Is Exemption u/s 54B available if assessee is co-owner of the agricultural land purchased?

In this article we will discuss whether an exemption under section 54B be permitted if the new agricultural land purchased is not wholly owned by the assessee,  as  the assessee’s son is a co-owner as per the sale deed. To get the answer of this question we need to have a look at the following case of CIT v. Gurnam Singh

Facts of the case:

The assessee claimed deduction under section 54B in respect of the land purchased by him along with his son out of the sale proceeds of the agricultural land. However, the same was denied by the Assessing Officer on the ground that the land was registered in the name of the assessee’s son.

The Tribunal observed that the agricultural land sold belonged to the assessee and the sale proceeds were also used for purchasing agricultural land. The possession of the said land was also taken by the assessee. The only objection raised by the Revenue was that the land was registered in the name of his son. Therefore, it cannot be said that the capital gains were in any way misused and therefore allowed the exemption.

High Court’s Decision:

In this case, the High Court held that merely because the assessee’s son was shown in the sale deed as co-owner, it did not make any difference.

It was not the case of the Revenue that the land in question was exclusively used by the son. Therefore, the assessee was entitled to deduction under section 54B.

Therefore, the case was settled in favor of assessee.