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2023 (5) TMI 118 - AT - Income TaxDeduction u/s 54B - Disallowance made as no bills of expenses are in the name of assessee - As submitted assessee given the details of agricultural land purchased on sale of ancestral property - HELD THAT - AO himself recorded that the bills are in the name of Chhaganbhai, who is the co-owner and is party to the sale deed dated 12.02.2014, which itself proves the agriculture activities. Moreover, keeping in view the size of land find no justification of such objection. Capital gain was not utilised before due date of filing return of income u/s 139 - As in Fatima Bai Vs ITO 2008 (10) TMI 563 - KARNATAKA HIGH COURT while considering almost similar question of law, though, on the deduction under section 54, held that due date for filing return of income in the said case was 30.07.1998, the assessee was entitled to file return of income under section 139(4), which was within 31.03.1990. Assessee did not file the return within the extended due date, but filed the return on 27.2.1990. However, the assessee had utilized the entire capital gains by purchase of a house property within the stipulated period of section 54(2) i.e., before the extended due date for return under section 139. Assessee technically may have defaulted in not filing the return under section 139(4). But, however, utilized the capital gains for purchase of property before the extended due date under section 139(4). The contention of the revenue that the deposit in the scheme should have been made before the initial due date and not the extended due date is an untenable contention. In view taken by Gauhati High Court in CIT Vs Rajesh Kumar Jalan 2006 (8) TMI 126 - GAUHATI HIGH COURT wherein it was held that time limit for deposit under the scheme or utilization can be made before due date for filing return under section 139(4). Thus, in view of the legal position, the second objection of the assessing officer also not tenable. Nature of land recorded on the purchase deed is bin Kheti premium patra land - We find merit in the submissions of the ld AR for the assessee that land purchased by assessee is agriculture land and can be used as NA (non-agriculture) subject to premium of payment, which means conditional permission was granted but the land was not converted to NA. Thus, find merit in the submission that nature of land purchased was not changed. Hence, third objection of assessing officer is also overruled. Appeal of the assessee is allowed.
Issues Involved:
1. Reopening of assessment under section 147 of the Income Tax Act. 2. Disallowance of exemption claimed under section 54B of the Income Tax Act. Summary: Issue 1: Reopening of Assessment At the outset of the hearing, the Authorized Representative (AR) for the assessee submitted that Ground No.1, which relates to the reopening of assessment under section 147 of the Income Tax Act, is not being pressed. Consequently, Ground No.1 was dismissed as "not pressed." Issue 2: Disallowance of Exemption under Section 54B The brief facts of the case are that the assessee, an individual, sold an immovable property and claimed an exemption of Rs.22,54,910/- under section 54B of the Income Tax Act for the purchase of new agricultural land. The Assessing Officer disallowed the exemption on several grounds: 1. No sufficient evidence of agricultural activities on the sold land. 2. The capital gains were not utilized before the due date for filing the return under section 139. 3. The purchased land was noted as "Bin Kheti Premium Patra Land," indicating non-agricultural status. The CIT(A) upheld the disallowance, leading the assessee to appeal to the Tribunal. Condonation of Delay: The Tribunal condoned the delay in filing the appeal, considering that the delay was not deliberate or intentional and was reasonably explained. Merits of the Case: 1. Evidence of Agricultural Activities: The Tribunal noted that the Assessing Officer acknowledged bills in the name of a co-owner, which substantiates the agricultural activities. Given the small size of the land, the objection was deemed unjustified. 2. Utilization of Capital Gains: The Tribunal referred to the Karnataka High Court's decision in Fatima Bai Vs ITO, which held that the extended due date under section 139(4) should be considered for the utilization of capital gains. Thus, the second objection was overruled. 3. Nature of Purchased Land: The Tribunal found merit in the assessee's submission that the land was agricultural and could be converted to non-agricultural status subject to a premium payment, but it was not converted. Thus, the third objection was also overruled. Conclusion: The Tribunal allowed the appeal of the assessee, granting the exemption under section 54B. The order was pronounced in the open court on 28/04/2023.
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