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2018 (8) TMI 642 - AT - Income TaxDeduction u/s 54F and 54B - investment of income from capital gain - the conveyance deed was executed on 03-07-2012. The assessee contended that he has entered into sale agreement with the buyer on 13-08- 2010 and the new house was purchased on 22/04/2010 which was within one year of the transfer of the land. Held that - It is crystal clear that the decision in the case of Sanjeev lal 2014 (7) TMI 99 - SUPREME COURT was delivered after taking into account the peculiar facts of the case that the sale deed could not be executed because of the pending litigation and the competent court has prohibited the assessee to execute the sale deed therefore it is held that the assessee was entitled for relief under section 54 of the act. However, in the case of the assessee, we did not find any such peculiar circumstances which have prohibited the assessee to execute the sale deed. We have also considered all the judicial pronouncements referred by the assessee and we find facts of the case of the assessee are distinguishable, therefore, the same are not applicable to the case of the assessee. Further when the assessee has executed agreement to sale on 13.08.2010 the land was agricultural land and agreement to sale was made with non-agricultural person. The land was transferred only on 03-07-2012 when a registered sale deed was executed and it was absolutely correct that there was no creation of any right of the purchaser in the said land as the same were prohibited by the law relating to transfer of agricultural land as existing in the state of Gujarat. Claim of deduction u/s 54F as well as 54B disallowed - Decided against the assessee.
Issues Involved:
1. Denial of Deduction under Section 54F of the Income Tax Act, 1961. 2. Denial of Exemption under Section 54B of the Income Tax Act, 1961. Detailed Analysis: 1. Denial of Deduction under Section 54F of the Income Tax Act, 1961: The assessee claimed a deduction of ?40,74,793 under Section 54F of the Income Tax Act, 1961, which was denied by the Assessing Officer (AO). The AO observed that the transfer of land took place on 3rd July 2012, while the residential house was purchased on 22nd April 2010, which was beyond the stipulated time frame as per Section 54F. The assessee argued that Section 54F should be interpreted liberally and cited a beneficial deal for purchasing the house. However, the AO maintained that the purchase of the house did not fall within the required time frame. On appeal, the CIT(A) upheld the AO's decision, noting that the facts of the case did not align with the decision in the case of Sanjeevlal vs. CIT (365 ITR 389), where the Supreme Court had allowed the deduction due to peculiar circumstances involving a legal prohibition on executing the sale deed. The CIT(A) emphasized that in the assessee's case, there was no such legal prohibition, and the land was sold as non-agricultural land, which did not qualify for the deduction under Section 54F. The Tribunal agreed with the CIT(A) and AO, stating that the facts of the assessee's case were distinguishable from the Sanjeevlal case. The Tribunal noted that the land was agricultural at the time of the agreement to sell and was converted to non-agricultural land later, which invalidated the sale agreement under the Gujarat Tenancy and Agricultural Lands Act, 1948. Therefore, the Tribunal upheld the denial of the deduction under Section 54F. 2. Denial of Exemption under Section 54B of the Income Tax Act, 1961: The assessee also claimed an exemption of ?26,74,283 under Section 54B for investments in agricultural land at Ranu and Dudhwada. The AO denied this exemption, noting that the land sold was non-agricultural, and the exemption under Section 54B is available only for the sale of agricultural land. The AO observed that the land was converted to non-agricultural land before the sale, and therefore, the exemption under Section 54B was not applicable. On appeal, the CIT(A) supported the AO's decision, referencing the Bombay High Court's ruling in V.A. Trivedi (1988), which held that land sold for non-agricultural purposes does not qualify for the exemption under Section 54B. The CIT(A) pointed out that the land's conversion to non-agricultural status was evident from the sale deed and revenue records. The Tribunal upheld the CIT(A)'s decision, reiterating that the land was non-agricultural at the time of sale, and therefore, the assessee was not entitled to the exemption under Section 54B. The Tribunal found no peculiar circumstances in the assessee's case that would warrant a different conclusion. Conclusion: The Tribunal dismissed the assessee's appeal, confirming the denial of deductions under Sections 54F and 54B of the Income Tax Act, 1961. The Tribunal's decision was based on the factual distinction from the cited case laws and the legal requirements for claiming the respective exemptions. The order was pronounced in the open court on 18-06-2018.
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