TMI Blog2021 (6) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividual assessee and HUF, can both be used as and when context so desires and it will not lead to any absurdity. In case the assessee is Hindu undivided family, the second part of section 54B i.e of parents of his , would not applicable. In the case of individual assessee, the parents of the assessee fulfill criteria, then the benefit can be given. In our considered opinion harmonious interpretation is required to invoked so that the word used in the provisions would not become redundant or otiose . In our view , in case of doubt or confusion ,the benefit of any doubt in respect to taxability or exemption should be given to the assessee rather than to revenue. On facts of the present case , we find that the assessee within two years of sale of agricultural land, had invested the amount and purchase of land in accordance with the requirement of section 54B and is entitle to the benefit of 54B of the ACT. The assessee HUF, is entitled to the benefit of section 54B, of the act for the assessment year under consideration, as we are of the opinion that the word assessee used in 54B, had always included HUF and further the amendment brought on by the finance act 2013, in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown by the assessee as per the following details: Sale Consideration 1,05,00,000/ Sales consideration as per Circle rates (SOC) 2,45,43,000/ Cost of acquisition 27245.2609x90 24,52,074/ Less: Indexed cost of acquisition (24,52,07 4x785/100) 1,92,48,780/ Capital gains 52,94,219/ (on purchase of agricultural lands 36,39,000/ Balance 16,55,219 Less: Exemption u/s 54F (on purchase of land and construction against a residential house) 28,74,000/ Deduction u/s 54EC 21,00,000/ Net capital gains Nil The AO while taking due cognizance of the dates on which the assessee had purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the facts of the case, the submissions as made by the Ld. AR of the appellant and have perused the AO's as well on this issue with reference to relevant facts on record. The appellant has claimed deduction under section 54F against capital gains on sale of land on the premise that it had constructed residential house by purchasing land for ₹ 10,99,000/- and had spent ₹ 17,75,000/- in raising construction thereon. As regards the plot of the land, the same was undisputedly purchased on 16.06.2012. In support of the expenses made towards construction, at the assessment stage, the assessee had furnished before the AO a valuation report dated 07.08.2014 indicating cost of construction at ₹ 17,46,000. However the AO has disallowed the assessee's claim on the main ground that investment in construction of house was made after the due date of filing of return as prescribed under section 139(1) and the assessee did not keep the amount in capital gain account scheme. The other grounds on which the AO had proceeded to make the impugned disallowance include that valuation report was not reliable and no details regarding investment in construction of house were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajesh Kumar Jalan reported as (2006) 286 ITR 274 (Gau). iii) ITO VS. Sapna Dimri reported as (2012) 50SOT 96 (Delhi) iv) ITO vs. R. Srinivas reported as (2015) 155 ITD 1066 (Bang -Trib) v) CIT vs. Jagriti Aggarwal reported as (2011) 339 ITR 61 O (P H) Thus in view of the foregoing, the addition on account of disallowance of assessee's claim of deduction u/s 54F is not justified and the same is therefore deleted. Accordingly, this ground of assessee is allowed. 4. However, the CIT(A) was not convinced with the second ground caused by the assessee pertaining to section 54B of the Act. The finding recorded by the first appellate authority were as under 6.3 I have considered the facts of the case, the submissions as made by the Ld. AR of the appellant and have perused the AO's as well on this issue with reference to relevant facts on record. The AO has denied the assessee's claim of deduction u/s 54B on the basis that said deduction is not admissible for assessment year 2012-13 in the case of an assessee being an HUF. Whereas the Ld. AR for the appellant has relied upon a decision rendered by the Hon'ble ITAT Delhi. However, I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'assessee' had kept that what had been contemplated is only an individual and not a HUF. We may also observe that the reasoning of the Tribunal, in this case, is based upon an interpretation of section 54 and the words 'used by the assessee or a parent of his mainly for the purpose of his own or parent's own residence' had been interpreted as contemplating only the case of an assessee, who is an individual and not a HUF or a firm vide Rowji Sojpalv. CIT [1957] 31 /TR 721 (Bom.), KI Viswambharan Bros. v. CIT [1973] 91 /TR 588 (Ker.) (FB) and Shrigopal Rameshwardas vs. Addi. CIT [1979] 119 /TR 980 (MP). We are relieved of the necessity of making a detailed reference to those cases, as they had arisen under section 12B(4) of the Indian Incometax Act, 1922, and section 54, where, the language employed is different from that found in section54B. It would also be pertinent to point. out that by section 19 of the Finance Act, 1987, in section 54(1) a HUF has also been included. The legislative change thus brought about is also an indication that what had been contemplated by 'assessee' under section 54(1) was not a HUF but only an individual. While a change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said cases pertained to section 54(1) and not section 548. With due respect, the quoted text from the decision of Hon'ble Madras High Court would show that Hon'ble Court was clearly concerned with section 54B and hence the decision of Delhi Tribunal cannot be read in preference to the decision of Hon'ble Madras High Court where it has been clearly held that deduction under section 54B is not admissible to HUF. Further