TaxTMI 
TaxTMI 
2014 (10) TMI 775
X X X X Extracts X X X X
X X X X Extracts X X X X
....u/s 54B of the Income Tax Act, 1961 even though the assessee was not entitled to the claim of exemption u/s 54B as the asset sold was not a long term capital asset but a short term capital asset and has failed to furnish evidence to show that the land was being used two years immediately preceding the date on which the transfer took place for agricultural purpose and is in contrary to the CBDT Circle no. 495 dated 22-09-1987. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 60,000/- made by the Assessing officer on account of low household withdrawals disregarding the status, requirement of daily needs and inflationary trend without giving any reason whatsoever." 2. Brief facts are: Assessee had purchased agricultural land at village Kheri in two parts: (i) 8 kanals on 2-07-2003 for Rs. 3,10,000/- (ii) 16 kanals on 11-08-2004 for Rs. 6,20,000/- These lands were sold by the assessee on 2-2-2006, in the return of income for A.Y. 2006-07 following capital gains were declared in this behalf: (i) Long term capital gain on sale of 8 kanals for Rs. 56,25,640/-, against this the assessee cla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....per my powers u/s 250(5) and the ratio laid down by the Apex Court in the case of Jute Corporation of India Ltd. Vs. CIT (1991) 187 ITR 688 (SC), I admit it for adjudication of the appeal." 2.6. Assessee further filed an application for additional evidence u/r 46A, which was duly forwarded by CIT(A) to AO for his objections and comments. AO submitted his remand report, on consideration thereof the additional evidence was admitted by ld. CIT(A) by observations at para 8 page 12 of his order. 2.7. On merits the assessee submitted before the ld. CIT(A) that relevant provisions of sec 54B are as under: [Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 54B. [(1)] [Subject to the provisions of sub-section (2), where the capital gain arises] from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by 77[the assessee being an individual or his parent, or a Hindu undivided family] for agricultural purposes 78[(hereinafter referred to as the original asset)], and the assessee has, within a period of two years after that date, purchased any othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther wherever the requirement of holding of 36 months is necessary it has been specifically mentioned as ''Long term capital gains" as is in the case of section 54E(A) and was with 54E(8), 54E(C}, 54E(D}, 54F. Even section 54G refers to capital gain irrespective of the period of possession. Even, the definition of "capital asset" & "capital gains" should set the controversy at rest. d. Further and without prejudice to the above, assessee's claim not decisive of whether the claim has been rightly made and if it has to be so then whatever has been claimed by the assessee may please be accepted as such. Nomenclature is never decisive of the nature of claim. The asset referred to in section 54B has to be a capital asset, be it "long term" or "short term" and therefore Assessing Officer was wrong in holding that the land under reference was not a long term capital asset and in consequently denying the exemption. All the three "capital asset': "long term capital asset" & ''short term capital asset" have been defined separately under the Income Tax Act 1961. "Capital asset" therefore includes both "long term" & ''short term" capital assets. The factum of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as agricultural land, the same being in support of fulfillment of condition (iii) mentioned above. To sum up, to claim exemption u/s 54B what is required is- (i) The land should be a capital asset, be it ''short term" or "long term" (ii) The land should have been used by the assessee or parent of his for agricultural purposes in the2 years immediately preceding the date of transfer. (iii) The land purchased and of sale proceeds should be agricultural land It is therefore prayed that the letter mentioned above being submitted herewith the same may please be considered and the claim of the assessee be allowed." 2.9. The ld. CIT(A) dismissed the claim raised by assessee by way of additional ground i.e. to treat the other piece of land sold as covered u/s 54B. Qua which the assessee has not pressed his appeal. Hence the same is dismissed. 2.10. Ld. CIT(A) however allowed the claim of the assessee on the original ground by following observations: "15. I have carefully considered the contentions of the Ld. A.R. and perused the order of assessment. First of all, there is no doubt that the asset in question was sold before 3 years (36 months) from the date of purchase of la....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n by the A.O. in that respect. That is why for clarification, the Ld. A.R. has produced the certificate dated 20-05-2009 from the Tehsildar/Patwari as additional evidence under rule 46A, which has been admitted as above in which the name of Subhash has been explained as the earlier owner of the lands. Such objection of the A.O. has also been met by the Ld. A.R. in the rejoinder to the A.O's comments. Further, it is found that the name of the wife in the investment of the agricultural land is mentioned only to avail of the registration facilities which are favourable to women as per law. She is only a name lender and all the investments had been made by the appellant in question out of his own sources and his wife has no independent source of any funds. This has been already explained sufficiently in the appellant's letters dated 18-09-2008 and 11-12-2008 submitted in the proceedings before the A.O. that have been evidently ignored by the A.O. The details of land purchased along with documentary evidences for the claim u/s 54B were provided in Annexure 'D' of the letter dated 18-09-2008 which is self explanatory & the exemption u/s 54B was rectified to Rs. 61,49,000/- which was less....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ility of additional evidence and challenge admission of additional evidence. Ld. Counsel thus contends that there is no merit in revenue's ground in this behalf, order of ld. CIT(A) is relied on. 4.1. Apropos issue on merits it is contended that the grounds raised in assessee's appeal are not pressed. Apropos revenue appeal it is contended that in terms of sec 54B following three conditions are to be satisfied: (i) The land should be a "capital asset" (ii) The land should have been used by the assessee or a parent of his for agricultural purposes in the 2 years immediately preceding the date of transfer. (iii) The land purchased subsequently should be agricultural land 4.2. AO has not disputed that the land in question is agricultural in nature hence it is a capital asset as assessee is an advocate and not a dealer in land. Similarly there is no dispute about condition iii. i.e. the new land purchased is agricultural land. 4.3. The entire objection of AO is to the ii. issue is to the effect that in prior two years land is not cultivated by assessee or his parents. The objection seems to be based on the fact that name of tiller mentioned in earlier agricultural record produced....