9911796707
TMI Blog2019 (10) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural purpose and consequently the deduction u/s 54B cannot be allowed as the necessary condition prescribed in the said section is not satisfied. Since the ld. Principal Commissioner of Income Tax has set aside the assessment order to the record of the Assessing Officer for fresh consideration, therefore, we do not find any reason to interfere with the impugned order of the learned Principal Commissioner of Income Tax. The decisions relied upon by the ld. A/R of the assessee are entirely on different aspects where the land was sold by the assessee by dividing into plots and therefore, it was held that there was no change of character from capital asset to stock-in-trade. In the case in hand, the issue is not limited to the capital gain or business income but the issue is allowing the deduction u/s 54B without conducting a minimum enquiry by the AO whether the conditions prescribed under section 54B are satisfied or not. - Decided against assessee. - ITA No. 318/JP/2019 (Assessment Year : 2014-15.) - - - Dated:- 29-7-2019 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM Assessee by: Shri O.P. Bhateja (ITP) Revenue by: S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural land in the Land Revenue records till the sale in the year 2013-14. Thus the assessee has reiterated its claim that what was sold by the assessee was capital assets and, therefore, the assessee is entitled for deduction under section 54B of the IT Act when another agricultural land was purchased by the assessee within a period prescribed under section 54B of the Act. The ld. Pr. CIT was not impressed with the reply and explanation and held that the ultimate motive of the assessee was to derive more profit by selling the land by making small plots which established that the intention of the assessee was not to resale the agricultural land as it is but to divide this single piece of land to multiple pieces of land being plots and sale them to make profits. Accordingly, it was held that the order passed by the AO under section 143(3) is erroneous in so far as prejudicial to the interests of the revenue. The said assessment order dated 21st December, 2016 was set aside to the file of the AO for making a fresh enquiry and adjudication after giving an opportunity of hearing to the assessee. Aggrieved by the impugned order, the assessee has filed the present appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sale of capital asset, not the activity of trade or business. 4. On the other hand, the ld. D/R has submitted that it is a case of multiple sale transactions. He has filed a copy of sale deed in one of the plots and submitted that a map is attached to the registered sale deed which shows that the assessee has not merely divided the land into plots but it is a well planed plan for development of land into a residential colony. Therefore, the land in question was no more an agricultural land and consequently even if the same is treated as capital asset, the deduction under section 54B is not available. The ld. D/R has thus contended that the conditions as prescribed under section 54B are not satisfied in this case and accordingly when the AO has not conducted any enquiry, the ld. Pr. CIT is justified in setting aside the order by invoking the jurisdiction under section 263 of the IT Act. He has relied upon the impugned order of ld. Pr. CIT. 5. We have considered the rival submissions as well as the relevant material on record. Though the scrutiny assessment was completed under section 143(3) on 21st December, 2016, however, the assessment order is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividual or his parent, or a Hindu undivided family] for agricultural purposes [(hereinafter referred to as the original asset)], and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for agricultural operations at least for two years prior to the date of sale. As it is apparent from the assessment order that the AO has not even whispered about any enquiry or verification of this fact. As far as the notice issued under section 142(1) dated 1st August, 2016, the AO has just asked for the details and evidence of short term and long term capital gain. No query has been raised by the AO on the issue of claim of deduction under section 54B of the Act. Accordingly, it is a clear case of complete lack of enquiry on the part of the AO which renders the assessment order erroneous in so far as it is prejudicial to the interests of the revenue. Further, we note that in the Sale Deed the description of the plot of land has been given with residential plot number situated in a newly developed residential colony, namely, Shanti Nath Nagar-II, Ajmer road, Kekri. This fact is also corroborated by the map of the said colony attached to the registered Sale Deed. Therefore, it is not a simple case of sale of the land by dividing into plots but the assessee has developed the land in question into a residential colony, namely, Shanti Nath Nagar-II. Once the land was converted into ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
