2020 (10) TMI 1197 - AT - Income Tax

Benefit of exemption u/s.54B(1) - AO denied the assessee s claim on the ground that the she did not deposit the amount of capital gain in the designated capital gain account maintained with a bank before the due date of filing return u/s.139(1) - HELD THAT - It is more than clear that section 139 is to be read here as section 139(4) and not to be confined to section 139(1) alone. As per the facts obtaining in this case, it is observed that the time u/s.139(4) was available up to 31-03-2014. The assessee opened a bank account under the designated Capital gain account scheme on 03-08-2013 and purchased a new property on 26-08-2013. It is evident that the assessee complied with the requirement of section 54B(2) seen in the light of the time limit as per section 139(4) of the Act. It is relevant to take note of the judgment of Hon ble Madras High court in the case of Venkata Dilip Kumar 2019 (11) TMI 416 - MADRAS HIGH COURT held that the requirement of depositing in the capital gain account scheme u/s.54(2) is directory. If the amount is utilized within the stipulated period of two/three years while depositing in the capital gain account scheme, there can be no denial of exemption u/s.54 because the substantial requirement of purchasing new property was satisfied. Coming back to the facts of the instant case, it is seen that section 54B(1) requires purchasing of new agricultural land within the period of two years from the date of sale of earlier agricultural land. The original agricultural land in this case was sold on 12-10-2011. New agricultural land was purchased on 26-08-2013, which is well within the given period of two years from the date of transfer. Assessee complied with the conditions for availing exemption u/s.54B. Therefore, set-aside the impugned order and direct to grant the benefit u/s.54B as claimed. - Decided in favour of assessee.

Summary

Issues involved:
- Interpretation of provisions of section 54B regarding exemption for capital gains from the transfer of agricultural land.
- Determination of the time limit for depositing the amount in the Capital gain account scheme under section 139(4).
- Application of relevant case laws to support the claim of exemption u/s.54B.

Issue 1: Interpretation of provisions of section 54B regarding exemption for capital gains from the transfer of agricultural land:
- The case involved a dispute over the denial of exemption u/s.54B to the assessee who sold agricultural land and purchased new agricultural land within the stipulated period.
- Section 54B(1) mandates the purchase of new agricultural land within two years of the transfer of the original land for availing the exemption.
- The denial of the claim was based on the failure to deposit the capital gain amount in a designated bank account before the due date of filing the return u/s.139(1).
- The Tribunal analyzed the interplay between sub-sections (1) and (2) of section 54B, emphasizing that the exemption is subject to the timely deposit of unutilized capital gain in a designated bank account as per section 139.
- The Tribunal referred to relevant case laws like CIT VS. Jagriti Aggarwal and others to support the interpretation of section 139(4) in the context of section 54B.

Issue 2: Determination of the time limit for depositing the amount in the Capital gain account scheme under section 139(4):
- The authorities initially denied the exemption u/s.54B based on the failure to deposit the capital gain amount in the Capital gain account scheme before the due date under section 139(1).
- The Tribunal highlighted that the time limit for depositing the amount as per section 139(4) was crucial in this case, as the assessee opened the bank account under the scheme on 03-08-2013 and purchased the new property on 26-08-2013.
- The Tribunal clarified that the requirement of depositing before the date of furnishing the return u/s.139 is not confined to section 139(1) alone, citing the judgment of Hon’ble jurisdictional High Court.

Issue 3: Application of relevant case laws to support the claim of exemption u/s.54B:
- The Tribunal referred to the judgment of Hon’ble Madras High Court in a similar case involving section 54, which has comparable provisions to section 54B.
- In the Madras High Court case, it was held that the requirement of depositing in the capital gain account scheme was directory, and if the amount was utilized within the stipulated period for purchasing the new property, the exemption should not be denied.
- Applying this principle, the Tribunal concluded that the assessee in the present case complied with the conditions for availing exemption u/s.54B by purchasing the new agricultural land within the specified period.

In conclusion, the Tribunal allowed all the appeals by granting the benefit of exemption u/s.54B to the assessee family members, emphasizing compliance with the statutory provisions and relevant case laws to support their claim.