2018 (8) TMI 1244 - AT - Income Tax

Deduction u/s 54B - capital gains arising on sale of agricultural land - The assessee has neither acquired the new asset (agricultural land) nor deposited the amount of capital gain in the specified bank account within the due date of filing of return of income under s.139(1) - belated return was filed u/s 139(4) - Held that - when an assessee furnishes return subsequent to due date of filing return under s.139(1) but within the extended time limit under s.139(4), the benefit of investment made up to the date of furnishing of return of income prior to filing return under s.139(4) cannot be denied on such beneficial construction. On the basis of legal principles set out above, the assessee would be required to demonstrate before the AO that the investment in the new asset has actually happened before furnishing of return of income by the assessee under s.139(4) of the Act on 24.02.2014. The AO shall grant relief to the assessee under s.54B of the Act in accordance with law, where it is found that the investment has been carried out in the new asset as contemplated in Section 54B before the date of furnishing belated return of income under s.139(4) of the Act. - Matter remanded back - Decided in favor of assessee ex parte for statistical purposes.

Summary

Issues:
Allowability of deduction under s. 54B of the Income Tax Act, 1961 concerning AY 2012-13.

Detailed Analysis:

1. ITA No.109/Ahd/2017:
- The assessee challenged the disallowance of deduction under s. 54B of the Act.
- The Assessing Officer disallowed the claim as the assessee failed to deposit the capital gains in the bank account as required by s. 54B(2) of the Act.
- The CIT(A) allowed deduction for land purchased before the sale but denied deduction for land purchased after the due date of filing the return.
- The Tribunal found in favor of the assessee, holding that the investment in the new asset was made before filing the belated return, complying with s. 54B(2) requirements.
- The issue was remanded to the AO for verification of factual aspects regarding the investment in the new asset.

2. ITA No.110/Ahd/2017:
- Similar to the first appeal, the issue was the denial of deduction under s. 54B.
- The Tribunal upheld the claim for deduction under s. 54B on first principles and remanded the issue to the AO for verification of investment in the new asset.
- The appeal was allowed for statistical purposes.

Conclusion:
Both appeals were allowed for statistical purposes, with the Tribunal ruling in favor of the assessee regarding the eligibility of deduction under s. 54B of the Act. The factual aspects of the investment in the new asset were to be verified by the Assessing Officer in both cases.