TaxTMI 
TaxTMI 
2016 (4) TMI 946
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....s against Rs. 3,23,050/- claimed by the assessee. (iii) Not allowing the claim of deduction U/s 54F at Rs. 70,00,000/- and deduction U/s 54B at Rs. 1,99,57,350/-. 2.1 The ld Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the action of the A.O. in holding that since the investment in property and in agriculture land is not made in the name of the HUF but in the name of the individual members of the family, deduction U/s 54F and 54B is not available to the assessee. 2.2 The ld Commissioner of Income Tax (Appeals) has erred in holding that the deduction U/s 54B is not available to HUF. 1.1 The assessee has raised additional ground, which is as under:- "Under the facts and circumstances of the case the gain on sale of agricultural land is not liable to capital gain tas as the land sold by the assessee is outside the purview of capital asset as per item (b) of sub clause(iii) of section 2(14) of the Income Tax Act, 1961 read with notification No. 9447 dated 06/1/1994. 2. The assessee is having income from long term capital gain and interest income. The assessee HUF filed return of income in response to notice U/s 142(1) of the Income Tax ....
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....ilal on 10/4/2006 for Rs. 9,84,000/-. The properties purchased are in the name of the other individuals of the family and not in the name of the HUF, therefore, the same cannot be treated as the application of funds eligible of the claim of deduction U/s 54B. Thus, the deduction U/s 54B is not allowable to the assessee in the HUF capacity. Further in respect of the investment made in the name of Sh. Khetilal on 10/04/2006, the investment made can also be not treated to be the investment qualifying for the deduction U/s 54B as the investment has been made in the individual name instead of the HUF capacity. He further held that the assessee had claimed construction done on the properties situated at village-Sarangpura and in support of this, the assessee had furnished copy of valuation report from the authorized valuer. The report furnished reveals that:- 1. The investment has been done in the house in the Individual land of the assessee; i.e. Mr. Kheti Lal Sharma as single owner. 2. The period of construction is mentioned as Nov. 2005 to 31/01/2010. 3. Therefore, in view of the Point No. the construction has also been done after the due date of filing the return of income U/s ....
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....am Jaipur, the proprieties falls within 8 KM of the present municipal limit, therefore, the same does not fall under the exemption, as stipulated U/s 2(14)(iii)(b) of the Act. Accordingly, the same is held as liable for capital gain U/s 45 of the Act. He further held that claim of deduction U/s 54B by HUF is also not found tenable as Section itself provides this deduction for individual and his parents. The intention of the Legislature is quite apparent and allows the benefit of such section to the individual human being and not any other types of person, being a legal entity like firm, HUF, company etc. The law on this issue is clear and unambiguous, therefore, it cannot be interpreted in different manner to confer benefit on assessee, for which he relied on the decision in the case of: (i) Dharmendra Textile Ltd. 306 ITR 277 (SC) (ii) Vijay Kumar & Ors 151 ITR 48 (Kar) (iii) T & Arvinda Ready 120 ITR 461 (SC) (iv) IPCA Laboratory Ltd. 266 ITR 521 (SC) He further relied on the decision of Hon'ble Madras High Court in the case of G.K. Devarajulu (supra) wherein it has been held that deduction U/s 54B cannot be allowed to the HUF. Accordingly, he confirmed the disallowance ....
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....nd was 13.370 Bhiga i.e. around 3.34 Hectares. Out of this land, assessee sold 2.33 Hectares land on 30.4.2005 to M/s. Praveen Mehta Builders Pvt. Ltd. for Rs. 2,76,80,400/- . During The course of appellate proceedings, assessee by taking an additional ground, contended that the agricultural land sold is beyond 8kms of Municipal Limit of Jaipur as envisaged u/s 2(14)(iii)(b) of the Income Tax Act, 1961 and therefore no capital gain is chargeable to tax since the agricultural land sold is not a capital asset u/s 2(14). The CIT(A) did not accept the contention of the assessee that the distance of agricultural land sold is to be seen with reference to the municipal limit as on the date of Notification No. 9447 dated 06.01.1994 and not with reference to the date of sale. He held that there is no specific mention of such effect or provision in the notification itself. The municipal limit, as prescribed in the notification, has to be taken as existed and declared by the competent authority and relevant to the day of the transaction. As the agricultural land sold falls within 8kms of the present municipal limit, it does not fall under the exemption u/s 2(14)(iii)(b) and the same is liable....
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....4 and not on the date of the sale. The relevant finding of Hon'ble ITAT is reproduced as under:- "We have considered the rival submissions as well as the materials on record. The question arises for our consideration and adjudication is whether the land in question though located beyond 8 kms from the Municipal Limits of Jaipur Municipality as on the date of notification 6-01-1994 but subsequently it falls within the distance of 8 kms from the Municipal Limits due to the expansion of the Municipal Limits would still be regarded as agricultural land not falling in the definition of capital asset in terms of Section 2(14)(iii)(b) of the Act. There is no dispute that Jaipur Municipality has been duly notified vide said notification dated 6-01-1994 and as on the date of said notification, the land in question was beyond 8 kms from the Municipal Limits exists at that point of time. The dispute arises because of the expansion of Municipal Limits and thereby the said distance from the Municipal Limits as on the date of sale of the land in question is only 2 kms and thereby the authorities below have treated the land in question as not falling under the exclusion clause of Section 2(14)(....
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....nicipal Limits as exists on the date of notification for the purpose of invoking subclause (b) of clause (iii) of Section 2(14) of the Act. Accordingly we hold that the land in question which was located beyond 8 kms from the Municipal Limits as on 6-01-1994 when the notification was published in the official gazette, the same would fall under the exclusion clause of the term 'capital asset' as per provisions of 2(14)(iii)(b) of the Act". In view of above, the AO be directed to delete the addition from long term capital gain on sale of agricultural land assessed by him. 5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A) and argued that the municipal limit has been verified by the ld Assessing Officer and land transaction was found within 8 km from the municipal limit. Therefore, it is a capital asset as per section 2(14)(iii)(b) of the Act. 6. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee sold the agricultural land on 30/4/2005 at village Sarangpura measuring 3.33 hectare (9.32 Bigha) for Rs. 2,76,80,400/-. The ld Assessing Officer has confirmed from the Nagar Nigam that th....