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TMI Blog2020 (2) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... of filing of return as prescribed in the Section 54EC of the Act. As the assessee has fulfilled the conditions prescribed in Section 54EC of the Act, he is eligible for the deduction u/s.54F - Decided against revenue. - I.T.A. Nos. 1225/Ahd/2013 & 997/Ahd/2016 And I.T.A. No. 1229/Ahd/2016 - - - Dated:- 31-1-2020 - Shri Pradip Kumar Kedia, Accountant Member And Smt. Madhumita Roy, Judicial Member For the Assessee : Shri Hardik Vora, A.R. For the Revenue : Shri Ritesh Parmar, CIT. D.R., Shri Umesh Kumar Agarwal, Sr. D.R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeals by the Assessee and Revenue are directed against the Commissioner of Income Tax, Ahmedabad-3 (in ITA No.1225/Ahd/2013) and Commissioner of Income Tax (Appeals)-5, Ahmedabad in other two appeals. The relevant details are tabulated as under: ITA Nos. Name of assessee AY CIT/ CIT(A) s order dated AO s penalty order dated AO s order under Section 1225/Ahd/13 Balkrishna P. Trivedi HUF 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Section 54B of the Act is divided into two parts. First part deals with exemption of capital gains from transfer of land (original asset) used for agricultural purpose in the two years immediately preceding the date on which the transfer took place. The second part deals with the manner of utilization of gains arising from transfer of such land used for agricultural purposes. The Pr.CIT has impugned the eligibility of deduction under s.54B of the Act in both the parts. It is an admitted fact that on the date of transfer of land (which is broadly the legislative expression used in Section 54B of the Act), the land in question was neither agricultural land nor was used for agricultural purposes. The land has been admittedly declared as fallow land on which no agricultural produce is plausible. Thus, as per the certificate of Talati as produced by the assessee himself, the viability of carrying out agricultural activity was quite dismal. We also find that the assessee has not declared any worthwhile agricultural income in the earlier years from such a large track of land (9286 sq.mtr.). Some expenses voucher produced for expenditure incurred on Tractor does not inspire any confid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/2016 5. The grounds of appeal raised on behalf of the assessee is reproduced hereunder: 1. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of ₹ 77,90,000/- claimed u/s 54B of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of ₹ 50,00,000/-claimed u/s 54EC of the Act. 3. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of brokerage amounting to ₹ 5,00,000/-. 6. Ground No.1 concerns disallowance of claim made under s.54B of the Act. We find that the identical issue has been examined by the co-ordinate bench of Tribunal in the case of other co-owner namely Riddhish B. Trivedi vs. CIT ITA No. 1226/Ahd/2013 order dated 17.01.2020 7. The learned AR for the assessee fairly pointed out that in view of the decision rendered by the co-ordinate bench in the case of other co-ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar only. The ceiling limit is not for Assessee or not for total deduction eligible under above section. Therefore the interpretation would be that the Assessee can make investment of ₹ 50,00,000/- in one financial year. If the period of investment available to Assessee extends in two financial years, then the Assessee can make investment of ₹ 50,00,000/- each in both financial years and can claim deduction accordingly. The learned A.R. has also relied on circular no.359 date 10.05.1983. The copy of circular is filled before me. Paragraph-2 of the above circular reads as under: On consideration of the matter in consultation with Ministry of Law, it is felt that the foregoing interpretation would go against the purpose and spirit of the section. As the section contemplates investment of the net consideration in specified asset for a minimum period and as earnest money or advance is a part of sale consideration, the Board have decided that if the Assessee invest the earnest money or the advance received in specified asset before the date of transfer of asset, the amount so invested will qualify for exemption u/s. 54E of the Income Tax Act 1961. 7. The A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. 12. In the result, appeal filed by the assessee in ITA No.997/Ahd/2016 is partly allowed. ITA No. 1229/Ahd/2016 (Revenue s appeal) 13. The grounds of appeal raised by the Revenue read as under: (1) The Ld.CIT(A) has erred on facts and in law in admitting various additional evidences in contravention of provisions of Rule 46A of the I.T. Rules. The CIT(A) ought to have afforded the AO an opportunity to offer his comments on the additional evidences such as 7/12 Uttara, Hak Patrak in Form No.6, declaration dated 29.03.1971 etc., which were not furnished before the AO during the assessment proceedings. (2) The Ld.CIT(A) has erred on facts and in law in directing the AO to treat the gain on transfer of land as LTCG instead of STCG on the basis additional evidences admitted in contravention of