TaxTMI 
TaxTMI 
2017 (3) TMI 1949
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....d. Indexed cost of land has been taken at Rs. 49,29,5409/-. Deduction u/s 54B of the Income-tax Act, 1961 was claimed against the capital gain of Rs. 7,37,126/- on account of investment in agricultural land. During the course of assessment proceedings, the Assessing officer referred the matter to the Tehsildasr, Patiala for determination of acquisition of the land. As per report the indexed cost was Rs. 1,07,303/- only. When confronted, the assessee submitted that he has also adopted the cost of acquisition on the basis of report of the Tehsildar. The Assessing officer again referred the matter to the Tehsildar alongwith objection of the assessee. The Tehsildar was summoned u/s 131 and his statement was recorded. The Tehsidar in his further report dated 23.12.2011, re-confirmed the rates of land as submitted to the Assessing officer earlier. The Assessing officer has also given opportunity to the assessee to confront the Revenue authorities regarding the dispute in valuation of land. However, the assessee apparently has not chosen to do so. The Assessing officer adopted the value of the land as per report received from Tehsildar. The second issue i.e. on deduction u/s 54B, the Asse....
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....ase of the agricultural land. He has submitted that advance received on account of sale of land was invested in the purchase of another land which is also clear from the entries contained in the sale deed and tabulated in a supporting chart. 7. He has relied upon CBDT Circular No. 359 dated 10.5.1983, which reads as under:- "SECTION 54E Section 54E of the Income-tax Act, 1961 provides for exemption of long-term capital gains if the net consideration is invested by the assessee in specified assets within a period of six months after the date of such transfer. A technical interpretation of section 54E could mean that the exemption from tax on capital gains would not be available if part of the consideration is invested prior to the date of execution of the sale deed as the investment cannot be regarded as having been made within a period of six months after the date of transfer. 2. On consideration of the matter in consultation with the Ministry of Law, it is felt that the foregoing interpretation would go against the purpose and spirit of the section. As the section contemplates investment of the net consideration in specified assets for a minimum period and as earnest mone....
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.... or earnest money or the advances received against sale of asset is invested in specified assets before the date of transfer of assets. The learned CIT(A) has further held that intention of legislator in respect of section 54B cannot be different as the essential purposes of incorporating the provisions of section 54B is to be ensure that anybody selling agricultural land should not subjected to tax if the proceeds thereof are used by assessee for purchase of agricultural land." 9. Order of the ITAT Pune Bench in the case of Ramesh Narhari Jakhadi Vs. ITO in (1992) 11 CCH 0081, in which it was held as under:- "The section contemplates user of agricultural land in the two years immediately preceding the date of transfer and therefore, the reference is to the years and not during the whole period of two years as viewed by the authorities. In other words, if the asset has been used for the whole of the immediately preceding year and some days of the year earlier to the preceding year, still the requirement of section 54B would be satisfied. Applying the definition of short term capital asset with reference to the word "held", it could be said that any asset held in the two years i....
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.... entered into an agreement to sell the property. As it was a fact that though the sale deed was executed on 30.12.2008, but the assessee purchased three properties with the sale consideration received. The intention of the Legislature was that the assessee had to use the sale consideration received for the purpose of buying agricultural land. In the present case, the assessee sold agricultural land was not disputed by the AO and also purchased agricultural land. The CIT (A) in his order had given a finding that though the sale deed was executed on 30.12.2008, but the possession was given on 10.09.2008. He had also observed that the sale deed had to be executed on or before four months from the date of agreement. There were certain dispute between the assessee and the purchaser. Therefore, the execution of sale deed was delayed and the sale deed was executed in December, 2008. So far as the objection raised by the revenue was that the property was only transferred in December, 2008, therefore, the property purchased before that date was not eligible for claiming deduction u/s 54B. It was opined, this was only a hyper technical objection raised by the revenue, because, the assessee h....
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.... clause (d) thereof records the fact that the Agreement to Sale had been entered into on 21st February, 2006 in respect of the subject property and the amounts being received by the vendor (respondent assessee) under that Agreement to Sale. Thus, these amounts when received as advance under an Agreement to Sale of a capital asset are invested in specified bonds, the benefit of Section 54EC of the Act is available. In the above view, the Tribunal holds that the facts of the present case are similar to the facts before the Tribunal in Bhikulal Chandak HUF (supra). The Revenue does not dispute the same before us. Moreover, on almost identical facts, this Court in Ms. Parveen P. Bharucha Vs. DCIT, 348 ITR 325, held that the earnest money received on sale of asset, when invested in specified bonds under Section 54EC of the Act, is entitled to the benefit of Section 54EC of the Act. This was in the context of reopening of an assessment and reliance was placed upon CBDT Circular No. 359 dated 10th May, 1983 in the context of Section 54E of the Act." 12. Ld. Counsel for the assessee therefore, submitted that assessee invested the advance money received in specific assets before date of t....