TaxTMI 
TaxTMI 
2023 (6) TMI 1425
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....sallowance of deduction claimed u/s.54B of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in not allowing exemption u/s 54B of the Income Tax Act amount of Rs.4,04,08,003/- for the purchase of the agriculture land against capital gain arose on sale of land. 3. On the facts and in the circumstances of the case as well as law on the subject, the Ld. AO has erred in initiating penalty proceedings u/s.271(1)(c) of the Income Tax Act, 1961. 4. On the facts and in the circumstances of the case as well as law on the subject, the Ld. AO has erred in initiating penalty proceedings u/s.271F of the Income Tax Act, 1961. 5. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 6. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal." 3. Brief facts qua the issue are that the assessee filed his original return of income for AY.2016-17 on 09.03.2018 declaring total income of Rs.32,31,06....
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....as per the law. 4. Further you had placed reliance on the statkhat. As per the provision of the contract Act, minor is not competent to enter into the contract agreement. The provisions 10. What agreements are contracts - All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in [India] and not hereby expressly repealed by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents. 11. Who are competent to contract -Every person is competent to contract who is of the age of majority according to the law to which he is subject to, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. 5. Further the agreement/satakhat is not registered with the competent authority for the validity and genuineness. Therefore, you are requested to show cause as to why not exemption claimed u/s 54B of the Income Tax Act, 1961 ....
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....ot get the registered document of the land purchased. The affidavit and agreement to sale can only give right to sue the other party but does not confer any right on the land if it is not registered. The agreement of sale will give only a right to sue for transfer of property and that itself will not amount to a transfer. The plain construction of section 54B contemplates sale of agricultural land in the first instance and subsequent to such sale, purchase of similar agricultural land with the aid of the consideration received thereunder to enable the assessee to claim exemption for the purpose of computing the income tax on capital gains. Since the assessee has not complied with the above mandatory provisions of the section, the assessee is not entitled to the exemption. Thus, assessing officer held that as the assessee has not been able to get the land registered till date therefore the amount of deduction of Rs.4,04,08,003/- claimed u/s 54B of the Income Tax Act, 1961 was disallowed by the assessing officer. 6. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the Assessing Officer....
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....e foregoing paragraphs, however in the succinct manner, the relevant facts and background are reiterated in order to appreciate the controversy and the issue for adjudication. The assessee has filed appeal against the denial of benefit under section 54B of the Income Tax Act claimed by her on transfer of agriculture land and purchased of another parcel of land. The assessing officer had denied benefit under section 54B of Income Tax Act 1961, on the ground that assessee was unable to furnish purchase deed for so called new agriculture land. The reason given by the assessee before the assessing officer was that two of the co-owners were minor due to which application had been filed in the appropriate court for permission to purchase land and sell land in their name. The assessee was acting as a guardian for these minors. 10. In our opinion, the contention urged by ld Counsel for the assessee, merits acceptance. The ld Counsel has submitted before the Bench, the following documents and evidences to support his plea, which are reproduced below: (i) Copy of agreement for sale (vide PB. 1 to 10) (ii) English Translation of agreement for sale (vide PB. 11 to 17) ....
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....ty within a year from sale of another property, he would be entitled to benefit provided under section 54 even though there was no registration within said period. The findings of the hon`ble Court is reproduced below: "2. The basic fact of the matter is not in dispute. The assessee sold a property, 15/16, East Patel Nagar, New Delhi, belonging to him on 3-12-1974 for Rs. 98,000. By reason of the agreement of sale coupled with possession the assessee purported to have purchased a property No. 12, West Patel Nagar, New Delhi, for Rs. 2,03,000 on 6-2-1975. It is not in dispute that if the aforementioned transaction amounts to purchase of property, the same would be within a period of one year. The only question, which, therefore, arises for consideration is whether the aforementioned agreement dated 6-2-1975 would answer the description of purchase within the meaning of section 54 of the Income-tax Act, 1961 ('the Act'). Out of the consideration of Rs. 2,03,000, the assessee admittedly at the time of entering into the aforementioned agreement paid a sum of Rs. 1,73,000 which was more than the amount of Rs. 98,000 which he received by way of consideration in terms of ....
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....97] 226 ITR 6252. The Apex Court categorically held that section 22 of the Act does not require registration of sale deed. The meaning of the word 'owner' in the context of section 22 has been held to be a person who is entitled to receive income in his own right. The Apex Court in Mysore Minerals Ltd. v. CIT [1999] 239 ITR 7751 and this Court in CIT v. R.L. Sood [2000] 245 ITR 7272 have held that registration of the document is not mandatory for claiming depreciation on the property. In this view of the matter, we have no doubt in our mind that the learned Tribunal went wrong in holding that for the purpose of applicability of section 54, registration of document is imperative. We, therefore, answer the question in the negative, i.e., the assessee is entitled to exemption in terms of section 54." 12. Our view is also fortified by the judgment of the Coordinate Bench of ITAT Chandigarh, in the case of Anil Bishnoi, 86 taxmann.com 217 (Chd-Trib.), where in it was held as follows: "7. We have heard the rival contentions and have also gone through the record. Admittedly, the assessee paid the consideration through cheques and also obtained the possession of the pro....
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....it seems to us that this said word is not used in the sense of legal transfer and, therefore, the holding of a legal title within a period of one year is not a condition precedent for attracting section 54. In the instant case, the whole consideration was paid, possession of the flat was obtained and it was actually put to use for dwelling within four months, as a result exemption contemplated u/s 54 was clearly attracted.' 8. We may further like to add here that if capital gains are deemed to have been earned by the assessee on transfer of land as per the provisions of Section 2(47) of the Act, as per which the registration of the sale deed is not necessary, the consequences are that the seller or the assessee is said to have transferred his right in property and consequently those rights are acquired by the transferee; if in the case of transferor the same is to be treated as sale, then, we do not find any reason to give a different meaning to the word 'Purchase'. If someone has sold a property, consequently the other person has purchased the said property. If the transfer of property is complete as per the definition of transfer u/s 2(47) of the Act, the ass....