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TMI Blog2023 (3) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the addition based on the decision of the Hon'ble IT AT, Ahmedabad in the case of Paras Chinubhai Jani Vs. Pr.CIT and in the case of Jaipur Tribunal in the case of Mathurlal Vs. ITO 174ITD 44 by holding that the issue of disallowance u/s 54B for investment made prior to the date of sale was covered against the appellant in view of the Tribunal's decisions cited above. 4. The Ld. CIT (Appeals) erred in confirming the disallowance of deduction u/s 54B of Rs. 88,17,491/-. 5. The appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal." 3. The brief facts of the case are that the course of assessment, the AO observed that the assessee had sold two agricultural lands, one on 20-03- 2017 for a sum of Rs. 1,90,14,000/- and another on 10-08-2016 for 1,04,10,000/-. The assessee claimed long-term capital gains of Rs. 2,79,37,474/- on the aforesaid two agricultural lands after taking benefit of indexation, the assessee claimed deduction under section 54B of the Act amounting to Rs. 1,87,45,250/- on purchase of agricultural land situated at Mogri on 21-10-2016. During the course of assessment, the AO observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of Rs. 2.20 crores received toward sale of properties (from 14-07- 2011 to 24-09-2015) was invested in new property from 14-10-2015 to 11- 11-2016 i.e. effectively, within two years from receipt of advance for sale of such properties. Notwithstanding the dates of new purchase deeds for purchase of agricultural property, the advance received toward sale consideration in respect of the aforesaid agricultural properties was invested in new agricultural property after the date when the advance was received by the assessee and within a period of two years from the date of receipt of advance. The counsel for the assessee relied on the decision of ITAT Amritsar Bench in the case of DCIT v Assa Singh in ITA No. 26(Asr)/2015 dated 11.3.2016 in support of the contention that if advances toward sale of property have been utilised towards purchase of new agricultural land, benefit of section 54B should be not be denied to the assessee. The Ld. CIT(Appeals) however denied benefit of section 54B of the Act to the assessee with respect to property sold on 20-03-2017 for a consideration of Rs. 1,90,14,000 on the ground that the language of section 54B of the Act is plain and categorical and doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly opposed to the plain provision of the Act and thus apparently not sustainable having regard to express the provision of the statute. The legislature in its own wisdom has used the expression before the transfer of long term asset as well as after the transfer ol capital asset at appropriate places viz. Section 54 of the Act. The intention of the legislature is thus quite clear In the case of Mathur Lal V ITO. reported in 174 TD 44 Hon'ble ITAT Jaipur has held that the purchase prior to the sale of the existing land would not be allowable for deduction us 541 of the Act 6.2 Since issue stands covered by the decision of jurisdictional ITAT cited supra, I have no option but to uphold the addition made by the AO Disallowance of deduction us 54B to the extent of Rs 88,17, 491/- is sustained. Ground of appeal number 1 is dismissed." 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) dismissing the appeal of the assessee. The assessee primarily reiterated the submissions made before Ld. CIT(Appeals) during the course of appellate proceedings. In response, DR relied upon the observations made by Ld. CIT(Appeals) and AO in their resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the old capital asset is replaced by a new capital asset in the form of a residential house. Once an assessee falls within the ambit of a beneficial provision, then the said provision should be liberally interpreted. In the case of State of Gujarat v. S.A. Himnani Distributors (P.) Ltd. [2014] 43 taxmann.com 358 (Gujarat), the Gujarat High Court held that when State is inclined to give some tax benefit to tax payers, terms or provisions of policy should be interpreted in a liberal manner and with an intention to see that purpose for which policy is framed is fulfilled and beneficiaries is helped and the interpretation must not be such which would frustrate objective of policy. 6.2 In the facts before us, we observe that the new property was primarily purchased out of advances received from sale of two agricultural properties. Evidently, the advances so received by the assessee were invested in the new agricultural property after the same were received and within a period of 2 years from the date of receipt of advance. In the case of DCIT v. Shri Indranil Sanjaybhai Rajyaguru, Sanjayraj Estate, Race Course, Rajkot in ITA number 358/Rjt/2015, the ITAT held that advance payment by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.6.2008. Therefore, authorities below cannot deny deduction claimed u/s 54B of the I.T. Act. Since the assessee has invested the advance money in purchase of land before the date of transfer of the land, the amount invested will qualif y for exemption u/s 54B of the I.T. Act. The evidence and material on record clearly prove that payment for purchase of land was made out of advance received by the assessee against sale of land, in the year under consideration. The claim of the assessee for deduction u/s 54B is thus supported by the Board Circular No. 359 (supra)and the decisions relied upon by the assessee. The authorities below were, therefore, not justified in denying the deduction claimed u/s 54B of the Act for a sum of Rs. 51,80,000/-. In view of the above discussion and in the light of the Board's Circular and the decisions cited above, we direct the Assessing officer to grant deduction claimed u/s 54B of the I.T. Act in a sum of Rs. 51,80,000/-. Since the Assessing officer computed the capital gain of Rs. 55,59,363/-, therefore, the Assessing officer is directed to re-compute the capital gains by giving deduction to the assessee of Rs. 51,80,000/-. This ground of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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