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TMI Blog2010 (11) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... issues raised in the appeals are likely to arise in the case of other assessees and so much so the Department seeks a decision by this court on the questions raised. We, therefore, proceed to consider the questions raised by the Revenue which are substantial questions of law. 3. The assessees who were the owners of agricultural land within the municipal limits sold the same in the year relevant to the assessment year 1991-92. However, the assessees did not pay any tax on capital gains but claimed exemption under section 54B(2) of the Income-tax Act, 1961, which provides for exemption from payment of tax on capital gains, if the same is deposited in specified bank account before the due date and utilised within two years from the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er assessees the proceedings initiated by the Assessing Officer under section 143(1)(a) was rectified under section 154 of the Act and the capital gains held by the assessee was brought to tax for the assessment year 1993-94. 4. In the appeals filed before the Commissioner of Income-tax (Appeals), the assessees raised two issues, namely, (1) the assessment of tax on capital gains in the case of one set of assessees by way of prima facie adjustments in the returns under section 143(1)(a) is illegal, and (2) the rectification of order issued in the case of the other set of assessees to levy tax is also not permissible as it is not an apparent mistake that could be corrected under section 154 of the Act. Besides the jurisdictional issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by deducting the indexed cost of acquisition and the indexed cost of improvement in terms of the amended provisions of section 48 which came into force in the year 1993-94 onwards. 6. Since our decision on the issues raised will depend upon the scope and meaning of section 54B, we extract hereunder the said section for easy reference : "54B. Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases.-(1) Subject to the provision of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139) in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purpose of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased assessees that the assessees are entitled to computation of capital gain by availing of deduction of the indexed cost of acquisition and the indexed cost of improvement introduced by the amendment to section 48 with effect from April 1, 1993, cannot be accepted because what is provided in clause (i) of the proviso to section 54B(2) is to treat the capital gain retained in deposit, and in respect of which exemption was claimed, as income chargeable under section 45 of the relevant year in which the assessee failed to utilise the fund for acquisition of agricultural land. In fact, the scheme of the Act is to compute the capital gain on sale of agricultural land in the assessment for the assessment year relevant to the previous year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee failed to utilise for acquisition of agricultural land. Since no computation of capital gain is required to be made in the year 1993-94, in our view, the Assessing Officer rightly treated the capital gain as income assessable under section 45 of the Act in terms of specific provision contained in clause (i) of the proviso to section 54B(2) of the Act. Therefore, recomputation of capital gain based on the amended provisions does not arise at all. Since computation or recomputation of capital gain was not required, and the capital gain deposited by the assessees was not utilised by them for purchase of agricultural land, the Assessing Officer rightly processed the returns for the year 1993-94 demanding tax on the same under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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