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ITAT allows Capital Gain Exemption for purchase of Agricultural Land in Son’s Name

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption can be allowed under section 54B of the Income Tax Act for the purchase of agricultural land in the name of son. 

The question before the Tribunal was that whether exemption under section 54B can be allowed even if the new agricultural land is purchased in the name of family members. The Assessing Officer took a view that since the land was purchased in the name of the assessee’s son, the benefit of section 54B of the Income Tax Act cannot be allowed. 

The Tribunal noted the decision in the case of Commissioner of Income Tax Vs. Gurnam Singh, wherein the Punjab & Haryana High Court decided a similar issue in favour of the assessee. In that case, the assessee sold an agricultural land and out of sale proceeds purchase another agricultural land in his name and in name of his only son, he claimed deduction under section 54B, but the same was disallowed by the Assessing Officer on ground that land was purchased by assessee in the name of his son as co-owner. The High Court, in that case, it was held that the assessee had sold agricultural land which was used by him for agricultural purposes. 

The Tribunal observed that “Out of sale proceeds of the said sale, the assessee has purchased other piece of land in his name and in the name of his only son who was bachelor and was dependent upon him, for being used for agricultural purposes within the stipulated time. Further it was not the case of the Revenue that from the sale proceeds of the agricultural land earlier owned by the assessee, the land in question was purchased for any other purpose than the agricultural purpose. The purchased land was being used by the assessee for agricultural purpose and merely because in the sale deed his only son was also shown as co-owner, the Hon’ble ITAT has rightly come to the conclusion that it does not make any difference because the purchased land is being used by the assessee for agricultural purposes.”

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