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TMI Blog2017 (3) TMI 1949X X X X Extracts X X X X X X X X Extracts X X X X ..... se of land before the date of transfer of the land, the amount invested will qualify 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. We direct the AO to grant deduction claimed u/s 54B - Assessee appeal allowed. - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND Ms. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For the Appellant : Sh. Rakesh Jain For the Respondent : Sh. Manjit Singh ORDER PER BHAVNESH SAINI, JM This appeal by the assessee has been directed against the order of Ld. CIT(A), Patiala dated 26.11.2014 for assessment year 2009-10. 2. Ld. Counsel for the assessee did not press ground Nos. 1 2 of the appeal. The same are dismissed being not pressed. 3. Ground No.3 of the appeal of the assessee reads as under:- 3. Because the action is under challenge on facts law, while ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54B of the I.T. Act and computed the capital gain at Rs. 55,59,363/-. 6. The Ld. CIT(A) confirmed the order of the Assessing officer as regards valuation of land for the capital gain on which assessee also did not press ground Nos. 1 2 of the appeal. However, as regards deduction claimed u/s 54B, the assessee had contended that possession of the land sold vide sale deed dated 19.2.2009 was actually given on April 2008 and the money was received. The Ld. CIT(A) however, noted that as per sale deed the possession is given on the date of sale, therefore, deduction claimed u/s 54B is not allowable to the assessee. This ground of appeal of the assessee was accordingly dismissed. 7. Ld. Counsel for the assessee reiterated the submissions made before authorities below. He has referred to PB-16 which is copy of the bank account. PB-50 is copy of the sale deed dated 19.2.2009 and referred to the averments contained in the sale deed to show that on various dates, advance money has been received from the purchaser in year 2007 which is also tabulated in supporting chart. Ld. Counsel for the assessee therefore, submitted that upto November 2007, the total advance money of Rs. 4,63,35,060/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an undisputed fact that assessee had not co-operated during the assessment proceedings and therefore, assessment was completed u/s 144 and it is only during appellate proceedings that assessee filed his submissions. The learned CIT(A) forwarded the submissions to Assessing Officer for remand report. The Assessing Officer in his remand report had observed that assessee for the claim u/s 54B had purchased agricultural land measuring 61 kanal at village Kingra for Rs.1,20,37,500/- but he observed that date of purchase of this land predate the date of sale of the land sold by the assessee and he raised further objection regarding another land measuring 28 Kanal 17 Marias for Rs.53,00,000/-. The Assessing Officer observed that the final registry of this land was not got done in favour of assessee as the matter was under appeal. Therefore it was submitted that the eligibility of exemption u/s 54B may be decided accordingly. As regards the first objection of purchase of some part of agricultural land before the date of sale, the learned CIT(A) has made a clear finding of fact that payment for purchase of such land was made out of advances received by assessee against sale of land and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agriculturist is dispossessed of his agricultural land and obtains possession of another agricultural land for the purpose of being used for agricultural purposes, the same benefit available under the Board's circular should be extended to the assessee governed by section 54B also. In this connection, it is also necessary to consider the question whether the investment should be made in new agricultural land necessarily within a period of two years after the date of transfer or not. Applying the spirit of the circular of the Board, it could be said that the investment made prior to the date of transfer would also be eligible and should be considered as investment made out of sale proceeds. The limit of two years'; period after transfer is an outer limit, while the investments made earlier to the date of transfer out of the earnest money or advances should be considered to fall within two years'; time limit period and which would be the inner limit, so to say. 10. Order of ITAT Chennai Bench in the case of ACIT Vs. Dr. S. Balasundarm in (2013) 36 CCH 107, in which it was held as under:- According to the AO, the purchase consideration paid by the assesses was not eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement to Sale and the same being invested in specified bonds before the final sale, would entitle the respondent assessee to the benefit of Section 54EC of the Act. 4. The impugned order of the Tribunal records the fact that an Agreement to Sale for the subject property was entered into on 21st February, 2006. The final sale took place under a Sale Deed dated 5th April, 2007. The respondent assessee had invested an amount of Rs.50 lakhs from the advance received under the Agreement to Sale in the Rural Electrification Corporation Ltd. bonds on 2nd February, 2007. The Assessing officer as well as the Commissioner of Income Tax (Appeals) held that the respondent assessee is not entitled to the benefit of Section 54EC of the Act as the amounts were invested in the bonds prior to the sale of the subject property on 5th April, 2007. The impugned order of the Tribunal placed reliance upon the decision of its co-ordinate bench in Bhikulal Chandak HUF Vs. Income Tax Officer, 0126 TTJ 545 wherein it has been held that where an assessee makes investment in bonds as required under Section 54EC of the Act on receipt of advance as per the Agreement to Sale, then the assessee is entitled to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land. The contention of the assessee, is therefore, correct that assessee has handed over the possession of land to the purchaser sometime in April 2008 otherwise the purchaser would not make the huge advances to the assessee. It is also proved that when substantial amount was received against the sale of land, it is available to the assessee for making investment in purchases of land. The assessee claimed that he has made investment of Rs. 51,80,000/- in the purchase of another land vide purchased deed dated 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 qualify 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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