the Hon'ble ITAT Delhi, Circuit Bench at Meerut vide its order in the case of Ashwini Kumar Sons HUF Vs. /TO Ward-1(1) Meerut /TA No. 5521 I Del. I 2015 A. Y. 2012-13 dated 15.03.2016, has also observed that the decision in the case of K. S. Jain Sons HUF vs. /TO 173 Tax man 114 (Delhi) has been rendered on the incorrect facts laid before the coordinate. bench. It is only from assessment year 2013-14 that an assessee HUF has been entitled for such deduction and since the matter under consideration relates to assessment year 2012-13, deduction under section 54B cannot be allowed to it. Accordingly the AO's action in denying deduction u/s 548 to the assessee is found justified and the same is therefore sustained 2nd confirmed. Thus this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 2,35,000 under a sale deed dated July 10,1975. For the assessment year 1975-76, the assessee filed a return disclosing an income of ₹ 12,375. In doing so, it has no1 offered the gains arising from the sale of agricultural lands for tax. The Income-tax Officer held, in view of the provision contained in section 54B of the Income-tax Act, the Hindu undivided family is not entitled to the exemption. However, on appeal, the Appellate Assistant Commissioner allowed the exemption claimed by the assessee. On further appeal, the Appellate Tribunal concurred with the view taken by the Appellate Assistant Commissioner. Learned standing counsel for the Department brought to our notice a decision of the Madras High Court in CIT v. G.K. Devarajulu [1991] 191 ITR 211, wherein it is clearly held that the exemption under section 54B is not available to the Hindu undivided family, but is available only to an individual. In view of the abovesaid decision of this High Court cited supra, the order passed by the Tribunal is not sustainable. Accordingly, we answer the question referred to us in the negative and in favour of the Department. No costs. 8. Before we go to the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of 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 or a parent of his] for agricultural purposes 36[(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 the amount of the capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and is therefore an assessee within the meaning of section 2(7) of the Act. 12. As the Hindu undivided family, can be an assessee for the purposes of the Income Tax Act, Therefore the assessee used in section 54 B, can be interpreted to mean, even the Hindu undivided family beside being an individual, etc would fell within the realm of assessee used in this provision, as and when context so required. Both i.e an individual assessee and HUF can be used to represent assessee in isolation in this provision depending upon the facts of the case. However the Hon ble HC had pointed out some absurdity which would result in permitting reading of HUF as against assessee and had only restricted it to an individual assessee only. In our view, ratio laid down by the HC had been subsequently expanded and clarified by the subsequent amendment brought in by the Finance Act 2013, whereby the scope of section 54B had been clarified to include the assessee being an individual or his parent, or a Hindu undivided family. Beside that there are contrary views of various other authorities .Thus the controversy had been put to rest by the subsequent amendment of 2013 in section 54B, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with, any scheme 80 which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid 15. In our considered opinion, the Hindu undivided family, entitled to the benefit of 54B, even prior to insertion of the assessee being an individual or his parent, or a Hindu undivided family by the finance act 2013. In our view the assessee is a person subjected to tax under the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration. However, later on, the Assessing Officer confirmed the view that the deduction was not allowable to an 'HUF' for the assessment year 2012-13 as the same has been made available to a 'HUF' by Finance Act 2012 w.e.f. 1-4-2013. He, therefore, held that a mistake apparent on record had occurred in the assessment order dated 17-3-2015 passed u/s 143(3) of the Act. However, we find from the provisions of section 54B of the Act, as applicable for assessment year 2012-13, that the same are loosely worded. The relevant part of the said provisions is reproduced as under:- 54B. Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases.-[(1)] [Subject to the provisions of 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 or a parent of his 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land not in respect of the claimant/assessee whose income is assessed. It is also a well-known fact that in the land record maintained by the Land Revenue Department, ownership of property is entered in the name of an individual and not in the name of 'HUF' and that the 'HUF' claim of ownership over such a property by virtue of the property being ancestral and put into the common hotchpotch of the family. Under the circumstances, the issue being highly debatable and requires lengthy arguments. 17. In the light of the above we are of the view that the assessee HUF, is entitled to the benefit of section 54B, of the act for the assessment year under consideration, as we are of the opinion that the word assessee used in 54B, had always included HUF and further the amendment brought on by the finance act 2013, in section 54 by inserting the assessee being an individual or his parent, or a Hindu undivided family] was classificatory in nature and was introduced by the Ministry with a view to extend the benefit to the Hindu undivided family. The Hindu undivided family,(HUF) has been the recognized as separate tax entity, therefore, before and after amendment , if t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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