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TMI Blog2023 (6) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... t and possession letter signed by their guardians on their behalf and therefore a documents on which basis, assessee had purchased is valid and enforceable in law. The assessee had claimed the amount already paid for the purchase of a new agriculture land which is confirmed by the above parties and also confirmed the enforceable of transaction and documentation in assessee s favour and hence assessee s claim u/s 54B of the Act is allowable as the transaction is enforceable in the eyes of the law. On the identical facts, in the case of Balraj [ 2001 (12) TMI 51 - DELHI HIGH COURT ] held that section 54 of the Act speaks of purchase only and for availing benefit under this section, it is not necessary that assessee should become owner of property. Where assessee paid a sum at time of entering into an agreement for purchase of a property within a year from sale of another property, he would be entitled to benefit provided under section 54 even though there was no registration within said period. We note that assessee`s issue under consideration is also squarely covered by a decision of the Apex Court in CIT v. T.N. Aravinda Reddy [ 1979 (10) TMI 1 - SUPREME COURT] where it has been he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in initiating penalty proceedings u/s.271(1)(c) of the Income Tax Act, 1961. 4. On the facts and in the circumstances of the case as well as law on the subject, the Ld. AO has erred in initiating penalty proceedings u/s.271F of the Income Tax Act, 1961. 5. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 6. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal. 3. Brief facts qua the issue are that the assessee filed his original return of income for AY.2016-17 on 09.03.2018 declaring total income of Rs.32,31,060/-. The assessee s case was selected for limited scrutiny under CASS. Accordingly, notice under section 143(2) of the Income Tax Act was issued on 16.08.2018 and served upon the assessee through e-mail. In response to the Notices issued under section 143(2)/142(1) of the Act, the assessee furnished various details e filling portal on ITBA. The details called for were examined by the assessing officer. During the year under consideration, the assessee has derived income from other sources and capital gain. On perusal of the return, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the presence of witnesses, or any law relating to the registration of documents. 11. Who are competent to contract Every person is competent to contract who is of the age of majority according to the law to which he is subject to, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. 5. Further the agreement/satakhat is not registered with the competent authority for the validity and genuineness. Therefore, you are requested to show cause as to why not exemption claimed u/s 54B of the Income Tax Act, 1961 is to be disallowed and should be included in the capital gain income for the year. 4. In response to the notice of the assessing officer, the assessee submitted the reply dated 19/12/2018, and the same is reproduced below: I am in receipt of your show cause notice, notice no.ITBA/AST/F/1 43(3) (SCN)/2018-19/1014241206(1) dated on 13/12/2018, asking me to furnish certain information and explanation and in this regard, I make the following submission for the kind consideration of your honour: In my earlier submission I have stated that the registration of the purchased land is pending due to court permission due to two of the co-sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve mandatory provisions of the section, the assessee is not entitled to the exemption. Thus, assessing officer held that as the assessee has not been able to get the land registered till date therefore the amount of deduction of Rs.4,04,08,003/- claimed u/s 54B of the Income Tax Act, 1961 was disallowed by the assessing officer. 6. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the Assessing Officer. The ld CIT(A) observed that claim of assessee under section 54B of Income tax Act is not acceptable for simple reason that purchase deed of the new land has not been shown and it is not being shown that land parcel belongs only to the assessee. Income tax has to be taxed in the right hands and it is not enough that formal and procedural requirements are fulfilled but also that the tax has been paid if it all in the right hands for the right assessment year. The very fact that the assessee has shown the entire gains in her hands even when due to other co-owners does not mean that the reinvestment would be allowed benefit of section 54B of the Act. Hence, ld CIT(A) dismissed the appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court for permission to purchase land and sell land in their name. The assessee was acting as a guardian for these minors. 10. In our opinion, the contention urged by ld Counsel for the assessee, merits acceptance. The ld Counsel has submitted before the Bench, the following documents and evidences to support his plea, which are reproduced below: (i) Copy of agreement for sale (vide PB. 1 to 10) (ii) English Translation of agreement for sale (vide PB. 11 to 17) (iii) Bank statement highlighting payment for purchase of land (vide PB. 18 to 21) (iv) Agreement for sale deed with possession (vide PB. 22 to 29) (v) English translation of agreement for sale deed with possession (vide PB.30 to 33) (vi) Application for permission to sale under guardian and wards Act (vide PB.34 to 38) (vii) English translation of relevant portion of application for permission to sale (vide PB. 39 to 40) (viii) Affidavit filed by the assessee to substantiate the facts (vide PB.41 to 46) (ix) Identity Proof of Milan Zalavadiya and Rutvik Zalavadiya (vide PB. 47 to 48) (x) Acknowledgment of return of income (ROI) for AY.2016-17 (vide PB. 49 to 51) (xi) Revised computation of income for AY.2016-17 (vide PB.52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would answer the description of purchase within the meaning of section 54 of the Income-tax Act, 1961 ('the Act'). Out of the consideration of Rs. 2,03,000, the assessee admittedly at the time of entering into the aforementioned agreement paid a sum of Rs. 1,73,000 which was more than the amount of Rs. 98,000 which he received by way of consideration in terms of the transaction which took place on 3-12-1974. Section 54 relates to profit on sale of property used for residence. The said provision reads, thus : 54. Profit on sale of property used for residence. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head 'Income from house property' (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the judgment of the Coordinate Bench of ITAT Chandigarh, in the case of Anil Bishnoi, 86 taxmann.com 217 (Chd-Trib.), where in it was held as follows: 7. We have heard the rival contentions and have also gone through the record. Admittedly, the assessee paid the consideration through cheques and also obtained the possession of the property in question. The claim of deduction u/s 54B of the Act has been denied to the assessee on the ground that the said deed of purchase/ sale had not been registered with the competent authority. The Hon'ble Supreme Court in the case of 'Sanjeev Lal' (supra) has discussed as to whether the agreement to sell can be considered to be an instrument of transfer of property. The Hon'ble Supreme Court observed that though in normal circumstances by executing an agreement to sell in respect of immovable property, a right in personam is created in favour of the transferee/vendee and when such a right is created, the vendor is restrained to sell the said property to someone else because the transferee has got a legitimate right to enforce specific performance of said agreement to sell. In normal circumstances, it cannot be said that entire pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be treated as sale, then, we do not find any reason to give a different meaning to the word 'Purchase'. If someone has sold a property, consequently the other person has purchased the said property. If the transfer of property is complete as per the definition of transfer u/s 2(47) of the Act, the assessee is made labile to pay tax on the capital gains earned by him, on the same analogy, the transfer is also complete in favour of the purchaser also. The provisions cannot be interpreted in a manner to say that transfer vis-a-vis selling is complete but vis-a-vis purchase is not complete in respect of same transaction. In view of this, the word 'Purchase' cannot be interpreted and detached from the definition of word 'transfer' as given u/s 2(47) of the Act. When the transfer takes effect as per the provisions of section 2(47) of the Act, if a liability to pay tax arise in the case of the seller, the consequent right to get deduction on the purchase of property accrues in favour of the purchaser, if he otherwise is so eligible to claim it as per the relevant provisions of the Act. 9. In view of our above observations, the Assessing officer is directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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