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2023 (3) TMI 1045 - AT - Income TaxDeduction u/s 54B - investment made prior to the date of sale - claim denied as new agricultural land was purchased by the assessee prior to the date of sale of agricultural land - HELD THAT - We observe that the new property was primarily purchased out of advances received from sale of two agricultural properties. Evidently, the advances so received by the assessee were invested in the new agricultural property after the same were received and within a period of 2 years from the date of receipt of advance. In the case of Ramesh Narhari Jakhadi 1992 (2) TMI 178 - ITAT PUNE ITAT held that investment made prior to date of transfer out of earnest money or advanced would also be eligible and should be considered as investment made out of sale proceeds for purposes of section 54B. Thus we are of the considered view that the assessee should be allowed the benefit of deduction under section 54B of the Act since the purchase in the new property has been made out of advances received towards sale of agricultural properties held by the assessee. Decided in favour of assessee.
Issues Involved:
1. Ignoring the submission and decision relied upon by the appellant. 2. Disregarding the decision of ITAT Amritsar and Circular No.359 dated 10.05.1983. 3. Confirming the addition based on decisions of ITAT Ahmedabad and Jaipur Tribunal regarding disallowance under section 54B. 4. Confirming the disallowance of deduction under section 54B of Rs. 88,17,491/-. Summary: 1. Ignoring the submission and decision relied upon by the appellant: The appellant contended that the Ld. CIT(Appeals) ignored their submissions and the decision of ITAT Amritsar in DCIT & ANR Vs. ASSA Singh & ANR, along with Circular No.359 dated 10.05.1983. The Tribunal noted that the CIT(Appeals) failed to consider these submissions correctly. 2. Disregarding the decision of ITAT Amritsar and Circular No.359 dated 10.05.1983: The appellant argued that the advances received from the sale of properties were used to purchase new agricultural land, which should qualify for deduction under section 54B. The Tribunal found that the CIT(Appeals) disregarded the decision of ITAT Amritsar and Circular No.359, which supports the appellant's claim that advances utilized for purchasing new agricultural land should be eligible for deduction under section 54B. 3. Confirming the addition based on decisions of ITAT Ahmedabad and Jaipur Tribunal regarding disallowance under section 54B: The AO and CIT(Appeals) disallowed the deduction under section 54B for the land sold on 20-03-2017, as the new agricultural land was purchased on 21-10-2016, prior to the sale. The Tribunal noted that section 54B is a beneficial provision aimed at encouraging investment in new agricultural property and should be interpreted liberally. The Tribunal cited several cases, including Mother Superior Adoration Convent and Kishorbhai Harjibhai Patel, to support a liberal interpretation of beneficial provisions. 4. Confirming the disallowance of deduction under section 54B of Rs. 88,17,491/-: The Tribunal observed that the new property was purchased using advances received from the sale of agricultural properties, within two years of receiving the advances. Citing various judicial precedents, including DCIT v. Shri Indranil Sanjaybhai Rajyaguru and Ramesh Narhari Jakhadi v. ITO, the Tribunal concluded that the appellant should be allowed the benefit of deduction under section 54B, as the investment was made out of the advances received. Conclusion: The Tribunal allowed the appeal of the assessee, granting the benefit of deduction under section 54B, as the purchase of new agricultural land was made from the advances received towards the sale of agricultural properties. The decision emphasized a liberal interpretation of beneficial provisions to fulfill their intended purpose.
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