9911796707
TMI Blog2022 (1) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the agricultural land situated at Village Sachana is about 15 km away for Viramgam Taluka Panchayat and 40 kms away from Ahmedabad Municipal Corporation limits. Coupled with this, the population of Sachana Village located at Viramgam Taluka is 3844 as per Census 2011. The extract of google map showing the distance of Sachana village from Viramgam Taluka Panchayat and Ahmedabad Municipal Corporation was also placed on record. The assessee has also pointed out on facts that the land was used for agriculture of crops, namely, Bajri and Jowar etc. The factual matrix demonstrated by the assessee could not be successfully rebutted on behalf of the Revenue. Having regard to the aforesaid facts, the CIT(A), in our view, has rightly concluded that the agricultural land parcels being situated in the rural area is outside the purview of expression capital asset defined in Section 2(14) of the Act. Consequently, the rural agricultural land in question not being a capital asset is not susceptible to tax under s.45 r.w.s. 48 of the Act. The capital gains arising on sale of rural agricultural land (new asset) is thus outside the purview of taxation at the threshold. We thus see no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be stated that the conditions of Section 54B of the Act have been fulfilled. Thus, for the reasons mentioned in the assessment order, the AO denied the claim of exemption under s.54B of the Act. 7. Aggrieved, the assessee preferred appeal before the CIT(A). It was contended before the CIT(A) that the agricultural land giving rise to capital gain is situated in rural area and is not a capital asset as per definition of Section 2(14)(iii) of the Act at the first instance and hence, the chargeability under s.45 of the Act on such gains do not arise in any manner. Consequently, in the absence of any chargeable capital gains, Section 54B of the Act would not apply. The CIT(A) found substantial merit in the plea raised on behalf of the assessee for non-chargeability of capital gains. The CIT(A) also found merit in the alternate contention of the assessee for eligibility of exemption under s.54B of the Act. The relevant operative para of the order of the CIT(A) is reproduced hereunder: 3.1. I have gone through the facts mentioned in the assessment order and the submission filed by the appellant carefully. The case of the appellant was re- opened under 147 rws 148 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the chargeability u/ s. 45 would fail and accordingly, the computation provision as per section will also fail. The appellant has also placed reliance on the decision of Hon' ble Apex Court in the case of CIT vs. B. C. Srinivasa Setty reported in 128 ITR 294 and Bombay High Court in the case of Cadell Weaving Mills Co. (P) Ltd. vs. CIT reported in 249 ITR 265. The ratio laid down in the aforesaid judgments is squarely applicable to the case of appellant. 3.3. . As per the section 54B(1)(i) of the Act, the amount of capital gain, if is greater than the cost of the land purchased and if such new assets is sold within a period of three years from its purchase, the cost of the asset shall be Nil and the entire sales consideration of the new asset would be subject to tax. In the instant case of appellant as the rural agricultural land situated at Sachana is not a capital asset as per the definition of section 2(14)(iii) of the Act rws 45, the computation would be as under:- (a) 95 % of ₹ 1,82,30,653/- i.e. (₹ 1,73,19,120/- Being exempt as per the provisions of sec. 2(14)(iii) of the Act) Exempt incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chased agricultural land parcels situated at Sarkhej in F.Y. 2006-07 relevant to F.Y. 2007-08 on 29.03.2007. The aforesaid agricultural land parcels at Sarkhej was sold in F.Y. 2008-09 relevant to A.Y. 2009-10 on 14.05.2008. A capital gain of ₹ 2,70,88,834/- arose to the assessee on sale of the agricultural land. The assessee, in turn, purchased agricultural land at Sachana, Viramgam (new asset) and claimed deduction of ₹ 1,37,74,997/- being cost of purchase of agricultural land in A.Y. 2009-10 out of capital gains of ₹ 2,70,88,834/-. It was noticed by the AO that the aforesaid agricultural land at Sachana (new asset) have been sold at a consideration of ₹ 1,82,30,683/- within 14 months on 22.02.2010 in F.Y. 2009-10 relevant to A.Y. 2010-11 in question. The share of consideration (95%) attributable to assessee stands at ₹ 1,73,19,120/-. In these facts, the AO had disputed the eligibility of claim of deduction under s.54B of the Act in the earlier year on the ground that the assessee had sold the land parcels at Sachana (new asset) without holding it for three years from the date of purchase in violation of the conditions of Section 54B of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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