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TMI Blog2020 (7) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,065/-. Also that there is nothing on record to establish that various valuation reports referred to and relied upon by assessee have been before AO. In the interest of justice, direct Ld.AO verify the reports and to consider cost of improvement/construction in accordance with law. Ld.AO shall ascertain by way of proper enquiries regarding construction/improvements that originally existed at the time of purchase and any construction/improvements subsequently carried out by assessee on plot for purposes of computing capital gains in the hands of assessee. Denial of claim under section 54G - assessee did not fulfil necessary conditions for eligibility - assessee had not used new land for industrial purpose - HELD THAT:- Hon ble Supreme Court in case of Fibre Boards (P) Ltd. vs CIT [2015 (8) TMI 482 - SUPREME COURT] held that, even an agreement to purchase is good enough, and that assessee cannot be denied exemption under section 54G for the reason that plant and machinery has not been purchased. It is clear that for the assessment year in question all that is required for the assessee to avail of the exemption contained in the section is to 'utilize' the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Appellant has established occurrence of unforeseen events i.e. floods based oil documentary evidences) which was completely beyond his control, in the sold industrial premise, that led to damage and destruction of accounting records and documents dating back several years. Claim for cost of improvements' for the property was based upon reliable records like earlier years' audited financial statements and tax records that were aailable at the auditor's premises which survived the floods. 5. The Revenue is not justified in denying the exemption under section 54G of the Act to the extent of ₹ 69,90,935/- on the facts and circumstances of the case. 6. The Revenue ought to have appreciated that the exemption provision under section 54G of the ct is a beneficial provision and therefore to he liberally construed. 7. The Revenue has erred in denying the Appellant's claim of exemption under section 54G citing that industrial production has not begun at tile new industrial property acquired by the Appellant. III section 54G does not specify commencement of industrial production at the premise as a pre-condition for the grant of exemption. The emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a pre-condition for availing exemption under Sec 54G. Accordingly, the AO and CIT(A) both have misinterpreted the requirements for eligibility of exemption under Sec 54G which is liable to be set aside and relief shall be allowed to the Appellant. 14. Without prejudice to Appellant's actual claim for cost of improvements, on the presumption that the Appellant is entitled for exemption under Sec 54G, it is sufficient to demonstrate only a fraction of (less than one fifth) cost of improvements because exemption Linder Sec 54G, will have positive effect of offsetting any disallowance of cost of improvements upto the extent of investment made by the Appellant to acquire the new industrial land. 15. The Appellant craves before the Honourable Tribunal to consider the fact that the investment made to purchase new land is significantly higher as compared to Capital gains from the sale of industrial land by the Appellant. This demonstrates bonafide intention of the Appellant to carry out investment in accordance with Sec 54G which should be given due weightage. 16. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee sold only vacant plot of land with no construction thereon. He thus wholly denied benefit of allowance of cost of construction or improvements. Ld.CIT(A) also determined that there was no transfer of industrial undertaking', which entitles assessee to claim benefit of exemption under section 54G. He thus upheld the view of Ld.AO. and fully denied exemption claim by assessee under section 54G. 4. Aggrieved by order of Ld.CIT(A), assessee is in appeal before us now. 4.1. LdAR submitted that all grounds relates to denial of claim u/s.54G and denial of indexation of cost of improvement. 4.2. Grounds1-2 are general in nature. 4.3. Grounds 3,4,9-11 have been raised by assessee challenging denial of indexation to cost of acquisition and cost of improvement to the extent of ₹ 1,41,77,065/-. 4.3.1. Ld.AR submitted that assessee over a period of time constructed industrial sheds and godowns on the aforesaid sold property. It has been submitted that assessee obtained sanction plans from competent authority and built godowns as per his business requirements and fund availability. It was submitted that, the cost of improvement was spread across several financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n able to establish any kind of further construction/improvement being done worth ₹ 1,41,59,410/-, subsequent to the purchase of the land. He submitted that nothing is placed on record by way of any evidence to support the quantum of construction claimed by assessee. He this supported the observations made by authorities below. 4.4.1. In rejoinder, Ld.AR submitted that, due to heavy rains and flooding during 2013, May, records pertaining to his business were lost and assessee had to incur huge expenses towards cleaning of the mess caused due to calamity. He placed reliance on page 34 -37 of the same in support of hi contention, being claim made to Insurance company. 4.5. We have perused submissions advanced by both sides in light of records placed before us. Admittedly, we reject observation of Ld.CIT (A) that assessee sold vacant lot of land. Sufficient evidences have been presented by assessee in the paper book which proves that constructed buildings/sheds word there on the original plot. Further Ld.Sr.DR has not supported view taken by Ld.CIT (A) in this regard. The only reason for disallowing indexation of cost of improvement is that assessee could not establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below do not dispute that assessee purchased another industrial unit outside Bangalore urban limits for consideration of ₹ 1,70,00,000/-. Ld.AR in section 54G(1), emphasised on; transfer of capital asset being, machinery or plant or building or land or any rights in the building or land previously used for the purpose of business of industrial undertaking 5.2. Ld.AR thus submitted that assessee has complied with the requirement of section 54G and therefore benefit cannot be denied. 5.3. Ld.Sr.DR placed reliance upon orders passed by authorities below. 5.4. We have perused submissions advanced by both sides in light of records placed before us. A reading of section 54G(1) makes it clear that assessee is given a window of 3 years after the date on which transfer has taken place to purchase new machinery or plant, or, acquire building or land. The criteria that needs to be fulfilled by assessee is that, shift of such industrial undertaking should be to any area, other than an urban area, and assessee has within a period of one year before or 3 years after the date on which transfer of original asset took place, purchased new machinery or plant, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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