction on Rs.12,49,000/-, i.e. half share of the land purchased by him in the name of his wife jointly with his sister-in-law. The Assessing Officer vide order dated 4.12.2008 disallowed the claim of Rs.12,49,000/- under Section 54B of the Act being agricultural land purchased in the name of the assessee's wife along with other expenses of Rs.67,900/- holding that the said amount was gifted by the assessee to his wife. The other claims for several expenses were also disallowed for the same reason. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”]. The CIT (A) vide order dated 15.1.2010 allowed the appeal and directed the Assessing Officer to grant exemption under Section 54B of the Act to the assessee. Being not satisfied, the department filed an appeal before the Tribunal who relying upon the judgment of this Court in Jai Narayan v. ITO, [2008] 306 ITR 335 vide order dated 13.8.2010 allowed the appeal. Hence, the present appeal by the assessee . 4. The point for consideration in these appeals is whether the assessee was entitled to benefit of Section 54B of the Act in respect of long term capital gain arising from sale of land, when the assessee had purchased the agricultural land in the name of his wife from those sale proceeds. ITA No. 237 of 2011 -4- 5. The similar issue came up for consideration before this Court in Jai Narayan's case (supra), wherein this Court taking a different view from the Madras High Court in CIT v. Natarajan (V.) [2006] 287 ITR 271 had held that the new asset, i.e. agricultural land, which was subsequently purchased had to be in the name of the assessee and the said benefit was not admissible where the same had not been purchased in the name of the assessee. 6. No illegality or perversity could be pointed out by the learned counsel for the appellant in the order passed by the Tribunal which may warrant interference by this Court. Therefore, this Court is of the opinion that no substantial question of law arises in these appeals. The same are dismissed. (AJAY KUMAR MITTAL) JUDGE July 26, 2011 (ADARSH KUMAR GOEL) gbs ACTING CHIEF JUSTICE ITA No. 237 of 2011 -5- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 238 of 2011 (O&M) Date of Decision: 26.7.2011 Jitender Singh Dalal ....Appellant. Versus Commissioner of Income Tax, Faridabad ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Aman Bansal, Advocate for the appellant. AJAY KUMAR MITTAL, J. Delay in refiling condoned. For orders, see ITA No. 237 of 2011 (Jile Singh Dalal v. Commissioner of Income Tax, Faridabad). (AJAY KUMAR MITTAL) JUDGE July 26, 2011 (ADARSH KUMAR GOEL) gbs ACTING CHIEF JUSTICE "