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2019 (2) TMI 42 - AT - Income TaxReopening of assessment - addition on account of Long Term Capital Gain - scope of Section 55A of the Act regarding reference to DVO in case of cost of acquisition as on 01.04.1981 - land was purchased by assessee in the name of his son as co-owner - Held that - For the assessment year 2009-10 in assessee s group concern this issue was observed in detailed and it was held by the Co-ordinate Bench of the Tribunal that the applicability of amendment so far as Section 55A is concerned, it cannot be applicable retrospectively. Exemption/s.54B - assessee was not allowed by the Revenue Authorities. Since the land was purchased in the name of the assessee s son - whether exemption/s.54B of the Act can be allowed even if the new agricultural land is purchased in the name of family members? - Held that - Out of sale proceeds of the said sale, the assessee has purchased other piece of land in his name and in the name of his only son who was bachelor and was dependent upon him, for being used for agricultural purposes within the stipulated time. Further it was not the case of the Revenue that from the sale proceeds of the agricultural land earlier owned by the assessee, the land in question was purchased for any other purpose than the agricultural purpose. The purchased land was being used by the assessee for agricultural purpose and merely because in the sale deed his only son was also shown as co-owner, the Hon ble ITAT has rightly come to the conclusion that it does not make any difference because the purchased land is being used by the assessee for agricultural purposes. On the other hand, Ld. DR did not bring out any evidence on record to demonstrate that the said land of the assessee was used for any other purpose other than agricultural purpose. The Assessing Officer referred to the judgment of Hon ble Bombay High Court in the case of Prakash Vs. ITO 2008 (9) TMI 234 - BOMBAY HIGH COURT but the facts are substantially different from the case of the assessee in hand. Further, we have also considered the decision in the case of CIT Vs. Vegetables Products Ltd. 1973 (1) TMI 1 - SUPREME COURT , therein the view also favorable to the assessee that has to be taken, in case of conflicting opinions. - Decided in favour of assessee
Issues Involved:
1. Reference for valuation of property to the Departmental Valuation Officer (DVO) under Section 55A of the Income Tax Act. 2. Addition on account of Long Term Capital Gain by substituting the valuation of DVO as on 01.04.1981. 3. Disallowance of exemption claimed under Section 54B of the Income Tax Act. Detailed Analysis: Issue 1: Reference for valuation of property to the DVO under Section 55A of the Income Tax Act The core issue was whether the Assessing Officer (AO) was justified in making a reference to the DVO for determining the fair market value of the property as on 01.04.1981. The assessee argued that the reference was beyond the AO's power, citing the case of CIT Vs. Pooja Prints, which held that such a reference cannot be made prior to the amendment to Section 55A of the Act. The Tribunal noted that the amendment to Section 55A, effective from 1st July 2012, was not retrospectively applicable. Since the case pertained to the assessment year 2011-12, the Tribunal concluded that the AO's reference to the DVO was not justified. Issue 2: Addition on account of Long Term Capital Gain by substituting the valuation of DVO as on 01.04.1981 The AO had substituted the valuation of the DVO, which was ?48 per square metre, against the valuation adopted by the appellant, leading to an addition of ?5,02,459/- to the Long Term Capital Gain. The Tribunal, referencing the judgment in CIT Vs. Pooja Prints and the decision in the case of Bhima Dada Kharate, held that the amendment to Section 55A was not applicable retrospectively. Therefore, the AO's action of substituting the DVO's valuation was invalid. The Tribunal set aside the order of the CIT(Appeal) and allowed the grounds raised by the assessee. Issue 3: Disallowance of exemption claimed under Section 54B of the Income Tax Act The AO disallowed the exemption claimed under Section 54B because the new agricultural land was purchased in the name of the assessee's son. The assessee relied on judicial pronouncements, including the cases of Laxmi Narayan Vs. Commissioner of Income Tax and Commissioner of Income Tax Vs. Gurnam Singh, which held that exemption under Section 54B should be allowed even if the new agricultural land is purchased in the name of family members. The Tribunal agreed with the assessee, noting that the primary purpose of Section 54B is to support agriculturist families. The Tribunal found no evidence to suggest that the land was used for any purpose other than agriculture and set aside the CIT(Appeal)'s order, allowing the exemption under Section 54B. Conclusion: The Tribunal concluded that: - The reference to the DVO under Section 55A was not justified for the assessment year 2011-12. - The addition to the Long Term Capital Gain by substituting the DVO's valuation was invalid. - The exemption under Section 54B should be allowed even if the new agricultural land is purchased in the name of family members. The appeal of the assessee was allowed, and the orders of the lower authorities were set aside.
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