Rule 46A. (3) The Ld.CIT(A) has erred on facts and in law in directing the AO to allow exemption of ₹ 50,00,000/- u/s 54EC of the Act ₹ 51,29,236/- u/s 54F of the Act. 14. Ground No.1 of Revenue s appeal concerns contravention of provisions of Rule 46A of the Income Tax Rules. The grievance has bearing with the substantive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O was called for various details from the assessee, The AO has of the opinion that in absence of relevant evidences and details the ownership of the assessee with date is not established. Therefore, the AO has considered the income derived from the sale of land as short term capital gain and cost of the acquisition is taken at Rs.Nil. 3.5. During the appellate proceedings, the appellant has submitted following submissions that in connection with the claim of ownership. 1. The sale deed is executed by Balkrishna P. Trivedi, HUF the assessee, which proves that Shri Balkrishna P. Trivedi HUF is the owner of the land. 2. Title clearance certificate issued by Kilol Vinod Shelat, Advocate on 15.2.2001 and in the said title report complete history of land at Survey No.74 is mentioned prior to 1946. 3. The land was sold to Neeldeep Malls Developers Pvt. Ltd. and the said party has also obtained title clearance certificate from Sanghi Co., Advocate Solicitor and Notary. 4. Revenue records in 7/12 9entry No.2670) shows the ownership of the assessee in land at Survey No.74. 5. It is submitted that the land was owned prior to 1946 by Madhuradas Mansukhram, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO by treating income from sale of land as STCG is deleted and the AO is directed to compute the LTCG after giving benefit of indexation. 16. As reproduced above, the CIT(A), in our view, has appreciated the facts in perspective and held the capital gains arising on sale of land to be long term capital gain in the hands of the assessee HUF. We do not see any error in the process of reasoning adopted by the CIT(A) while granting the relief to the assessee. Ground Nos. 1 2 of the Revenue s appeal are accordingly dismissed. 17. Ground No.3 concerns deduction under s.54EC 54F of the Act. 18. The CIT(A) has adjudicated both the issues in favour of the assessee. The relevant extracts are reproduced hereunder: 6.3. I have considered the facts of the case and submission made by the appellant. The next ground is regarding denial of exemption claimed by the assessee of Rs.l crore U/S.54EC of the Act. In the order u/s.263 of the Act. the CIT has held that the assessee has required to invest in the specified asset within a period of six months after the date of transfer of the asset. In the present case, the date of transfer is 8.6.2007 therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year. The AO has disallowed the entire claim of deduction on the ground that the transaction of sale of land is treated as short term capital gain therefore exemption u/s.54EC of the Act is not allowable. As discussed in the preceding paras the transaction of sale of land is treated as long term capital gain as the ownership of the land is of the HUF from 1971, therefore, the disallowance of entire deduction claimed by the assessee u/s.54EC of the Act is not justified. Now the second question arises whether the assessee is eligible for deduction of ₹ 50 lakhs which was enlisted on 31st March, 2007, before the sale of the land. The appellant has relied upon the provisions of Section and certain judgments wherein it is held that the assessee is eligible for deduction u/'s.54EC of the Act exceeding ₹ 50 lakhs if it is made within six months of transfer. The facts of the case of the assessee are different. Here the assessee has made investment of ₹ 50 lakhs before the date of sale of land and ₹ 50 lakhs within six months of date of sale of land. The provisions of Section 54EC of the Act clearly states that the investment in specified bonds is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the AO is not justified as it is already held that sale of the land is long term capital gain instead of short term capital gain as held in the assessment order. Since the assessee has transferred long term capital asset, the deduction u/s.54F is available to the assessee. The assessee has also invested an amount of ₹ 1,25,00,000/-before the due date of filing of return as prescribed in the Section 54EC of the Act. As the assessee has fulfilled the conditions prescribed in Section 54EC of the Act, he is eligible for the deduction u/s.54F of the Act. Hence the disallowance made by the AO is deleted and the ground of appeal is allowed. 19. We find that the conclusion drawn by the CIT(A) is on legally sound basis and does not call for any interference. The Revenue has also failed to rebut the findings of the CIT(A) in assertive manner. 20. Ground No.3 of the Revenue s appeal is also dismissed. 21. In the result, appeal filed by the Revenue in ITA No. 1229/Ahd/2016 is dismissed. 22. In the combined result, appeal of the assessee in ITA No.1225/Ahd/2013 is dismissed and in ITA No.997/Ahd/2016 is partly allowed whereas Revenue s appeal in ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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