S/s. 54B, 54F – Assessee is not entitled to claim exemption under s/s. 54B/54F in respect of investments made in the name of major married daughters. The term `assessee’ used in section 54B/54F cannot be extended to mean the major married daughters.

During the previous year relevant to the assessment year 2008-09, the assessee transferred wet agricultural land for a consideration of Rs. 1,41,12,000. The assessee purchased an agricultural land, for a consideration of Rs. 52 lakh, in the name of her younger daughter and a residential house in the name of her eldest daughter for a consideration of Rs. 58 lakh. The long term capital gain arising on such transfer was claimed to be exempt under s/s. 54B/54F on the grounds that the investment made in the names of two daughters qualifies for exemption under s/s. 54B/54F. The assessee claimed that she has entered into “Possession purchase agreements” with her two daughters to comply with the provisions of s/s. 54B/54F. It was also contended that the daughters should be considered as her benamidars.

The Assessing Officer (AO) denied the exemption claimed by the assessee on the ground that the properties purchased were not registered in the name of the assessee. The claim of “benami” was rejected by the AO on the grounds that the Benami Transactions (Prohibition) Act provides exemption to the property purchased in the name of unmarried daughters only. He also refused to recognise both the “possession purchase agreements” as they were unregistered documents and did not transfer the properties. Tribunal news Aggrieved, the assessee preferred an appeal to the CIT(A) who upheld the action of the AO.

Aggrieved, the revenue preferred an appeal to the Tribunal.

Held:

The decision of the jurisdictional High Court in the case of Late Mir Gulam Ali Khan vs. CIT 56 CTR 144 (AP) was rendered on typical facts of the case before the Court viz. that the assessee in that case entered into an agreement for purchasing a residential property and had also paid earnest money in furtherance of the same. Unfortunately, he passed away before the completion of the purchase transaction. Hence, the legal representative of the assessee completed the purchase of property. Thus, in effect, the new house property was not purchased in the name of the assessee, who sold the old property. Since the said legal representative of the assessee is liable to be assessed in respect of the capital gain on the property sold by his father, he claimed the cost of new property as deduction u/s. 54 of the Act. Thus, the facts prevailing in the case of Late Mir Gulam Ali Khan are peculiar and further, u/s. 159 of the Act, the legal representative is treated as assessee in respect of liability of the deceased person. The liberal view taken by the High Court in that case cannot be stretched in each and every case, where the property was not purchased in the name of the assessee who sold the property. It held that the assessee in the present case cannot derive support from this decision.

In respect of the other decisions relied upon, on behalf of the assessee, the Tribunal noted that in all those cases, the new property was either purchased in joint names i.e., in the names of the assessee and others, or it was purchased in the names of spouse or minor daughter. The Tribunal held that in its view the Courts have considered the investments made in the name of wife or minor daughter as an investment made by the assessee himself for the reason that there was no real intention to provide consideration for the benefit of wife/minor daughter alone.

In the instant case, undisputedly, the investments have been made in the names of the married daughters and apparently both of them are also majors. Thus, it is not a case of joint ownership along with the assessee. Both the daughters of the assessee shall have every right over the property purchased in their respective names. Thus, it cannot be said that the intention of purchasing the properties was not to give benefit to them. The assessee claims that she has entered into purchase possession agreement with her two daughters. However, we tend to agree with the view of the learned CIT(A) that the said agreement does not actually effect transfer of assets to the name of the assessee. Further, as pointed out by the AO, the said agreements have been entered only to show some compliance with the provisions of section 54B/54F of the Act.

The appeal filed by assessee was dismissed.