2013 (5) TMI 1038 - AT - Income Tax

Deduction u/s 54B - DR contended that the assessee is eligible for deduction if he has purchases the land for agricultural purpose within a period of two years after transfer of agricultural land - first objection raised by the ld. DR is concerned the property was only transferred in December 2008 therefore the property purchased before that date is not eligible for claiming deduction under section 54B - HELD THAT - This is only a hyper technical objection raised by the ld. DR because the assessee has received substantial amount from the purchaser before executing sale deed. So far as registration of the sale agreement is concerned if both the parties proceeded to carry the execution of the sale as per the agreement whether it is registered agreement or not there is no effect so far as transfer is concerned. Therefore the case law relied on by the ld. DR is altogether on a different context and have no application to the fact of the present case. In view of the above we find no infirmity in the order passed by the CIT(Appeals) and the ground raised by the Revenue is dismissed. CIT(Appeals) directing the AO to give relief of 50% on the strength of fresh evidences produced - Production of Additional Evidence under Rule 46A - HELD THAT - It amounts to violation of Rule 46A of the Income Tax Rules which elucidates that before any additional evidence is accepted the other party has to be given an opportunity of hearing. Faced with this situation we deem it appropriate that the matter requires re-examination by the AO. Accordingly we restore the issue back to the file of the Assessing Officer who shall pass a fresh order in accordance with law after affording adequate opportunity of hearing to the assessee. Appeal of the Revenue is partly allowed for statistical purpose.

Summary

Issues:
1. Eligibility for claiming exemption under section 54B of the Income Tax Act.
2. Direction to Assessing Officer regarding relief of expenses without proper verification.

Issue 1: Eligibility for claiming exemption under section 54B of the Income Tax Act:
The case involves an appeal by the Revenue and Cross Objection by the assessee regarding the eligibility for exemption under section 54B of the Income Tax Act for the assessment year 2009-10. The assessee, a medical practitioner, entered into an agreement to sell agricultural land and received payments before the sale deed was executed. The Assessing Officer denied the exemption claim as the properties were purchased before the actual transfer of the sold land. The CIT(Appeals) allowed the exemption, noting that the sale proceeds were utilized for purchasing agricultural land. The Revenue contended that the transfer occurred after the purchase of properties, hence not eligible for deduction. However, the Tribunal held that the sale proceeds were used for buying agricultural land, fulfilling the legislative intent, and dismissed the Revenue's appeal.

Issue 2: Direction to Assessing Officer regarding relief of expenses without proper verification:
The second issue pertains to the CIT(Appeals) directing the Assessing Officer to grant relief of 50% of certain expenses based on fresh evidence produced during appellate proceedings. The Revenue argued that the relief was granted without following Rule 46A of the Income Tax Rules, which requires giving the other party an opportunity to be heard before accepting additional evidence. The Tribunal found a violation of Rule 46A and remitted the matter back to the Assessing Officer for re-examination and proper verification. The appeal of the Revenue was partly allowed for statistical purposes, and the Cross Objection filed by the assessee was dismissed due to the academic significance of the issue in light of the remittance to the Assessing Officer.

In conclusion, the judgment addresses the eligibility criteria for claiming exemption under section 54B of the Income Tax Act and the procedural aspects related to granting relief of expenses based on fresh evidence. The Tribunal's decision provides clarity on the utilization of sale proceeds for purchasing agricultural land and emphasizes adherence to procedural rules in considering additional evidence during appellate proceedings.