Deduction under Section 54B for agricultural land sale upheld where purchase consideration paid and possession received despite delayed registration.

Deduction under the agricultural land reinvestment provision was allowed where the assessee paid purchase consideration, received possession and fulfilled transfer requirements despite formal registration occurring later; the reasoning treats purchase as integral to the statutory definition of transfer and rejects a bifurcated view separating seller's transfer from purchaser's acquisition, relying on coordinate-bench precedent. The sale proceeds were held to be validly utilised for acquisition of agricultural land within the statutory time frame, resulting in allowance of the deduction claimed.

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Issues: Whether the assessee is entitled to deduction/exemption under section 54B of the Income-tax Act, 1961 in respect of capital gains from sale of agricultural land (thereby negating addition made under section 69A) where consideration was paid and possession obtained but registration of purchase deed occurred after the two-year period.

Analysis: The Tribunal examined whether the conditions of section 54B were met on the facts, including utilization of sale consideration for purchase of new agricultural land within two years and whether registration of the sale deed is a prerequisite for claiming the exemption. The Tribunal considered the payments made (verified by bank records), possession given to the purchaser, and the effect of transfer as understood under section 2(47) which treats transfer as complete on execution of agreement in specified circumstances. The Tribunal also applied precedents holding that where consideration is paid and possession/right in rem or enforceable right exists, registration may not be determinative for the purpose of claiming exemption under section 54B.

Conclusion: The Tribunal held that the assessee satisfied the requirements of section 54B by utilising the sale consideration for purchase of agricultural land within the prescribed period (considering payment and possession) and therefore the exemption under section 54B is allowable. Consequentially, the addition of Rs. 1,14,25,000 made under section 69A is set aside.

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