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TMI Blog2022 (4) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned rectification u/s.154 was illegal and unlawful. 1.3 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought to have held that the impugned rectification u/s.1.54 was illegal and unlawful. 1.4 The Ld. CIT(A) has grievously failed to appreciate that there was no mistake apparent on record of holding the land bearing FP No. 31 of block no. 279 of vill. Gota was a long term capital asset and allowing exemption u/s 54. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in holding that the appellant had not become owner of the said land on 23-2-1987 but on 8-12-2009 when the transfer deed was executed so that the said land was a short term capital asset. The Ld. CIT(A) has grievously erred in law and or on facts in rejecting the evidence produced by the appellant towards possession and ownership of said land acquired prior to 08.12.2009. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have held that the appellant had not become owner of the said land on 23-2-1987 but on 8-12-2009 when the transfer deed was executed so that the said land was a short term capital asset. 3.1 The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 987. The assessee subsequently sold this plot of land for Rs. 60,11,000/- on 14-10-2010 and claimed exemption u/s. 54F of the Act in respect of such long term capital gains. The ld. A.O. held that assessee was in possession of the plot from 08-12-2009 ( date of registration of the plot of land in assessee's name) to 14-10-2010 (date of sale of land by the assessee) i.e. for 10 months only and therefore capital gains earned was a short term capital gain and ld. A.O. vide 154 order dated 03-08-2016 rejected the claim of deduction of the assessee made u/s. 54F of the Act and added a sum of Rs. 56,11,000/- as short term capital gain to the income of the assessee. 4. The assessee filed appeal before the ld. CIT(A) who dismissed the assessee's appeal vide order dated 14-12-2018 by holding that: (a) The final purchase deed executed on 08-12-2009 did not make mention of the power of attorney or possession given on that date i.e. 23-12-1987. (b) The entire consideration of Rs. 4 lakhs, there was no reference to payment mentioned in agreement made in 1987. (c) There cannot be transferred in favour of the non-agriculturalist which required permission and it was taken by land owners vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. Even legally, the appellant could not have purchased or become an owner of an agricultural land. What the appellant could not have done legally cannot be claimed as a legal document. Though the appellant has claimed the ownership of land at the time of alleged agreement to sale made in 1987, the impugned land could not have been sold at the time of such alleged agreement to sale, because, under the relevant provisions as applicable for transfer of agricultural land in the State of Gujarat, such land cannot be sold to a non-agriculturist. It is also pertinent to state that it is always the seller i.e. the agriculturist who applies for the permission to convert the agricultural land into non-agricultural land when he wants to sell the agricultural land to a non-agriculturist. In the present case also, it is the venders who have got the permission for sale of land. Even order of converting agricultural land into non-agricultural passed by Collector, Ahmedabad, on 19th November, 2008 was in the name of sellers and not in the name of Appellant. The reason of passing of such order in the name of sellers is also not explained by Appellant. It is a matter of fact that even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... combined effect of chain of events like entering into a registered banakhat in 1987, the initiation of process of conversion of agricultural land into a non-agricultural land as per terms of banakhat, payment of gram panchayat tax bills by the assessee and execution of final sale deed between the same parties, it is evident that what the assessee sold was a long term capital asset held for over 20 years and not a short term capital asset held for a period of 10 months as held by the ld. A.O. in the 154 order. Without prejudice to the above, the ld. counsel for the assessee challenged the validity of the order passed u/s 154 of the Act by submitting that the ld. A.O. in the instant set of facts did not have the jurisdiction to pass order u/s. 154 of the Act in the present set of facts since the issue was examined by the ld. A.O. during the course of original proceeding and the issue involved a detailed analysis and interpretation of facts and fell outside the purview of rectification u/s. 154 of the Act, which can be invoked only to rectify "mistakes apparent from the record" and in the 154 order, the ld. A.O. has done a detailed analysis to come to the conclusion that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset only for a period of 10 months, as held by the Ld. AO in the 154 order. We note from the facts that in the original assessment order, the Ld AO called for details of exemption claimed u/s 54F of the Act and after due application of mind, allowed the assessee's claim for exemption u/s 54F of the Act. However, in the 154 order, the Ld. AO has come to the conclusion that the assessee has earned short term capital gains and hence not eligible for deduction u/s 54F of the Act. In our view, perhaps after a long drawn debate, we may come to the conclusion that the assessee did in fact earn short term capital gains and is not eligible for exemption u/s 54F of the Act which is available on sale of asset held for more than 36 months. However, in our view, this decision would not qualify as a 'mistake apparent from the record'. There are few factors which need to be considered while taking a view in the matter. Firstly, the assessee entered into a Banakhat with the seller in 1987 in respect of a piece of land, which was duly registered. Secondly, the said piece of land was converted from agricultural to non-agricultural with the object to effectuate the Banakhat referred to above. Third ..... X X X X Extracts X X X X X X X X Extracts X X X X
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