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2015 (7) TMI 73 - AT - Income TaxEligibility exemption u/s.54B with regard to the on money received on sale of agriculture land - undisclosed income of the block period - Held that - Assessee has received ₹ 1,90,88,759/- (including on money) (Assessing Officer has taken ₹ 95,25,836/- only on which the exemption u/s.54B was claimed) on account of sale consideration of of Gatrad land. The said sale consideration includes mount of sale consideration shown in sale deed and on money received thereon. Out of sale consideration received, assessee has invested ₹ 92,47,100/- (Assessing Officer has mistakenly taken as ₹ 90,90,582/-) in another new agriculture land within the prescribed period. Assessee is entitled for relief of exemption u/s.54B to the extent of his contribution of ₹ 92,47,100/- (which has been mistakenly taken by Assessing Officer as ₹ 90,90,582/-) towards purchase of new agriculture land out of sale consideration received of ₹ 1,90,88,759/- (including on money) (Assessing Officer has taken ₹ 95,25,836/- only) on account of sale of Gatrad agriculture land. Assessing Officer has not allowed the exemption u/s.54B on the ground that basic requirement of claim of exemption u/s.54B is that first condition of land should be used by assessee being an individual or his parent or HUF for agriculture purpose has not been complied with. We have decided this issue in preceding favour in favour of assessee. Regarding allowability of claim of claim of on-money the ld. AR drew our attention to the decision of Hon ble Gujarat High Court in the case of CIT vs. Suman Paper & Boards Ltd. (2009 (2) TMI 66 - GUJARAT HIGH COURT) wherein it was held that in view of amendment on the provisions of section 158BB by the Finance Act, 2002 with retrospective effect from 1st July, 1995 the assessee was entitled to claim deduction under sec.80-I or section 80-IA in block assessment of the block period. The Revenue has acknowledged the benefit of deduction with regard to undisclosed income of the block period. Thus assessee is entitled for getting benefit of exemption under section 54B with regard to the on money . See Commissioner of Income Tax, Central II, Versus M/s. Sheth Developers (P) Ltd. 2012 (8) TMI 159 - BOMBAY HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Consideration of appellant's submissions and principles of natural justice. 2. Eligibility for exemption under Section 54B of the Income Tax Act. 3. Charging of interest under Sections 234A, 234B, 234C, and 234D of the Act. 4. Initiation of penalty proceedings under Sections 271(1)(c) and 271AAA read with Section 274 of the Act. 5. Allowability of exemption under Section 54B against unaccounted additional sale receipts (on money). Detailed Analysis: 1. Consideration of Appellant's Submissions and Principles of Natural Justice: The appellant contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in not considering their submissions, thus violating the principles of natural justice. The tribunal did not explicitly address this issue, suggesting that the primary focus was on the substantive tax issues rather than procedural fairness. 2. Eligibility for Exemption under Section 54B of the Income Tax Act: The appellant, engaged in the construction business, claimed exemption under Section 54B for the sale of agricultural land. The Assessing Officer (AO) disallowed the claim, arguing that the land was not used by the appellant or his parents for agricultural purposes, as required by Section 54B. The appellant countered that the land was used for agricultural purposes through an agreement with a third party, and relevant revenue records (Form No. 7/12) showed crops grown on the land. The tribunal upheld the CIT(A)'s decision to allow the exemption, stating that the land was indeed used for agricultural purposes, and the appellant was entitled to the exemption under Section 54B. 3. Charging of Interest under Sections 234A, 234B, 234C, and 234D of the Act: The appellant argued against the charging of interest under Sections 234A, 234B, 234C, and 234D. The tribunal did not provide specific details on this issue, implying that the focus remained on the primary issue of exemption under Section 54B. 4. Initiation of Penalty Proceedings under Sections 271(1)(c) and 271AAA read with Section 274 of the Act: The appellant challenged the initiation of penalty proceedings under Sections 271(1)(c) and 271AAA read with Section 274. The tribunal did not elaborate on this issue, suggesting that the decision on penalties would follow the resolution of the primary tax issues. 5. Allowability of Exemption under Section 54B against Unaccounted Additional Sale Receipts (On Money): The appellant disclosed unaccounted income (on money) received from the sale of agricultural land during search and seizure proceedings. The AO did not allow the exemption under Section 54B for this unaccounted income. The tribunal, referencing the Gujarat High Court decision in CIT vs. Suman Paper & Boards Ltd. and the Bombay High Court decision in CIT vs. Sheth Developers (P) Ltd., held that the appellant was entitled to the exemption under Section 54B for the total sale consideration, including the on money. The tribunal directed the AO to allow the exemption accordingly. Conclusion: The tribunal dismissed the Revenue's appeal and allowed the appellant's appeal, affirming the eligibility for exemption under Section 54B for both the accounted and unaccounted sale consideration of agricultural land. The tribunal's decision emphasized the agricultural use of the land and the appellant's entitlement to the exemption despite the AO's objections.
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