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TMI Blog2018 (9) TMI 1841X X X X Extracts X X X X X X X X Extracts X X X X ..... e consideration for sale of the existing land was received at the time of the agreement to sell dated 22/11/2012 and possession was also handed over on the said date of agreement. Hence when the agreement was subsequently acted upon and in performance of the said agreement, the parties have finally executed the sale deed then the transaction will be considered as transferred as on the date of the agreement. The assessee has satisfied the conditions of acquiring new agricultural land against the sale of existing agricultural land and therefore, it is a case of substitution of existing agricultural land by new agricultural land and consequently the assessee is eligible for deduction u/s 54B in respect of the agricultural land purchased for total cost of ₹ 2,47,60,900/-. Accordingly, the orders of the authorities below are set aside qua this issue. - Decided in favour of assessee. - ITA No. 557/JP/2018 Assessment Year :2013-14 - - - Dated:- 18-9-2018 - Shri Vijay Pal Rao And Shri Vikram Singh Yadav, JJ. Assessee by : Shri P.C. Parwal (CA) Revenue by : Shri J.C. Kulhari (JCIT) ORDER Vijay Pal Rao, This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds purchased by the assessee was allowed by the Assessing Officer. The Assessing Officer denied the claim of deduction U/s 54B on the ground that the agricultural land was sold after purchase of new agricultural land and therefore, the agricultural land purchased prior to the sale is not eligible for deduction U/s 54B of the Act. 3. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and reiterated its contention that the sale transaction of the original agricultural land affected vide agreement to sell dated 22/11/2012. The assessee has also referred the sale consideration received by the assessee prior to the sale deed dated 28/01/2013 and thus claimed that the assessee received the consideration as per the agreement to sell. The assessee also relied upon the correction deed dated 15/02/2013 in support of the claim that the said correction deed clearly mentioned the prior agreement between the parties and consideration received by the assessee as per the terms of the agreement. The ld. CIT(A) did not accept the contention of the assessee and upheld the order of the Assessing Officer on the ground that the transaction of sale of existing lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than Agencies Pvt. Ltd. Vs ITO in ITA No. 680 681/JP/2017 and submitted that the Tribunal after considering the agreement to sell and subsequent sale deed in respect of sale of land, held that the transaction of transfer was completed when the parties have executed the agreement to sell and in performance of the said agreement, sale deed was executed subsequently, therefore, when there was an agreement to sell and assessee received the consideration and handed over the possession of the land then the transaction of transfer in relation to the land was completed on the date of execution of agreement to sell and the subsequent sale deed is only in pursuant to the agreement to sell and not created any fresh right in favour of the purchaser. He has referred to the details of the consideration received by the assessee as well as paid in respect of the sale of existing agricultural land and purchase of the new agricultural land and submitted that the major purchase consideration was paid by the assessee only after receiving the sale consideration of the existing agricultural land and hence the conditions of Section 54B of the Act have been satisfied. He has also reiterated its contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement to sell dated 22/11/2012 and submitted that when the assessee received the consideration through post dated cheques on the date of agreement to sell and also handed over the possession of the land to the purchaser then the transaction of transfer of existing agricultural land completed on 22/11/2012 which is prior to the purchase of the new asset vide sale deed dated 29/11/2012. The Assessing Officer and the ld. CIT(A) has doubted the existence of the agreement to sell dated 22/11/2012, however, we find that the details of consideration as mentioned in the agreement to sell as well as subsequent sale deed dated 28/01/2013 are same. For sake of completeness, we reproduce the details of cheques through which the assessee received the sale consideration as under: Sl. No. Cheque No. Name of the Bank Amount Dated 1. 358891 Vijaya Bank, Vidyadhar Nagar Branch, Jaipur 88,00,000/- 04/01/2013 2. 308537 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find from the bank statement that the first part of the purchase consideration was paid on 12/12/2012, the second part of the consideration was paid on 21/12/2012 and the third part of the consideration was paid on 16/01/2013. Thus, the encashment of the cheques of sale consideration as well as purchase consideration clearly shows that the assessee received the sale consideration through post dated cheques and also paid the purchase consideration through post dated cheques. The part payment of the purchase consideration was made after receipt of the part purchase consideration of ₹ 88.00 lacs on 07/01/2013 whereas the purchaser consideration was paid on 16/01/2013. All these transactions were completed even prior to the sale deed dated 28/01/2013. Hence this explanation of the assessee that the purchase consideration as well as sale consideration were paid and received respectively