Deduction us 54B for land purchased in wife’s name disallowed by ITAT following the judgment of Punjab & Haryana High Court.

Deduction us 54B for land purchased in wife’s name disallowed by ITAT following the judgment of Punjab & Haryana High Court.

ABCAUS Case Law Citation:
ABCAUS 1163 (2017) (03) ITAT

Assessment Year : 2007-08
Date/Month of Pronouncement: February 2017

Brief Facts of the Case:
The appellant assessee sold certain land on which long term capital gain was earned. The assessee purchased, inter alia, an agricultural land in the name of his wife. The Assessing Officer (‘AO’) denied the benefit of deduction under section 54B of the Income Tax Act, 1961 (‘the Act’) for the purchase of the agricultural land in the name of his wife.

The CIT(A) affirmed the disallowance. The assessee, aggrieved against the denial of deduction u/s 54B came to the Tribunal.

Observations made by the Tribunal:
The Tribunal observed that there was no dispute that the new land was purchased by the assessee in the name of his wife. It was observed that there was a cleavage of opinion amongst the Hon’ble High Courts on the question of grant of benefit u/s 54B etc. when the new property is purchased by the transferor in his own name with another or exclusively in the name of another.

It was noted that the Hon’ble Punjab & Haryana High Court in had held that the benefit of deduction cannot be allowed when a new property is purchased in the name of wife, the Hon’ble Delhi High Court had held that deduction u/s 54F cannot be denied if the property is not purchased in own name.

Held:
Since the assessee fall within the jurisdiction of the Hon’ble Punjab & Haryana High Court, it was held that the assessee was not right in claiming the benefit of section 54B in purchasing new property in the name of his wife.

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