TaxTMI 
TaxTMI 
2023 (8) TMI 1578
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....l in the name of seller, the sale consideration was still outstanding and there was contradictions in the cash flow statement. (ii) Whether on the facts and in the circumstances of case, the ld. CIT(A) was justified in allowing the benefit of Section 54B to the assessee in respect of property purchased at 1 DJM, 6.262, Command Area Vijaynagar purchased for a sum of Rs. 2,22,75,000/- especially when the agreement was doubtful, the amount of consideration mentioned in the agreement did not match with the amount mentioned in the sale deed and there was contradictions on the cash flow statement. (iii) Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in allowing indexed cost of acquisition of Rs. 23,34,480/- as against Rs. 13,15,488/- allowed by the Assessing Officer which is based on the fair market value of the land." 3. The fact as culled out from the records is that assessee has sold a piece of land along with three other persons for a consideration of Rs. 13,15,50,000/- during the F.Y 2012-13 relevant to Asstt. Year 2013-14. The assessee's share in sale consideration comes to Rs. 3,28,87,500/- i.e. 1/4th of Rs. 13,15,50,00....
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....ove persons from whom land was purchased. The assessee not filed the required details. The ld. AO thus noted that since the assessee has not filed the details as called for, the direct nexus of payment of consideration against purchase of these two properties is not established. 4.1 As the assessment getting time barred a final show casue notice dated 20.12.2017 was given to justify the capital gain and deduction claimed. The assessee filed reply to this final show cause notice. From the details so made available the ld. AO observed that assessee filed a copy of an agreement which was executed between Sh. Madan Lal, Village Kupli, Tehsil- Vijaynagar (expectant- seller) and the assessee i.e. Sh. Badri Prasad(claimant- purchaser). As per this agreement, the seller has proposed to sale the land situated at Chak 14 A.S. (A), Tehsil Sri Vijaynagar to the assessee through agreement at a sale consideration of Rs. 82,00,000/- and received an advance of Rs. 80,00,000/- in cash against this property. Based on agreement and the false agreement exemption u/s 54B of Rs. 2,34,85,830/- (on account of investment in both the properties). But the assessee has neither paid the full amount against ....
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....54B of the Income tax Act, the agreement is irrelevant and not eligible to claim exemption u/s 54B of the IT Act 1961. B.1(c) The original agreements have agreements have not been furnished. Therefore, the authenticity of these false agreements is not proved. B.1(d) There is no where mentioned in sale deed regarding agreement dated 31.01.2013. B.1(e) Agreement is simply written on simple revenue ticked and not notarized. In view of this validity of agreement is not proved. B.1(f) During the assessment proceedings, A/R of the assessee filed cash flow showing payment to Sh. Shanker Lal is as under:- S.No. Date Amount Mode of payment 1. 31.01.2013 18,38,000 Cash 2. 01.02.2013 1,50,000 Cash 3 05.02.2013 1,00,000 Cash 4 11.02.2013 2,40,000 Cash 5 15.02.2013 50,000 Cash 6 20.02.2013 1,00,000 cash 7 25.02.2013 2,60,000 Cash 8 24.04.2013 70,00,000 Cash 9 05.03.2013 1,60,000 Cash 10 15.03.2013 50,000 Cash 11. 26.03.2013 50,000 Cash 12 20.06.2013 1,00,000 Cash 13 26.08.2013 5,00,000 Cash ....
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....gard, assessee has submitted that this expenditure is a routine in nature in this type of transaction. The reply of the assessee considered but not found tenable because the assessee has neither filed proof of payment nor filed name and address of the recipient who have taken brokerage. In absence of evidences, it is not possible to allow the above expenditure of Rs. 3,28,875/- is hereby disallowed and the same is added in the total income of the assessee. 4.4 The assessee was asked to vide show cause notice about excess payment of Rs. 4,11,000/-. In response to this, assessee has stated that he got Rs. 4,11,000/- against standing crops which did not come in the definition of capital gain. In sale-deed nowhere is mentioned about standing crops. Assessee was asked to submitted supporting evidence for standing crops. But no documents/ evidences submitted by the assessee. In absence of proof, plea of assessee is rejected and Rs. 2,41,598/- is added to the income of the assessee. 4.5 The ld. AO has also considered the cost of acquisition at Rs. 13,15,488/- as against Rs. 23,34,480/- claimed by the assessee. 5. Aggrieved from the order of the Assessing Officer, assessee preferr....
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....of his] for agricultural purposes 222[(hereinafter referred to as the original asset)]. and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (1) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year, and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period ....
