2024 (1) TMI 324 - AT - Income Tax

LTCG - Deduction u/s 54B on agricultural land purchased through agreement - absence of registered title deed, the transfer of land cannot be treated as valid - HELD THAT - A transfer may or may not involve a sale or purchase, but the purchase is definitely falling in the ambit of transfer. Capital gain arising from transfer may not be necessarily resulting any consideration, but the purchase of another land certainly involves the payment of consideration either in cash or kind. The capital gain on transfer is computed as per the provisions of the Act and, therefore, even in case of no consideration is received by the assessee under a mode of transfer, the full value consideration has to be taken into consideration as per the provisions of Section 50C of the Income-tax Act, 1961. Hence, a purchase has an inevitable transaction of sale by the other party to the transaction and therefore, is part of the transfer, then purchase of an immovable property cannot be without a valid title document as held in the case of CIT vs. Balbir Singh Maini 2017 (10) TMI 323 - SUPREME COURT . The decisions relied upon by assessee are prior to the judgment of the Hon'ble Supreme Court in the case of Balbir Singh Maini(supra) and, therefore, those decisions cannot be applied by ignoring the judgment of the Hon'ble Supreme Court. Accordingly, we do not find any merits or substance in the contention of the Ld. Authorized Representative of the assessee that for claiming the benefit of section 54-B, the registration of the title deed is not required. Validity of the transaction of exchange of land between the assessee and one Mr. Suresh Verma - The assessee has filed the copies of legal notices dated 05.03.2020 and 27.01.2023, wherein the transaction has been challenged as illegal being The Government land which was transferred by the assessee under the said exchange. Accordingly, in the facts and circumstances of the case, we set-aside the matter to the record of the AO for proper verification and deciding the same after considering the new development in respect of the land transferred by the assessee under the exchange. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues involved:
The issues involved in the judgment are denial of deduction u/s 54-B on agricultural land purchase and the validity of the transaction of exchange of land.

Issue 1: Denial of deduction u/s 54-B on agricultural land purchase:
The appellant contested the denial of deduction u/s 54-B for the land purchased, arguing that registration of title document is not necessary for claiming the deduction. The appellant relied on various decisions to support the argument that registration is required only for transfer of immovable property, not for purchase of agricultural land. However, the Tribunal held that a purchase is a part of transfer, and the full value consideration must be considered as per the provisions of the Income-tax Act, 1961. The Tribunal concluded that a valid title document is necessary for the purchase of an immovable property, as established in the judgment of the Hon'ble Supreme Court in the case of CIT vs. Balbir Singh Maini.

Issue 2: Validity of the transaction of exchange of land:
The appellant submitted an affidavit and legal notices challenging the transaction of exchange of land, claiming that the land transferred was Government land and thus the transfer was invalid. The Tribunal decided to set aside the matter to the AO for proper verification in light of the new developments regarding the land transferred under the exchange. The appellant was granted an appropriate opportunity of hearing before a fresh order is passed. Ultimately, the appeal of the appellant was allowed for statistical purposes.

This judgment dealt with the denial of deduction u/s 54-B on agricultural land purchase and the validity of the transaction of exchange of land, emphasizing the importance of a valid title document for property transactions and the need for proper verification in case of disputed transactions involving Government land.