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2015 (5) TMI 580 - AT - Income TaxDisallowance of deduction u/s 54B - non utilization of capital gain before the due date of furnishing of the return - investment in the agricultural land - CIT(A) deleted the disallowance - assessee sold urban agricultural land and claimed the deduction u/s 54B on account of investment made in agricultural land - Held that - The assessee can furnish the return of income at any time before the expiry of one year from the end of the relevant assessment year or be fore the completion of assessment whichever is earlier. In the present case, the assessment year assessment year 2007-08 which ends on 3118/2008 . Therefore, the period extended by one year end on to 31 st March 2009 and in the present case the assessee made the investment in the agricultural land before the extended due date for filing the return of income u/s139(4) of the Act i.e. 31/3/2009. Therefore, the Ld. CIT(A) was fully justified in directing the AO to allow the deduction u/s 54B of the Act. We do not see any infirmity in the impugned order of the Ld. CIT(A) on this issue. See CIT Vs. Rajesh Kumar Jalan 2006 (8) TMI 126 - GAUHATI High Court - Decided in favour of assessee.
Issues Involved:
1. Deletion of disallowance of Rs. 18,00,000 made by the Assessing Officer (AO) on account of non-utilization of capital gain before the due date of furnishing the return. 2. Compliance with the conditions specified in Section 54B(2) of the Income Tax Act, 1961. 3. Validity of the Ld. CIT(A)'s observation regarding the investment in FDRs instead of the capital gain account scheme. 4. Interpretation of the due date for investment under Section 54B in relation to Section 139(4) of the Act. Issue-wise Detailed Analysis: 1. Deletion of Disallowance of Rs. 18,00,000: The Department's primary grievance was the deletion of the disallowance of Rs. 18,00,000 made by the AO due to the non-utilization of capital gain before the due date of furnishing the return. The assessee sold urban agricultural land on 7/12/2006 and claimed deductions under Section 54B for investments made in agricultural land. The AO disallowed the claim because the capital gain was not deposited in a capital gain account scheme as mandated by Section 54B(2) but was instead placed in FDRs. 2. Compliance with Section 54B(2): The AO noted that the assessee did not comply with Section 54B(2) as the capital gain was not deposited into a specified account before the due date of filing the return. The Ld. CIT(A), however, observed that the investment in FDRs constituted only a technical breach and that the assessee should be allowed the deduction by applying a liberal interpretation of the beneficiary provisions. The Ld. CIT(A) relied on several case laws, including the decision of the Hon'ble Jurisdictional High Court in CIT vs. Jagriti Agrawal, which allowed for investment within the extended period under Section 139(4). 3. Investment in FDRs vs. Capital Gain Account Scheme: The Ld. CIT(A) argued that the investment in FDRs instead of the capital gain account scheme was a technical breach and should not disqualify the assessee from claiming the deduction. The Ld. CIT(A) emphasized a liberal interpretation of the provisions, as they are beneficial in nature. The Department contended that the assessee's investment in FDRs did not meet the clear provisions of the law, which required the capital gain to be deposited in a specified account. 4. Interpretation of Due Date under Section 54B and Section 139(4): The Ld. CIT(A) pointed out that the Hon'ble Jurisdictional High Court in CIT vs. Jagriti Agrawal held that if the investment in the new asset is made before the time prescribed under Section 139(4), the claim for deduction is allowable. The investment in agricultural land was made within two years from the date of sale, and the return was filed within the extended period allowed under Section 139(4). The Ld. CIT(A) concluded that the assessee was entitled to the deduction under Section 54B as the investment was made within the permissible period. Conclusion: The Tribunal upheld the Ld. CIT(A)'s decision, stating that the assessee made the investment within the extended due date for filing the return under Section 139(4). The Tribunal found no infirmity in the Ld. CIT(A)'s order and dismissed the Department's appeal. Result: The appeal of the Department was dismissed, and the order was pronounced in the open court on 17th April 2015.
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