2020 (11) TMI 308 - AT - Income Tax

Eligibility of deduction u/s 54B - Claim denied as investment made prior to the date of the sale of the land on which the capital gain arose - AO held that only the amount utilized/invested till the due date of the filing of the return of income u/s 139(1) was eligible for deduction u/s 54B and the remaining amount would be eligible for deduction only is such amount was deposited in the account in a specified bank or institution before the due date as provided under section 139(1) - as argued investment made in purchase of agriculture land till the extended date of filing of the return of income as provided under section 139(4) - HELD THAT - CIT(A) has claimed to have followed the decision of the Hon ble Jurisdictional High Court in the case of Jagriti Agrwal 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT but according to him, the benefit of utilising the capital gains amount to the extended date as provided under section 139(4) would be allowable only to the date of the actual filing of return of income by the assessee. In this case, limitation for filing of the return of income in terms of section 139(4) expires on 31/03/2012 but the actual return of income was filed on 29/09/2011 and, therefore, the Ld. CIT(A) restricted the deduction for the amount invested in purchase of the agriculture land till 29/09/2011. The coordinate bench in the case of Smt. Vatsala Asthana 2019 (10) TMI 1025 - ITAT DELHI has allowed benefit of deduction under section 54 of the Act for the payment made towards purchase of the residential house up to the due date of the filing of the return of income prescribed under section 139(4) - The Section 54B is pari-materia with Section 54 of the Act. Also see SH. VIJAY CHAUDHARY C/O RAVI GUPTA, ADVOCATE VERSUS ITO, WARD 4 (4) GURGAON 2019 (7) TMI 857 - ITAT DELHI Parties could not get verified the exact amount invested in purchase of agricultural land till the qualifying period, thus, we feel appropriate to set aside the finding of the Ld. CIT(A) and restore the issue in dispute of deduction under section 54B of the Act to the file of the Learned Assessing Officer for verifying the investment in purchase of agriculture land and decide the issue of deduction u/s 54B of the Act afresh in accordance with law after providing adequate opportunity of being heard to the assessee. As per the record, we find that against the order of the Learned CIT(A), the Revenue is not in appeal, which means the Revenue has accepted the decision of the Ld CIT(A) - Appeal of the assessee is allowed for statistical purposes

Summary

Issues Involved:
1. Validity of the assessment order.
2. Disallowance of ?17,28,000 on account of fencing and commission expenses.
3. Restriction of benefit under Section 54B of the Income-tax Act.

Comprehensive, Issue-Wise Detailed Analysis:

1. Validity of the Assessment Order:
The appellant contended that the assessment order dated 30th March 2014, passed by the Deputy Commissioner of Income-tax, Circle-2, Gurgaon, and upheld by the Commissioner of Income-tax (Appeals)-II, Gurgaon, was void ab initio. However, this issue was not elaborated upon in the judgment, and no specific arguments or legal principles were discussed regarding the validity of the assessment order.

2. Disallowance of ?17,28,000 on Account of Fencing and Commission Expenses:
The appellant claimed expenses of ?9,00,000 and ?8,28,000 for payments made to individuals for commission and fencing work. The Assessing Officer (AO) and the Commissioner of Income-tax (Appeals) (CIT(A)) disallowed these expenses due to insufficient evidence. The appellant argued that confirmations from the parties were submitted, shifting the onus to the AO and CIT(A) to verify these claims. The Tribunal decided to restore this issue to the AO for fresh verification, emphasizing the need for adequate opportunity for the appellant to be heard.

3. Restriction of Benefit under Section 54B of the Income-tax Act:
The appellant claimed a deduction of ?5,53,52,300 under Section 54B for investments in agricultural land. The AO restricted the deduction to ?1,96,52,825, corresponding to investments made before the due date for filing the return under Section 139(1). The AO and CIT(A) did not consider investments made after the return filing date but before the extended date under Section 139(4).

Analysis by Tribunal:
- The Tribunal examined the legal requirements for eligibility under Section 54B, referencing the CIT(A)'s decision in a similar case (Vijay Choudhary) and relevant High Court rulings.
- The CIT(A) had followed the principle that only amounts utilized or deposited in a specified account before the actual filing of the return were eligible for deduction.
- The Tribunal noted the jurisdictional High Court's decision in Jagriti Agrawal, which allowed deductions for investments made up to the extended date under Section 139(4).
- The Tribunal also referenced other cases where similar interpretations were upheld, allowing deductions for investments made within the extended period.
- Consequently, the Tribunal set aside the CIT(A)'s findings and restored the issue to the AO for verification of investments made in agricultural land up to the extended date under Section 139(4). The AO was directed not to withdraw deductions already granted by the CIT(A).

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the disallowed expenses and the Section 54B deduction claims, ensuring compliance with legal precedents and providing the appellant with adequate opportunity to present evidence. The judgment emphasized the importance of considering investments made within the extended period for filing returns under Section 139(4).