2017 (10) TMI 243 - AT - Income Tax

Disallowance of deduction u/s. 54B - Belated filing of return - investments in purchase of agricultural land for claiming the benefit of exemption u/s 54B was made by the assessee after the due date of filing of return u/s 139(1) i.e. 31.10.2006 - Held that - There is no dispute about the fact that the return of income has been filed by the appellant within sub section 4 of 139 of the IT Act. The Assessing Officer has erred in disallowing the exemption on the long term capital gain of the appellant uls 548 of the I.T. Act of ₹ 69,80,300/-. There is no dispute about the fact that the whole of long term capital gain of ₹ 1,65,27,403/- has been invested by the appellant in the purchase of another agricultural land within two year from the sale of the capital asset i.e. agricultural land. The sale of the asset having been taken place on 13-1-2006, falling in the previous year 2006-07, the return could be filed before the end of relevant assessment year 2007-08, i.e., 31-3-2007. Thus, sub-section (4) of section 139 provides extended period of limitation as an exception to sub-section (1) of section 139. Sub-section (4) is in relation to the time allowed to an assessee under sub-section (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-section (1) of section 139. Therefore, such sub-section (4) has to be read along with sub-section (1). Due date for furnishing the return of income as per section 139(1) is subject to the extended period provided under sub-section (4) of section 139. Therefore, CIT(A) was of the considered opinion that the amount of ₹ 69,80,300/- has to be exempted uls 54B of the I T Act and therefore the Assessing Officer was rightly directed to delete the addition of ₹ 69,80,300/-., which does not need any interference on our part, hence, we uphold the same. - Decided against revenue

Summary

Issues:
Disallowance of deduction under section 54B of the Income Tax Act.

Analysis:
The case involved an appeal by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-XXIV, New Delhi. The assessee had claimed a deduction under section 54B of the Income Tax Act for the capital gain earned on the sale of agricultural land. The Assessing Officer disallowed the deduction as the investment in the purchase of agricultural land was made partially after the due date of filing the return of income. The Ld. CIT(A) allowed the appeal of the assessee, quashing the reassessment order and deciding the appeal on merits as well.

The Revenue contested the appeal on merit, arguing that the investment for claiming the exemption under section 54B was made after the due date of filing the return. However, the Ld. CIT(A) held that the assessee had invested the entire capital gain amount in the purchase of agricultural land within the stipulated period of two years from the sale of the land, as required by section 54B. The Ld. CIT(A) relied on legal precedents and interpretations of relevant sections to support the decision to exempt the amount of the deduction claimed by the assessee.

The Tribunal noted that the Revenue did not challenge the legal ground of appeal related to the quashing of the reassessment order. Therefore, the Revenue's appeal was dismissed on this ground itself. Additionally, on the merit of the case, it was established that the assessee had complied with the provisions of section 54B by investing the entire capital gain amount within the specified period. The Ld. CIT(A) correctly directed the deletion of the disallowed amount, and the Tribunal upheld this decision based on legal interpretations and precedents cited in support of allowing the exemption under section 54B.

In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the decision of the Ld. CIT(A) to allow the deduction under section 54B of the Income Tax Act. The judgment was pronounced on 04/10/2017.