9911796707
TMI Blog2018 (8) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of the assessee. Further when the assessee has executed agreement to sale on 13.08.2010 the land was agricultural land and agreement to sale was made with non-agricultural person. The land was transferred only on 03-07-2012 when a registered sale deed was executed and it was absolutely correct that there was no creation of any right of the purchaser in the said land as the same were prohibited by the law relating to transfer of agricultural land as existing in the state of Gujarat. Claim of deduction u/s 54F as well as 54B disallowed - Decided against the assessee. - ITA No. 587/Ahd/2017 - - - Dated:- 18-6-2018 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For The Revenue : Shri Saurabh Singh, Sr. D.R. For The Assessee : Shri M.J. Shah, A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee s appeal for A.Y. 2013-14, arises from order of the CIT(A)- 1, Vadodara dated 27-12-2016, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee has raised following grounds of appeal:- 1. The C.I.T.(Appeals) erred in law and on facts in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer about the purchase of agricultural land he has borrowed ₹ 32 lacs from his relatives and incurred ₹ 32, 83,000/- towards purchase of house. He further submitted as soon as he has received money from buyer, he has returned the entire amount of borrowed money on 6th Jan, 2013. The assessing officer has not accepted the reply of the assessee. He has stated that for claiming exemption u/s. 54F, the assessee has to purchase within one year before the date of transfer or two years after the date of transfer or constructed within three years after the date of transfer (or from the date of receipt of compensation in the case of compulsory acquisition), one residential house. However, in the case of the assessee, the transfer of land was taken place on 3rd July, 2012 and the residential house was purchased on 22nd April, 2010 beyond the time allowed as per the provision of section 54F of the act. Consequently, the assessing officer has disallowed the claim of exemption u/s. 54F of the act and made addition of ₹ 40,74,793/- in the total income of the asessee Second ground of appeal disallowance of Exemption u/s. 54B of the act of ₹ 26,74,283/- 5. At t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s. 54B of the act is available only out of capital gain arising from the transfer of land being used by an individual or his parents or Hindu undivided family for agricultural purpose for a period of two years immediately preceding the date of transfer, if the assessee has purchased another land for agricultural purpose within a period of two years from the date of such transfer. In view of the above facts and circumstances, the assessing officer has concluded that the assessee is not entitled for claim of exemption u/s. 54B of the act. Therefore, he has made addition of ₹ 26,74,283/- to the total income of the assessee. 6. Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A)has sustained the addition on both the issues. The relevant part of the findings of ld. CIT(A) are reproduced as under:- Deduction u/s. 54F of the act of ₹ 40,74,793/-. 5.3 I have considered the facts of the case, the submission of the appellant and the AO's observations. A perusal of the assessment order shows that the appellant had not made any submission before the AO that it should be allowed exemption u/s 54F of the IT Act on account of the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the date of its execution, no possession was given to the purchaser. Besides, it has been clearly mentioned that possession will be given at the time of executing the sale seed of the said property. Relevant parts of the English Translation of the sale agreement as provided by the appellant himself are as follows: 3. Schedule selling property's absolute possession will be given us the execute to you the execute at the time of executing registered sale deed of said property at that time we the executor have to give to you the execute, such is decided. 4. After transferring the above said schedule property into non agricultural as mentioned above on paying said sale consideration amount by executing registered sale deed, you the executor are rightful. But, you the executee, by paying sale consideration amount and ready to execute sale deed and then also at that time we the executors does not execute registered sale deed to you the executee and/or for that does any excuses then at that time you the executees, to gets special existence of this Banakhat Agreement and by filing suit against us in court, at court way are rightful to execute registered sale deed and at that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that such members of the family or the legal heirs shall hold the land, after the partition, on the same terms, conditions, restrictions as were applicable to such land or interest thereat therein purchased by the tenant or the person. (1A) The sanction under sub-section (1) shall be given by the Collector in such circumstances and subject to such conditions, as may be prescribed by the State Government. ( 1AA) Notwithstanding anything contained in sub-section (1), it shall be lawful for such tenant or a person to mortgage or create a charge on his interests in the land in favour of the State Government in consideration of a loan advanced to him by the State Government under the Land Improvement Loans Act, 1884, the Agriculturists' Loan Act, 1884, or the Bombay Non-agriculturists' Loans Act, 1928, as in force in the State of Gujarat, or in favour of a bank or co-operative society, and without prejudice to any other remedy open to the State Government, bank or co-operative society, as the case may be, in the