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....dispute in respect of the fact that the old land which was sold by the appellant was used continuously for agriculture and further, the new land which the appellant purchased was also being used for the purposes of agriculture. Merely because the sale deed was not yet registered and in the revenue records, the assessee's name was not registered as owner of the land, the deduction u/s. 54B cannot be denied. Registration is prima facie proof of an intention to transfer, but it is no proof of an operative transfer if there is a condition precedent as to the payment of consideration or delivery of the deed. Thus the seller may retain the deed pending payment of price and, in that case, there is no transfer until the price is paid and the deed is delivered. This view is affirmed by decision of Hon'ble Bench of the Calcutta High Court in the case of Nitai Chandra Naskar vs. Smt. Champaklata Debi reported in (1919) 29 CLJ 250, wherein while referring to s. 54 of the Transfer of Property Act, it has been held that, "sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. The true test is, what is the intention of the parties to the t....
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....le transaction but it is not full and final determinant to conclude the transfer. 6.4.7. In the instant case, Ikranamana dated 31-01-2013 and 16-07-2013 specified that the entire sale consideration was paid as advance in cash and the appellant took possession of the lands from the date of Ikaranama. Thus, it is clear from the evidences produced by the appellant that the sale proceeds of the agriculture land were invested for purchase of another agriculture land within the stipulated time in the appellant's name. Moreover, the land was under cultivation for agriculture purpose in subsequent years. No adverse evidence in thi regard has been brought on record by the AO. The object of provisiori of sec. 54B of the Act is to re invest capital gain arisen out of sale of agriculture land in purchase of agriculture land, which has bec complied with by the appellant. The AO has not conducted any sp enquiries so as to establish that these lands were not in possession the appellant or no agricultural activities were being carried out by : assessee on these lands. 6.4.8. Further, I find no reason to doubt the genuineness of Ikrarnama (sale- agreement) dated 31-01-2013 and....
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....of the facts and circumstance of the case and details / evidences furnished by the appellant. Considering the facts and circumstances of the instant case and legal precedents as discussed above, it is held that the AO was not justified in denying the deduction u/s. 54B of the Act as the appellant does confirm to the express provisions of sec. 54B of the Act. The disallowance of deduction u/s. 54B is held as not justified and addition made on this account is directed to be deleted. The grounds raised by the appellant regarding this issue are allowed. 07. Rejecting the assessee's claim of cost of acquisition 7.1. The AO in the show-cause dated 20-12-2017, required the assessee to explain the basis of FMV of Rs. 2,74,000/- as on 01-04-1981, on the basis of which indexed cost was worked out at Rs. 23,34,480/-, The AO having not being satisfied with the assessee's reply allowed indexed cost to tune of Rs. 13,15,488/-. 7.2. The appellant submitted before me that agricultural land sold by him was an ancestral land and was purchased before 01-04-1981. At time of sale of this land in year 2012, value of this land was Rs. 30,00,000/- per bigha and ....
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....e ld. CIT(A) has appreciated the fact that the based on the statement recorded the actual consideration has passed. There is no doubt that the assessee sold the property and against the consideration has purchased another property and the source is not doubted and even the investment is also based on the statement of the person who have confirmed to have sold the property and has received the money. On the identical the ld. AR of the assessee relied on the decision of the coordinate bench of Chandigarh in ITA No. 1459/Chd/2016 in the case of Anil Bishnoi Vs. ACIT & Ahmedabad bench in ITA no. 561/Ahd/2020 in the case of Dharmendra J Patel has considered the claim of the assessee u/s. 54B of the Act and the ratio of that decision relied upon by the assessee. 7. The ld DR is heard who has relied on the findings of the assessing officer and submitted that as regard the investment of the property the ld. AO has relied upon the detailed finding in the assessment proceeding based on that finding taken a view that the assessee has not invested the money and even the registration of the property was not in the name of the assessee and even the possession was not passed the denial to the ....
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....3. The amount of consideration of the said land as mentioned in the agreement did not match with the sale deed. The ld. AO also noted that the cash flow statement submitted by the assessee showing payment to Shri Shankar Lal was also found contradictory. Based on this observation the ld. AO also denied the benefit of section 54B in respect of the Shri Shanker. 8.2 In support of the claim u/s. 54B of the Act, the ld. AR of the assessee reiterated the submission made before the ld. CIT(A) and submitted that for claim u/s. 54 B of the Act he has claimed the benefit for purchase of two agricultural land from two different person. Thus, the claim of the assessee was supported by the two agreements and one registry made. In the assessment proceeding the assessee produced both the seller and their statements were recorded. Both the seller admitted to have sold their agricultural land to the assessee. 8.3 The ld. AR of the assessee contended that for claiming deduction u/s 44B of the Act. The provisions of section 54B required that sale deed must be registered the only requirement is that the sale consideration decided should be invested in purchase of agricultural land. The ld. AR o....
