2011 (5) TMI 986 - AT - Income Tax

Summary

Issues Involved:
1. Sustainability of the CIT(A)'s order.
2. Validity of notice u/s 143(2).
3. Disallowance of exemption u/s 54B.
4. Disallowance of exemption u/s 54F.
5. Deletion of addition u/s 54EC.

Summary:

1. Sustainability of the CIT(A)'s order:
The assessee's general ground that the CIT(A)'s order is not sustainable in law was rejected as no arguments were advanced.

2. Validity of notice u/s 143(2):
The assessee's ground that the notice u/s 143(2) was served after the statutory period was not pressed and thus rejected.

3. Disallowance of exemption u/s 54B:
The assessee claimed exemption u/s 54B for the purchase of agricultural land. The AO disallowed Rs. 13,75,000/- on the grounds that the amount paid as an advance did not come from the sale proceeds of the old agricultural land. The Tribunal held that the crucial dates are when the land was sold (19th March 2007) and purchased (20th March 2007). Any advances paid or received prior to these dates are irrelevant. The Tribunal allowed the exemption u/s 54B and directed the AO to grant the exemption for Rs. 13,75,000/-.

4. Disallowance of exemption u/s 54F:
The AO disallowed Rs. 17,40,318/- from the exemption claimed u/s 54F, arguing that the cost of the old land could not be adjusted towards the qualifying investment. The Tribunal noted that the assessee had purchased the other half share of the plot from her husband within one year before the transfer of the agricultural land, thus qualifying for exemption u/s 54F. The Tribunal directed the AO to allow the deduction u/s 54F for the cost of the plot and the construction.

5. Deletion of addition u/s 54EC:
The AO disallowed Rs. 11,93,488/- from the exemption u/s 54EC, arguing that the REC bonds were in joint names, thus diluting the assessee's ownership. The CIT(A) allowed the exemption, relying on the ITAT's decision in a similar case. The Tribunal upheld the CIT(A)'s decision, noting that the bonds were for succession purposes only and the primary holder was the assessee. The Tribunal found no merit in the revenue's appeal and dismissed it.

Conclusion:
The appeals of the assessee were partly allowed, and the appeal of the revenue was dismissed. The Tribunal directed the AO to grant the exemptions u/s 54B and 54F as claimed by the assessee.