TMI Blog2015 (7) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... y thereof was tendered before us by Mr. Jain, the learned senior counsel appearing on behalf of the respondent. Page-44 of this compilation is a record/statement of the “Patwari” which confirms that the respondent had utilized the land sold by him for agricultural purposes during the period 03.07.2003 to 27.01.2006. There is nothing on record that suggests the contrary. The respondent, therefore, used the said land for a period of more than two years prior to the date of sale i.e. 26.09.2005. The plain language of Section 54B requires the land sold to have been in use by the assessee or by his parents or the HUF for agricultural purposes for a period of two years immediately preceding the date on which the transfer took place. There is nothing in this section that bifurcates the period of the use during these two years. There is nothing in this section that indicates that the land should have been used continuously only in the second of the two years and only for a few days in the first of the two years. Nor are we able to infer such a limitation from the plain language of this section on principle. - Decided in favour of assessee. Failure to furnish evidence to show that the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Respondent : Mr. Pankaj Jain, Senior Advocate with Mr. Sachin Bhardwaj and Mr. Radhe Mohan Garg, Advocates S.J. VAZIFDAR, ACTING CHIEF JUSTICE (Oral): This is an appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal in respect of the assessment year 2006-07. 2. The appellant contends that the following substantial questions of law arise in this appeal:- 1. Whether on the facts and in the circumstances of the case, the Hon ble ITAT was right in law in upholding the order of Ld. CIT(A) in allowing the exemption u/s 54B of the I.T Act even though the assessee was not entitled to the claim of exemption u/s 54B as the asset sold was not a long term capital asset but a short term capital asset that is not eligible for exemption under section 54B, 54D and 54F as is clear from CBDT Circular No.495 dated 22.09.1987? 2. Whether on the facts and in the circumstances of the case, the Hon ble ITAT was right in law in upholding the order of Ld. CIT(A) in allowing the exemption u/s 54B of the I.T Act when the assessee failed to furnish evidence to show that the land was being used for agricultural purpose for two y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu Undivided Family] for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- ( i ) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under Section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or ( ii ) if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale proceeds of ₹ 60,00,000/- for the payment of the consideration of the plot that he purchased subsequently. The balance consideration in respect of the plot of ₹ 16,84,000/- was paid by his wife. 6. The Assessing Officer held the gain to be a short-term capital gain. The CIT(A) and the Tribunal have held in favour of the respondent on the grounds we will shortly refer to. Re: Questions No.1 and 5 : 7. It was submitted before us that the difference between the sale price of the first property and the expenditure of ₹ 44,76,000/- for the purchase of the second property ought to be taxed as a short-term capital gain as the property sold by the respondent was held by him for a period of less than three years. 8. The submission is not well founded. It proceeds on the erroneous assumption that provisions of Section 54B would be applicable only to a long-term capital asset. Sections 2(14)(iii) and 2(42-A) read as under:- 2. Definitions. (14) capital asset means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- ( iii ) agricultural land in India, not being land sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the Patwari which confirms that the respondent had utilized the land sold by him for agricultural purposes during the period 03.07.2003 to 27.01.2006. There is nothing on record that suggests the contrary. The respondent, therefore, used the said land for a period of more than two years prior to the date of sale i.e. 26.09.2005. 12. Having said this, however, we must pause here to consider an observation made by the Tribunal to the effect that for the purpose of Section 54B, it is not necessary that land should have been used for agricultural purposes for full two years immediately preceding the date of transfer and that it is sufficient if it was so used in the whole of the preceding year and for some days in the year earlier to the preceding year. We are unable to agree. There is nothing in Section 54B that supports such an inference. The plain language of Section 54B requires the land sold to have been in use by the assessee or by his parents or the HUF for agricultural purposes for a period of two years immediately preceding the date on which the transfer took place. There is nothing in this section that bifurcates the period of the use during these two years. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity for ladies. The Tribunal noted that as long as the funds are invested the respondent s exemption cannot be denied. 18. It is difficult to accept this view. 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. If the legislature intended conferring such a benefit, it would have provided for the same expressly. 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. Moreover, it is not the case of the assessee that he purchased the asset benami in the name of his wife. We have proceeded on the basis that his wife invested the amount of ₹ 16,84,700/- herself. 19. A Division Bench of this Court in Jai Narayan vs. Income-Tax Officer, [2008] 306 ITR 335 (P H) held: 10. In interpreting the words contained in a statute, the court has not only to look at the words but also to look at the context and the object of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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