2012 (7) TMI 1170 - AT - Income Tax

Summary

Issues:
1. Allowability of deduction u/s. 54B amounting to Rs. 16,21,205.

Detailed Analysis:
The appeal was filed by the Revenue against the order of the CIT(A) regarding the allowability of deduction u/s. 54B amounting to Rs. 16,21,205. The Assessee, engaged in the medical profession, declared total income of Rs. 2,50,979/- and agricultural income of Rs. 2,20,442/- for A.Y. 2007-08. The Assessing Officer assessed the income at Rs. 35,73,781/- by adding long term capital gains of Rs. 33,22,802. The CIT(A) granted relief to the assessee based on the claim that the time allowed for making investment for purchasing agricultural land without depositing the amount in a specified bank under the capital gain scheme is until the filing of the return of income u/s. 139(4). The CIT(A) held the appellant eligible for deduction u/s. 54B to the extent of Rs. 16,21,205, confirming the addition made by the A.O. to the extent of Rs. 17,01,597 and deleting it to the extent of Rs. 16,21,205.

The Revenue opposed the decision, arguing that the assessee's claim regarding the time allowed for making the investment for purchasing agricultural land without depositing the amount in a specified bank is until the filing of the return of income u/s. 139(4) is supported by legal precedents. The assessee had purchased agricultural land before 31.03.2009, well within the stipulated time frame. The Assessing Officer contended that the assessee is entitled to benefit under section 54B only after investing within the limit prescribed under section 139(1) of the Act. The provisions of section 54B were examined, emphasizing the requirement to deposit the capital gain not utilized for the new asset before furnishing the return of income under section 139. The CIT(A) decision was supported by the Hon'ble Guwahati High Court's ruling in CIT vs. Rajesh Kumar Jalan, emphasizing the need to interpret statutes to ascertain lawmakers' intentions effectively.

The CIT(A) was justified in granting relief to the assessee based on the interpretation of the provisions of section 54B(2) and section 139(4). The decision was further supported by the ITAT Bangalore Bench's ruling in Nipun Mehrotra. The identically worded provisions of sections 54F(4), 54B(2), and 54(2) were considered, and the decision of the CIT(A) was deemed appropriate without requiring any interference. The appeal filed by the Revenue was dismissed, citing the inapplicability of the case of Taranbir Sinh Sawhney vs. DCIT to the present case, leading to the confirmation of the CIT(A)'s decision in favor of the assessee.