2018 (1) TMI 783 - AT - Income Tax

Deduction u/s 54B eligibility - Held that - Agricultural record produced before us does show at least with respect to Fasil year 1416, 1417 and 1418 the details of agricultural produce. This it is apparent that land sold by the assessee shown in the sale deed was an agricultural land and further in view of the evidences produced by the assessee of agricultural produce for the relevant period which is not controverted by revenue then, assessee is eligible for deduction u/s 54B as the capital asset being land which was used for the agricultural purposes for specified number of years - Decided in favour of assessee Deduction u./s 54F as sum paid by the appellant for purchase of new residence - Held that - The assessee has deposited a sum of ₹ 6.50 lacs on 05.07.2011, however due to clerical error the appellant has shown this figure at ₹ 704772/-. Further, the assessee could not point out the exact payment about this whether related to the acquisition of house. Therefore, we do not find any infirmity in the order of the lower authorities. Hence, the claim of the assessee u/s 54F to the extent of ₹ 650000/- has rightly been rejected. Assessee stated as has deposited a sum of ₹ 20.50 lacs in capital gain account scheme however AO has granted deduction of only ₹ 329100/- - Held that - Allahabad High Court in case of Ranjit Narang Vs. CIT 2009 (7) TMI 118 - ALLAHABAD HIGH COURT wherein, it has been held that if the amount deposited is not utilized for the purposes of acquisition in the house property then such shortfall shall be chargeable to tax in the year in which the period of three years from the date of the transfer of the original asset expires. Therefore, the assessee must be granted deduction of deposit subject to time limit and unutilized amount shall be charged to tax in different year as provided under the proviso to section 54F(4) - AO is not correct in charging the sum of unutilized amount in Assessment Year 2012-13 but it is chargeable to tax in later assessment year. Therefore, the AO is directed to grant deduction to the assessee and take remedial action in specified year if the same is not offered in income by the assessee. This ground with respect to ₹ 20.50 lacs is allowed and ₹ 6.50 lacs is dismissed. - Decided partly in favour of assessee.

Summary

Issues:
1. Deduction u/s 54B of &8377; 1422250/- claimed by the appellant.
2. Partial disallowance of deduction claimed u/s 54F of the Income Tax Act.

Analysis:

Issue 1: Deduction u/s 54B
The assessee claimed a deduction of &8377; 1422250/- under section 54B for the sale of agricultural land. The Assessing Officer denied the deduction as the land was not proven to be used for agricultural purposes. However, the assessee provided evidence of agricultural activities carried out on the land, supported by agricultural records and crop details for relevant years. The Tribunal found that the land sold was indeed agricultural and that the evidence presented was unchallenged by the revenue department. Consequently, the Tribunal allowed the deduction u/s 54B in favor of the assessee.

Issue 2: Partial Disallowance of Deduction u/s 54F
Regarding the deduction claimed u/s 54F, the assessee had paid &8377; 6.50 lacs for a new residential house but mistakenly reported it as &8377; 704772/-. The Tribunal upheld the lower authorities' decision to reject this claim due to lack of clarity on the payment's purpose. Additionally, the assessee deposited &8377; 20.50 lacs in the capital gain account scheme, but the Assessing Officer only allowed a deduction of &8377; 329100/-, citing non-utilization of the deposited amount for house acquisition within the stipulated time. The Tribunal referred to a High Court decision stating that unutilized amounts should be taxed in a later assessment year. Consequently, the Tribunal directed the Assessing Officer to grant the deduction for the deposited amount and take necessary action in subsequent years if the unutilized sum is not declared by the assessee. Thus, the Tribunal partially allowed this ground of appeal.

In conclusion, the Tribunal partly allowed the assessee's appeal, granting the deduction u/s 54B and directing the proper treatment of the deposited amount under the capital gain account scheme. The stay petition filed by the assessee was deemed infructuous and dismissed.