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....es and on perusal of the records. We find that it is not under dispute that the assessee has out of the income of capital gain offered it purchase two properties for which the assessee has paid the money. The seller have also been exempted by the Assessing Officer and they have also confirmed that the assessee has purchased the land from them. The source of payment made by the assessee is also proved to be invested in the said agriculture land. 8.5 As regards, the contention of non registration of the sale deed in the name of the assessee, we have considered the decision of the Co- ordinate Bench in the case of Dharmendra J. Patel in ITA No. 561/Adh/2020 dated 22.03.2023. The Co-ordinate Bench held as under:- "6. We have heard the rival contentions and perused the material on record. We are of the considered view that the Ld. CIT(Appeals) has erred in not looking at the facts of the instant case in the correct perspective. In our considered view, one must not lose sight of the fact that section 54B of the Act is a beneficial provision and aimed at investment of proceeds from sale of agricultural property into new agricultural property. In a recent judgment of Mother Sup....
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....must not be such which would frustrate objective of policy. 6.2 In the facts before us, we observe that the new property was primarily purchased out of advances received from sale of two agricultural properties. Evidently, the advances so received by the assessee were invested in the new agricultural property after the same were received and within a period of 2 years from the date of receipt of advance. In the case of DCIT v. Shri Indranil Sanjaybhai Rajyaguru, Sanjayraj Estate, Race Course, Rajkot in ITA number 358/Rjt/2015, the ITAT held that advance payment by the appellant to purchase agricultural land from the sale proceed of the land sold by him has been rightly found eligible for benefit under Section 54B of the Act. Again, in the case of Sh. Inderjit Singh Mann v. ACIT in ITA number ITA No. 1136/CHD/2014, the Assessing officer noted that the assessee has sold his land on 19th February 2009 but the registration deed of purchase of the other land was dated 9.6.2008. In this connection the assessee has submitted that though the land was sold on 19.2.2009, yet actual possession of the land was handed over earlier in April 2008 and this land was purchased for Rs. 51,80....
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....see. The authorities below were, therefore, not justified in denying the deduction claimed u/s 54B of the Act for a sum of Rs. 51,80,000/-. In view of the above discussion and in the light of the Board's Circular and the decisions cited above, we direct the Assessing officer to grant deduction claimed u/s 54B of the I.T. Act in a sum of Rs. 51,80,000/-. Since the Assessing officer computed the capital gain of Rs. 55,59,363/-, therefore, the Assessing officer is directed to re-compute the capital gains by giving deduction to the assessee of Rs. 51,80,000/-. This ground of the appeal of the assessee is allowed. 6.3 In the case of Ramesh Narhari Jakhadi v. ITO 41 ITD 368 (Pune), the ITAT held that investment made prior to date of transfer out of earnest money or advanced would also be eligible and should be considered as investment made out of sale proceeds for purposes of section 54B. 6.4 Similarly, the Chennai ITAT in the case of ITAT Chennai Bench in the case of ACIT Vs. Dr. S. Balasundarm in (2013) 36 CCH 107, held as under:- "According to the AO, the purchase consideration paid by the assesses was not eligible for deduction u/s 54B of the Act. It wa....
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.... consistent on the ratio of decision given by the Co- ordinate Bench, we are of the view that there is no infirmity in the order of the ld. CIT(A) granting benefit of section 54F of the Act to the assessee. Based on these observations, Ground Nos. 1 & 2 taken by the revenue is dismissed. 9. As regards the ground No. 3 raised by the revenue, the relevant fact and finding of ld. CIT(A) is as under:- Facts "7.2 The appellant submitted before me that agricultural land sold by him was an ancestral land and was purchased before 01-04-1981. At time of sale of this land in year 2012, value of this land was Rs. 30,00,000/- per bigha and as on 01-04-1981, the same was Rs. 25,000/- per bigha. This value was determined and intimated after getting information regarding FMV of this land from Stamp authority and local property dealers. As per the assessee, Sub Registrar informed him that no other property (agricultural land) got registered in year 1981. The appellant submitted that this agricultural land is situated at Sriganganagar-Hanumangarh National Highway and is 2-3 Kms away from Sriganganagar's residential/population area. Thus, it was claimed that the assessee had....