2013 (4) TMI 607 - AT - Income Tax

Exemption u/s 54B denied - Held that - It is pertinent to note that the assessee herein held the impugned land jointly along with her elder sister who did not claim the impugned land as an agricultural land. Under these circumstances, it is unable to understand as to how the assessee herein alone can claim the same as an agricultural land. A plain reading of the provision of sec 54B show that the land should have been used for agricultural purposes in the two years immediately preceding the date of transfer and as the assessee did not bring any material on record to show that the impugned land was used for agricultural purposes in the immediately preceding two years the assessee has failed to substantiate her claim with regard to the nature of land and its user in the immediately preceding two years - AO was justified in rejecting the claim of exemption u/s 54B. Amount invested in Capital Gains Account scheme - whether would be taken at Rs.47 lakhs as per AO or actual investment of Rs.55 lakhs - Held that - The assessee claims that he has invested a sum of Rs.55 lakhs in the Capital gain Account scheme in two instalments viz., Rs.47.00 lakhs and Rs.8.00 lakhs. It appears that the deposit of Rs.47 lakhs was made in connection with the claim made u/s 54F and the deposit of Rs.8.00 lakhs was made in connection with the claim made u/s 54B. Under these circumstances, the assessing officer was justified in computing the deduction u/s 54F in respect of Rs.47.00 lakhs only. Appeal of assessee rejected.

Summary

Issues:
1. Rejection of claim of exemption u/s 54B of the Act.
2. Discrepancy in the amount invested in Capital Gains Account scheme.

Issue 1: Rejection of claim of exemption u/s 54B of the Act:
The appeal challenged the rejection of exemption u/s 54B for the assessment year 2006-07. The land in question was acquired through a settlement deed, and subsequent transactions involved gifting and power of attorney arrangements. The sale of the land to a construction company raised concerns due to discrepancies in dates and documentation. The assessing officer computed capital gains and allowed exemption u/s 54F but rejected u/s 54B. The appellant argued that the land was agricultural, qualifying for exemption u/s 54B. However, the tribunal noted that the appellant's sister did not claim the land as agricultural, and no evidence was presented to prove agricultural use in the preceding two years. Consequently, the claim for exemption u/s 54B was denied.

Issue 2: Discrepancy in the amount invested in Capital Gains Account scheme:
The appellant claimed to have invested Rs.55 lakhs in the Capital Gains Account scheme, but the assessing officer only considered Rs.47 lakhs for deduction u/s 54F. The tribunal found that the Rs.47 lakhs deposit was linked to the claim under u/s 54F, while the remaining Rs.8 lakhs was associated with u/s 54B. As a result, the assessing officer's decision to compute the deduction under u/s 54F for Rs.47 lakhs was deemed appropriate. Ultimately, the tribunal dismissed the appeal filed by the assessee based on these findings.

In conclusion, the tribunal upheld the assessing officer's decision to reject the exemption claim u/s 54B due to lack of evidence supporting the land's agricultural use. Additionally, the discrepancy in the amount invested in the Capital Gains Account scheme was clarified, leading to the dismissal of the appellant's appeal.