2020 (12) TMI 292 - AT - Income Tax

Long term capital gain on sale of agriculture land - transfer of land in the year under consideration - only 10% of the sale consideration was received during the year and balance 90% consideration was received on 30.06.2008 i.e. AY 2009-10 - eligible for grant of deduction u/s. 54B - HELD THAT - Issue involved in this appeal is squarely covered by the decision of the Tribunal dated 9.4.2018 in the case of 'Shri Sheo Ram, Jagadhari vs ITO' 2018 (4) TMI 1842 - ITAT CHANDIGARH sellers/farmers who had sold the land to the purchasers, as named above, had received only part payment of 10% of the entire consideration in the financial year 2007-08 and the remaining consideration was withheld by the builder. The sellers so duped by the builder, had approached the Hon'ble Punjab Haryana High Court and the Hon'ble High Court vide order 2009 (2) TMI 900 - PUNJAB AND HARYANA HIGH COURT had ordered an investigation into the matter and after considering the report of the Inspector had directed the builder to make the payment of the balance arrears to the sellers/farmers which was paid by the builder in the subsequent years. The Tribunal considering the aforesaid facts in the said case has restored the matter to the file of the Assessing Officer for the limited purpose of enabling the assessee to establish the similarity of the facts of the case with that of the case of Shri Rajiv Kumar 2016 (7) TMI 184 - ITAT CHANDIGARH and directed AO to verify the claim of the assessee in this regard and thereafter to pass and order in accordance with law. The issue relating to the claim of deduction u/s. 54B and 54F of the Act was also restored to the file of the Assessing Officer to be adjudicated upon afresh. Whether land belonged to the ''HUF'' and not to the assessee? - We are not convinced with the said contention of the assessee. The land was in the name assessee in individual capacity and the same was sold to the builder by the assessee in his individual capacity as there was no mentioned that the land was being sold by the assessee as Karta of 'HUF' - proceeds of the sale were also deposited/retained by the assessee in his individual capacity and further the land so purchased out of the proceeds of the sale was also in the name of the assessee in individual capacity - plea that the income/capital gains should have been assessed in the name of the 'HUF' seems to be an afterthought. Moreover, the issue relating to the 'HUF' has not been pressed before the Ld. CIT(A). This issue is accordingly decided against the assessee.

Issues Involved:
1. Addition of ?1,30,33,870/- as long-term capital gain on sale of agricultural land.
2. Denial of benefit of investments in new agricultural land amounting to ?1,16,49,865/- under Section 54B.
3. Adoption of indexed cost of land acquisition as of 1-4-1981 at ?2,63,415/-.
4. Reopening of assessment under Section 148.

Issue-wise Detailed Analysis:

1. Addition of ?1,30,33,870/- as Long-term Capital Gain:
The Assessing Officer (AO) observed that the assessee sold land to two companies for a total consideration of ?4,68,53,125/- in April 2007. Since the land was within the municipal limits of Jagadhari, the AO reopened the assessment under Section 147 and subjected the capital gains to tax. The assessee argued that the land was ancestral property belonging to the Hindu Undivided Family (HUF) and should not have been assessed in his individual name. However, this contention was rejected, and the capital gains were assessed at ?2,30,33,870/-.

Upon appeal, the CIT(A) upheld the AO's decision, noting that the assessee did not press the issue of the land belonging to the HUF. The assessee then appealed to the ITAT, referencing a similar case (Shri Sheo Ram vs ITO) where the Tribunal had restored the matter to the AO for verification of facts. The ITAT directed the AO to verify the similarity of facts with the case of Shri Rajiv Kumar and decide accordingly.

2. Denial of Benefit of Investments in New Agricultural Land under Section 54B:
The assessee claimed exemption under Section 54B for investing the sale proceeds in new agricultural land. The CIT(A) rejected this claim, noting that the property was purchased beyond the due date for filing the income tax return, and no evidence was provided for depositing the sale proceeds in the Capital Gains account. Additionally, the assessee had not filed a return for the assessment year 2008-09. The ITAT restored this issue to the AO for fresh adjudication after verifying the year of taxability of the capital gains.

3. Adoption of Indexed Cost of Land Acquisition as of 1-4-1981:
The CIT(A) confirmed the AO's adoption of the indexed cost of land acquisition at ?2,63,415/-. The ITAT did not specifically address this issue separately but indicated that it should be reconsidered by the AO in light of the main issue of the year of taxability of the capital gains.

4. Reopening of Assessment under Section 148:
The assessee initially raised the issue of reopening the assessment under Section 148 but later did not press this ground. Consequently, this ground was dismissed as not pressed.

Conclusion:
The ITAT restored the main issue of the year of taxability and the consequent deduction claimed under Section 54B/54F to the AO for verification of facts. The AO was directed to verify the similarity of facts with the case of Shri Rajiv Kumar and decide accordingly. The ITAT also clarified that if the assessee could demonstrate that the major portion of the sale proceeds was received in the subsequent year and invested in new agricultural land, the condition of depositing the amount in the Capital Gains account would not apply. The appeal was allowed for statistical purposes, and the matter was restored to the AO for fresh consideration.

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