through post dated cheques, are found to be correct from the record which can be verified independently being the statement of the assessee s bank account. Though in the first sale deed dated 28/01/2013 the entire facts were not narrated, however, subsequently on 15/2/2013 a correction deed was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by investing the capital gain and as such the purpose was to substitute the existing agricultural land by new agricultural land. Therefore, in order to determine the eligibility of benefit of Section 54B of the Act, the predominant and substantial condition of substituting the agricultural land has to be satisfied. The date of actual transfer of existing land or even the purchase of new agricultural land may not be always relevant for the purpose of Section 54B of the Act. For instance, in case of acquisition of land by the government, the transfer of the land took place when the government takes over the possession but that does not mean that the assessee has received the compensation and even in some cases enhanced compensation is received after lapse of so many years, therefore, the date of transfer and the actual receipt of compensation are not contemporaneous. Until and unless, the assessee received compensation/consideration, the acquisition of new agricultural land is not possible, hence the relevant date is the receipt of compensation or consideration and not the date of execution of document as held by the Hon ble Allahabad High Court in the case of CIT Vs. Janardhan Dass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. Hence when the agreement was subsequently acted upon and in performance of the said agreement, the parties have finally executed the sale deed then the transaction will be considered as transferred as on the date of the agreement. An identical issue was considered by the Coordinate Bench of this Tribunal in the case of M/s Rajasthan Agencies Pvt. Ltd. Vs ITO (supra) in para 6 and 7 as under: 6. Even otherwise the term transfer as per section 2(47) r.w.s. 48 of the of the Income Tax Act is wider than the term sale and it includes all rights and privileges in the property either in praesenti or accruing in future as vested in vendor. Once these rights vested in the vendor were subject matter of the transfer, the vendor retains no right in the property to be re-conveyed in the subsequent sale deed except the obligation to get the property converted for non agricultural use and execution of the sale deed. The intentions of the parties are relevant and must be ascertained from a document as a whole. Where the deed of transfer has been executed though in violation of law prescribing for a previous sanction or subsequent validation by a competent authority and thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement dated 11.04.2007. The sale deed clearly states that made of payment of consideration as per the details given in the agreement dated 11.04.2007. Therefore, the possession was handed over and consideration was received prior to the date of sale deed. The sale deed in fact ratify the transaction of transfer vide agreement dated 11.04.2007. The parties were very much aware about the need of conversion of land use and accordingly applied to JDA for conversion which was granted in the month of February, 2010 and thereafter the sale deed was executed. Hence, the transfer as per provisions of section 2(47) of the Act is to be considered at the time of agreement dated 11.04.2007. The intention of the parties can be gathered from the terms of the agreement, subsequent performance by the parties in terms of agreement getting the land converted to non agricultural use and execution on sale which has reaffirmed the status of the parties to the agreement and the transfer under the agreement instead of altering the same. The Hon'ble Supreme Court in case of Sanjay Lal vs. CIT 365 ITR 389 while considering the question as to whether the date on which agreement for sale was executed c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other as Shri Ranjeet Lal had challenged the validity of the Will under which the property had devolved upon the appellants. By virtue of an order passed in the suit filed by Shri Ranjeet Lal, the appellants were restrained from dealing with the said residential house and a law- abiding citizen cannot be expected to violate the direction of a court by executing a sale deed in favour of a third party while being restrained from doing so. In the circumstances, for a justifiable reason, which was not within the control of the appellants, they could not execute the sale deed and the sale deed had been registered only on 24th September, 2004, after the suit filed by Shri Ranjeet Lal, challenging the validity of the Will, had been dismissed. In the light of the aforestated facts and in view of the definition of the term transfer , one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and therefore, some right which the appellants had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the appellants to sell the property to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax laws, one can very well interpret the provisions of Section 54 read with Section 2(47) of the Act, i.e. definition of transfer , which would enable the appellants to get the benefit under Section 54 of the Act. 23 Consequences of execution of the agreement to sell are also very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immovable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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