event of his making default in payment of such loan in accordance with the termson which such loan was granted, it shall be lawful for the State Government, ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by a tenant under Sections 17B, 32, 32F, 32-1, 32-O, 32-U, 43-ID or 88EE can be transferred by any tenant, owner, by sale, gift, mortgage, lease or assignment without the previous sanction of the Collector. In each case, it is to be seen as to the place where such land is situated i.e. in the urban area or in the rural area. If it is in the urban area, then it is to be ascertained whether the land falls within the municipal area or the area under the Urban Development Authority or Mahanagarpalika or notified area or cantonment area. Collection of all such facts takes much time as thorough inquiry is to be made and then to give finding. Therefore, the petitioners cannot claim that once they file the application, the Collector is bound to give permission. In appropriate case, it can be refused. The petitioners have no right to transfer the land except in accordance with Section 43 to claim transfer of land from agriculture to nonagriculture or to alienate the land. If without permission under Section 43, the land could not have been sold, the agreement if any reached by the petitioners with any other person for transfer of land, such agreement is invalid, having executed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... execution of the sale agreement, the land was agriculture in nature, no legal transfer of the same to the purchaser was possible. Hence, it is evident that no legal right of the purchaser was created in land by such agreement as this agreement was invalid and hence Is required to be ignored. Consequently, there was no extinguishment of any of the appellant's rights in this land at the time of the execution of the agreement to sale and hence, the decision in the case of Sanjeevlal (supra) is inapplicable to the facts of the current appeal. 5.3.4. Now, the appellant has also claimed that part possession of the land was given to the purchaser vide possession receipt dated 15. 10. 2011. This, possession receipt is also of no help to the appellant. Firstly, due to the fact that as on that date also, the land had not been converted into non agricultural land and hence, by law the appellant was not entitled to hand over the possession of the agricultural land to the purchaser. Besides, said purchase receipt is also of 15.10.2011, whereas, the house property had been purchased by the appellant on 22.04.2010 and hence, the same being beyond one year from the date of handing ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Term Capital, assessee's claim of deduction u/s 54F of the Act cannot be allowed. Further to this, the ITAT Ahmedabad Bench in the decision in the case of Smt. Daxaben R Patel 2012, 22 taxmann.com 237 (Ahd) has held that, where the assessee purchased bonds prior to sale of property, exemption u/s 54EC was not available. In the present case also, the appellant was eligible for deduction u/s 54F of the Act on purchase of a residential house property within 1 year before and 2 years after the execution of registered sale deed on 03.07.2012. But, the appellant has purchased a house property on 22.04.2010 and hence, the AO has rightly disallowed the claim of deduction u/s 54F of the Act. Accordingly, this ground of appeal is dismissed. Exemption u/s. 54B of the act of ₹ 26,74,283/- 6.3 have considered the facts of the case, the submissions of the appeIlant and the AO's observations. As already discussed in Para 5.3, the transfer of land took place on 03.07.2012 when a registered sale deed was executed. On the date of transfer the land was non agricultural land as the appropriate authority had given approval for transfer of the land from the agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme court cases 703,2014 SCC Online Bom 599.He has also submitted note on denial of deduction . On the other hand the Ld. DR has supported the order of the lower authorities. 8. We have heard the rival contentions and perused the material on record. The assesse has claimed exemption u/s. 54 of the act of ₹ 40,74,793/-. The assessing officer has noticed that according to the provisions of section 54F of the act, the said exemption is available if the assessee has purchased within one year before the date of transfer or two years after the date of transfer or constructed within 3 years after the date of transfer ( or from the date of receipt of compensation in the case of compulsory acquisition) one residential house. In the light to the above provision, the assessing officer has observed that the transfer of the land was taken placed on 03/07/2012, however, the assessee had purchased the residential house on 22/04/2010 beyond the stipulated conditions laid down in section 54F of the act. The asssessee claimed that he has executed an agreement to sell the agricultural land to Smt. Aneetben M. Patel on 13-08- 2010 and the conveyance deed was executed on 03-07-2012. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 their residential property being House No. 267, Sector 9-C, situated in Chandigarh and used for purchase of a new asset/residential house. 26. The appeals are, therefore, allowed with no order as to costs. The impugned judgments are quashed and set aside and the Authorities are directed to re-assess the income of the appellants for the Assessment Year 2005-2006, after taking into account the fact that the appellants were entitled to the relief, subject to fulfilment of other conditions. It is crystal clear that the decision in the case of Sanjeevlal was delivered after taking into account the peculiar facts of the case that the sale deed could not be exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
