TaxTMI 
TaxTMI 
2011 (5) TMI 986
X X X X Extracts X X X X
X X X X Extracts X X X X
....taking up the facts mainly from this appeal i.e. 4754/Del/10. 2. In ground No. 1 , assessee has pleaded that order passed by the Ld. CIT(A) is not sustainable in the eyes of law. It is general ground of appeal and no arguments were advanced by the Ld. Counsel for the assessee. Hence, it is rejected. 3. In ground No. 2, the assessee has pleaded that notice u/s 143(2) has been served after a period of one year from the end of the month in which the return was filed. Therefore, asstt. order is not sustainable in law. Ld. Counsel for the assessee, however, did not press this ground of appeal and it is rejected. 4. In ground No. 3 the appeal assessee has pleaded that Ld. CIT(A) has erred in confirming the disallowance of ₹ 13,75,000/- which was disallowed by the AO out of the claim made u/s 54B of the Income Tax Act. 5. The brief facts of the case are that assessee is a senior citizen and has shown income form the interest derivatives and agricultural land. She has filed her return of income on 28.7.2007 declaring an income of ₹ 55,40,225/- which include agricultural income of ₹ 2,21,936/-. On scrutiny of the accounts, it revealed to the AO that assessee had purcha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terpreted the transaction as if the currency notes which received by the assessee should be given to the vendor for the purchase of the land. The crucial date is the date i.e. 19th March, 2007 when assessee sold the land and 20th March, 2007 when assessee purchased the land. Prior to these two dates, any advance received by the assessee or paid by the assessee are meaningless. She is not supposed to reconcile the amount taken and paid. The AO at the most could have asked the assessee to explain the source of ₹ 13,75,000/- paid as an advance to her vendor. The situation can be analyzed with a different angle also. In the hands of the vendor, capital gain would accrue on 20th March 2007, when assessee purchased the land from the vendor. Can the AO argue that a sum of ₹ 20 lacs was received by the vendor of the assessee on 17.10.2006. Therefore, capital gain has accrued to him on this date. It was merely an advance, the capital asset was not transferred within the meaning of 2 (47) of the Income Tax Act. Therefore, in our opinion, Ld. Revenue Authorities have given unnecessary weightage to the alleged advance given by the assessee, while computing her claim of exemption. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....land by the assessee. The AO has also not disputed this aspect. Rather while referring to the circular No. 667 he made the following observations :- 3.3. On being confronted, the assessee has referred to Circular No. 667 dated 18.10.1993 to contend that the cost of land is an integral part of the cost of residential house. However, this office has no difference of opinion with the assessee that the cost of land is to be included in the cost of residential house. What this office has objections to is the adjustment or application of the cost of an old or pre-existing land towards the qualifying investment u/s 54F. On this issue, the quoted Circular of the Board does not help the assessee. On the other hand, the later part of the Circular supports the contention of the undersigned that the sales consideration of the original asset should have been utilized for constructing the house, including purchase of the land for such purposes, when the Circular clarifies as under:- "Accordingly, if the amount of capital gain for the purpose of section 54F, is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 50% share was claimed in the hands of Smt. Sita Jain and the rest in the hands of her husband. In view of our discussion made in the case of Smt, Sita Jain, this ground of appeal is allowed and AO is directed to grant the exemption u/s 54B of the Income Tax Act to the assessee. Appeal of the assessee is allowed. ITA No. 5036/Del/10 15. In this appeal of revenue ,it has been pleaded that Ld. CIT(A) has erred in deleting the addition of ₹ 11,93,488/- which was disallowed by the AO from an exemption u/s 54 EC. The facts have been discussed in the case of Smt. Sita Jain. Assessee had sold plot of land bearing 9A ,Model Town, Rewari for a consideration of ₹ 22,50,500/-. He has shown capital gain on this sale at ₹ 18,05,154/-. The capital gain has been claimed exempt u/s 54EC of the Income Tax Act by reinvestigating the capital gain in the purchase of REC bonds amounting to ₹ 50,000/- and ₹ 17,60,000/-. According to the AO, on perusal of the REC bond it reveals that the bond of ₹ 50,000/- is in the joint name of Shri Mahavir Prasad Jain and Rajiv Jain. Another REC bond is of ₹ 17,60,000/- ( 176 x 10000) is in the joint name of Sh. Mahavir Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hould be invested by the assessee, as whole or any part in the bonds. The emphasis is on the expression of "assessee" and the assessee does not include other names, namely sons, wife and daughter. She in this way, contended that exemption u/s 54EC can be allowed to the assessee to the extent of in relation to one bond and to the extent of half share in relation to the other bond. On the other hand, Ld. Counsel for the assessee relied upon the order of Ld. CIT(A). We have confronted the Ld. Counsel with regard to the decision of Hon'ble Punjab & Haryana High Court rendered in the case of Jai Narayan Vs. Income Tax Officer reported in 306 ITR 335. In this case, an assessee has claimed exemption u/s 54B. He has capital gain arisen on transfer of long term capital asset. He invested the capital gain and purchased the land in the name of his son and claimed deduction u/s 54B. The dispute traveled upto the Hon'ble High Court and the Hon'ble High Court has upheld the disallowance of such exemption. The observation made by the Hon'ble High Court in paragraph No. 10 are worth to note in this connection :- 10. "In interpreting the words contained in a statute, the court has not only to loo....