THE issue is - Whether Section 54F places a restriction that the investment should be in the name of assessee only, for purpose of seeking benefit of exemption under the said provision. NO IS THE VERDICT.
Facts of the case:
The Assessee, an individual, had filed its return declaring total income of Rs.2,18,610/- which includes income from long term capital gain on sale of agricultural land at Rs.31,500/-. The assessment was completed u/s 143(3) at total income of Rs.3,87,830/- by assessing the income from long term capital gain at Rs.2,00,219/-. For enhancing the income under the head long term capital gain, the AO observed that (i) sales consideration of the land as per the provision of section 50C was Rs.55,13,599/- as against Rs.55.00 lacs claimed by the assessee (ii) the assessee had claimed brokerage expenses of Rs.1 lacs but had failed to prove the source of it (iii) the assessee has claimed deduction u/s 54B at Rs.43,50,000/- which included Rs.11 lacs incurred on construction of boring & pipe, rooms, boundary walls and stamp duty but had proved the source of Rs.10,44,880/- only. The AO finally assessed total income at Rs. 3,87,330/- which included salary income of Rs. 2,12,340, capital gain of Rs. 2,00,219/- and income from other sources at Rs.47,817/-. In the meanwhile, the CIT had examined the assessment and found that the order of AO was erroneous and prejudicial to the interest of Revenue.
High Court held that,
++ it is to be noted that in view of the decision of Malabar Industrial company Ltd., Sec.263 provisions are taken only on the ground of prejudicial and interest loss of the revenue to the Government. Merely change of opinion will not give any right u/s 263 hence, the issue regarding Sec. 263 is required to be answered in favour of the assessee and against the department;
++ on the ground of investment made by the assessee in the name of his wife, in view of the decision of Delhi High Court in Sunbeam Auto Ltd. and other judgments of different High Courts, the word used is assessee has to invest, but it is not specified that it is to be in the name of assessee. It is true that the contentions which have been raised by the department is that the investment is made by the assessee in his own name but the legislature while using language has not used specific language with precision and the second reason is that view has also been taken by the Delhi High Court that it can be in the name of wife. In that view of the matter, the contention raised by the assessee is required to be accepted with regard to Section 54B regarding investment in tubewell and others. In the considered opinion of this court, for the purpose of carrying on the agricultural activity, tubewell and other expenses are for betterment of land and therefore, it will be considered a part of investment in the land and same is required to be accepted.