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2011 (6) TMI 778 - AT - Income TaxExemption u/s 54F - Bank manager wrongly deposited the assessee's investment of the long term capital gain in the flexi deposit scheme instead of capital gain scheme. Assessee pleaded for claiming the exemption u/s 54F HELD THAT - The assessee was always under the bonafide belief that the amount has been invested in the capital gain scheme account only. The copy of letter written by the assessee to the branch manager for forwarding the cheques shows that the intention of the assessee was to invest in capital gain scheme account. The request made to the bank manager was to open a capital gain scheme account. This intention of assessee was always to reinvest in the scheme which qualify for the exception of capital gain tax. The ITAT, Bangalore relying on the case of NIPUN MEHROTRA. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 14 (2), BANGALORE. 2007 (3) TMI 283 - ITAT BANGALORE-B and judgements of COMMISSIONER OF INCOME-TAX VERSUS RAJESH KUMAR JALAN. 2006 (8) TMI 126 - GAUHATI HIGH COURT and FATHIMA BAI VERSUS INCOME TAX OFFICER 2008 (10) TMI 563 - KARNATAKA HIGH COURT , held that assessee was entitled to exemption of the entire investment upto the date of filing the return u/s 139(4) of the Act. The assessee s case is squarely covered by the above judgements, therefore, this ground of assessee s appeal is allowed. Benefit of the cost incurred for developing the Agricultural Land - Assesee submitted that such amount was received in lieu of residual things available on the land sold - Therefore, no addition should be made - HELD THAT - Assessee has also not furnished reliable evidence in respect of the claim of compensation on certain things, therefore such claim is unsustainable claim. In absence of any evidence and with the fact that the amount was received at and around the time of sale of the land from the same person, we are of the view that this was the sale consideration received towards the sale of the land. The surrounding circumstances also show that this amount received towards the sale consideration of land. For holding so, we get the support from the decision of Hon'ble Allahabad High Court in the case of DINESH KUMAR MITTAL VERSUS INCOME-TAX OFFICER AND OTHERS 1991 (3) TMI 78 - ALLAHABAD HIGH COURT ,where the Hon'ble High Court has held that there is no rule of law to the effect that the value determined for the purpose of stamp duty is the actual consideration passing between the parties to a sale. The actual consideration may be more or may be less. What is the actual consideration that passed between the parties is a question of fact to be determined in each case, having regard to the facts and circumstances of the case. As we have stated above, the facts and circumstances of the case show that the amount in question was received towards the sale consideration in addition to the amount declared in the sale deed. The revenue records show that the rice was being grown in 2006 when the sale was negotiated. Therefore, a deduction regarding such amount shall be allowed towards the compensation for the standing crops at the land sold out. In the interest of justice and equity, we hold that the assessee shall be at liberty to claim the benefit of the cost incurred for developing the agricultural land by way of making Dera, hand-pump, pucca drains, flooring, fencing and compensation for labourers, etc., if necessary evidences are filed before the assessing authority. Interest u/s 234B - CIT(A) upholded the levy of interest u/s 243B - HELD THAT - We hold that levying of interest is mandatory in view of the decision of Hon'ble Supreme Court in COMMISSIONER OF INCOME TAX VERSUS ANJUM MH GHASWALA AND OTHERS 2001 (10) TMI 4 - SUPREME COURT , Therefore, the same stands dismissed.
Issues Involved:
1. Confirmation of addition under the head 'long term capital gains' disallowing the claim under section 54F of the Income-tax Act, 1961. 2. Confirmation of addition representing sale of crops and temporary structures assessed under the head 'Income from other sources'. 3. Levy of interest under section 234B of the Income-tax Act, 1961. Detailed Analysis: 1. Confirmation of Addition under 'Long Term Capital Gains' (Section 54F): The assessee sold agricultural land and a residential house, declaring the sale consideration as long-term capital gains and claimed exemption under section 54F. The dispute arose due to the investment of the long-term capital gain in a flexi deposit scheme instead of a capital gain scheme account, which was a result of a mistake by the bank manager. The assessee argued that the intention was always to invest in a capital gain scheme account and eventually invested the amount in a new residential house before the due date for filing the return under section 139. The tribunal referred to the decisions of the Karnataka High Court in Fatima Bai vs. ITO and the Gauhati High Court in CIT vs. Rajesh Kumar Jalan, which held that the due date under section 139 includes the extended period under section 139(4). The tribunal concluded that the assessee fulfilled the conditions for exemption under section 54F since the investment was made within the permissible period. Therefore, this ground of the assessee's appeal was allowed. 2. Confirmation of Addition under 'Income from Other Sources': The assessee received Rs. 45,36,000/- as compensation for various items on the sold agricultural land, including crops, temporary structures, and settlement of laborers. The assessee claimed this should be considered agricultural income or at least not assessed under 'Income from other sources'. However, the tribunal found that the claims were not supported by reliable evidence and the amounts were received around the time of the land sale, suggesting they were part of the sale consideration. The tribunal referenced the decision of the Allahabad High Court in Dinesh Kumar Mittal vs. ITO, emphasizing the determination of actual consideration is a factual question. Given the lack of evidence and the timing of the payments, the tribunal held that the amount was part of the sale consideration. However, a deduction for compensation for standing crops was allowed. The tribunal remanded this issue back to the Assessing Officer for reassessment, allowing the assessee to claim the benefit of costs incurred for developing the land if supported by evidence. 3. Levy of Interest under Section 234B: The tribunal upheld the levy of interest under section 234B, citing the Supreme Court decision in Anjum Ghaswala, which held that the levy of such interest is mandatory. Therefore, this ground of the appeal was dismissed. Conclusion: The appeal was partly allowed, with the tribunal granting relief regarding the exemption under section 54F and remanding the issue of compensation for reassessment, while upholding the levy of interest under section 234B.
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