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TMI Blog2017 (3) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... l land as on 01-04-1981. Further, the cost of improvement claimed on account of land levelling charges of ₹ 20,000/- to remove the Kachi Dol and to make the land even which because of the irrigation nail was uneven by using the JCB is reasonable. Therefore, the AO is directed to consider the indexed cost of acquisition and improvement of the agricultural land sold by the assessee at ₹ 12,02,592/- as claimed by the assessee. Thus Ground of the assessee is allowed. Deduction u/s 54 in respect of purchase of agricultural land - revenue not allowed this claim for the reason that the sale deed of the agricultural land under consideration was registered on 03-08-2010 and therefore, the agricultural land purchased prior to the execution of sale deed is not entitled for deduction u/s 54B - Held that:- In view of the decision of Hon'ble Supreme Court in the case of Sanjeev Lal vs. CIT [2014 (7) TMI 99 - SUPREME COURT ] and Subhash Vinayak Supnekar [2017 (1) TMI 58 - BOMBAY HIGH COURT ] wherein it was held that where the investment in purchase of residential house or investment in bond is out of the amount received on agreement to sale, the deduction should be allowed even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC). In determining whether commencement of reassessment proceedings is valid, the Court has only to see whether there is prima facie some material on the basis of which the Department opened the case. The sufficiency or correctness of the material is not a thing to be considered at this stage as held by the Supreme Court in the case of Raymond Woollen Mills Ltd. vs. ITO (1999) 236 ITR 34 (SC), Great Arts (P) Ltd. vs. ITO (2002) 257 ITR 639 (Del.). The assessee cannot challenge sufficiency to belief ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) 4.7 Hon'ble Supreme Court has laid down in the case of Kelvinator India 320 ITR 561 that AO has power to reassess, only if there is a tangible material and the procedure laid down in the case of GKN Drivershaft has been followed by the AO. The AO has discharged the duty which lay upon him before initiating the reassessment proceedings. 4.8 Thus in view of these facts, I hold that AO had rightly initiated the proceedings u/s 147/148 of the I.T. Act. 2.2 After hearing both the parties and perusing the material available on record, I find no merit in the arguments adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Act has not been accepted by the AO in the remand report. No deduction will be available to the appellant for the land purchased in her name in F.Y. 2006-07 as the provisions of sub-section (1) of Section 54B of the I.T. Act require that investment of Long term capital gains on sale of agricultural land has to be made for the purchase of new agricultural land within two years from the date of transfer of the original asset (agricultural land). In this case, the land purchased in her name is much more i.e. 04 years before the sale of agricultural land whose profits are subject matter of taxation. Therefore, I hold that no deduction u/s 54Bof the I.T. Act against this purchase of land would be available to the appellant. 5.15 Thus, in view of the above discussion, AO is being directed to compute the Long term capital gains in the hands of the appellant by taking the sale consideration of ₹ 23,26,071/- after giving a deduction for cost of acquisition (as discussed in para 5.10 5.11) and cost of improvement. Further, deduction u/s 54B of the I.T. Act may be given for investment of ₹ 9,00,100/- made in the name of self (as discussed above). 3.2 During the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the value adopted by the assessee as on 01.04.1981 at ₹ 1,21,000/- should be accepted and the AO be directed to allow the indexation benefit accordingly. (b) Indexed Cost of Improvement The assessee has claimed cost of improvement of ₹ 20,000/- on account of land levelling expenses in the FY 2007-08. This expenditure was incurred for removing the Kacchi dol and the Nali before selling the land. This work was done by utilising the JCB. This expenditure is very reasonable. There is no finding of the lower authorities that such expenditure is not incurred. Therefore, even if the evidence is not filed, considering the explanation of the assessee the same should be accepted and the capital gain be directed to be worked out after allowing the same. (c) Deduction u/s 54 B on agricultural land purchased The assessee claimed it as deduction u/s 54B on agricultural land purchased on 26.08.2006 for ₹ 5,20,050/- (PB 25-30) . This claim is not accepted by the AO in the remand report and also by the Ld. CIT(A) that this land is purchased by the assessee 4 years prior to the execution of sale deed and therefore the same is not allowable u/s 54B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. 24. Thus, a right in respect of the capital asset, viz. the property in question had been transferred by the appellants in favour of the vendee/transferee on 27th December, 2002. The sale deed could not be executed for the reason that the appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated. 25. In view of the aforestated peculiar facts of the case and looking at the definition of the term transfer as defined under Section 2(47) of the Act, we are of the view that the appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of in Chandigarh and used for purchase of a new property being House No. 267, Sector 9-C, situated asset/resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 20,000/- to remove the Kachi Dol and to make the land even which because of the irrigation nail was uneven by using the JCB is reasonable. Therefore, the AO is directed to consider the indexed cost of acquisition and improvement of the agricultural land sold by the assessee at ₹ 12,02,592/- as claimed by the assessee. Thus Ground No. 2 of the assessee is allowed. 3.4.1 In respect of Ground No. 3, it is noticed that that the assessee clamed deduction u/s 54 in respect of purchase of agricultural land for ₹ 5,20,050/- which is stated to be out of the amount of ₹ 9,17,000/- received upto 26-06-2006 as per the earlier agreement to sale dated 18- 03-2006. The lower authorities have not allowed this claim for the reason that the sale deed of the agricultural land under consideration was registered on 03-08-2010 and therefore, the agricultural land purchased prior to the execution of sale deed is not entitled for deduction u/s 54B. However, this claim of the Revenue is not tenable in view of the decision of Hon'ble Supreme Court in the case of Sanjeev Lal vs. CIT 365 ITR 389 and also the decision of Hon'ble Mumbai High Court in the case of Subhash ..... X X X X Extracts X X X X X X X X Extracts X X X X
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