9911796707
TMI Blog2023 (8) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... still outstanding and there was contradictions in the cash flow statement. (ii) Whether on the facts and in the circumstances of case, the ld. CIT(A) was justified in allowing the benefit of Section 54B to the assessee in respect of property purchased at 1 DJM, 6.262, Command Area Vijaynagar purchased for a sum of Rs. 2,22,75,000/- especially when the agreement was doubtful, the amount of consideration mentioned in the agreement did not match with the amount mentioned in the sale deed and there was contradictions on the cash flow statement. (iii) Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in allowing indexed cost of acquisition of Rs. 23,34,480/- as against Rs. 13,15,488/- allowed by the Assessing Officer which is based on the fair market value of the land." 3. The fact as culled out from the records is that assessee has sold a piece of land along with three other persons for a consideration of Rs. 13,15,50,000/- during the F.Y 2012-13 relevant to Asstt. Year 2013-14. The assessee's share in sale consideration comes to Rs. 3,28,87,500/- i.e. 1/4th of Rs. 13,15,50,000/-. The sold property in question is situated within the 8 kilomet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls as called for, the direct nexus of payment of consideration against purchase of these two properties is not established. 4.1 As the assessment getting time barred a final show casue notice dated 20.12.2017 was given to justify the capital gain and deduction claimed. The assessee filed reply to this final show cause notice. From the details so made available the ld. AO observed that assessee filed a copy of an agreement which was executed between Sh. Madan Lal, Village Kupli, Tehsil- Vijaynagar (expectant- seller) and the assessee i.e. Sh. Badri Prasad(claimant- purchaser). As per this agreement, the seller has proposed to sale the land situated at Chak 14 A.S. (A), Tehsil Sri Vijaynagar to the assessee through agreement at a sale consideration of Rs. 82,00,000/- and received an advance of Rs. 80,00,000/- in cash against this property. Based on agreement and the false agreement exemption u/s 54B of Rs. 2,34,85,830/- (on account of investment in both the properties). But the assessee has neither paid the full amount against purchase nor executed the Registry of this land. Therefore, he is not entitled to claim this incorrect claim of exemption to the tune of Rs. 82,00,000/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authenticity of these false agreements is not proved. B.1(d) There is no where mentioned in sale deed regarding agreement dated 31.01.2013. B.1(e) Agreement is simply written on simple revenue ticked and not notarized. In view of this validity of agreement is not proved. B.1(f) During the assessment proceedings, A/R of the assessee filed cash flow showing payment to Sh. Shanker Lal is as under:- S.No. Date Amount Mode of payment 1. 31.01.2013 18,38,000 Cash 2. 01.02.2013 1,50,000 Cash 3 05.02.2013 1,00,000 Cash 4 11.02.2013 2,40,000 Cash 5 15.02.2013 50,000 Cash 6 20.02.2013 1,00,000 cash 7 25.02.2013 2,60,000 Cash 8 24.04.2013 70,00,000 Cash 9 05.03.2013 1,60,000 Cash 10 15.03.2013 50,000 Cash 11. 26.03.2013 50,000 Cash 12 20.06.2013 1,00,000 Cash 13 26.08.2013 5,00,000 Cash 14 27.08.2013 10,00,000 Cash 15 28.08.2013 15,00,000 Cash 16 29.08.2013 12,00,000 Cash 17 02.09.2013 15,00,000 Cash 18 03.09.2013 20,00,000 Cash 19 04.09.2013 25,00,000 Cash 20 05.09.2013 15,00,000 Cash 21 06.09.2013 4,77,000 Cash Total Rs. 2,22,75,000/- B.3 As per agreement, assessee has shown p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was asked to vide show cause notice about excess payment of Rs. 4,11,000/-. In response to this, assessee has stated that he got Rs. 4,11,000/- against standing crops which did not come in the definition of capital gain. In sale-deed nowhere is mentioned about standing crops. Assessee was asked to submitted supporting evidence for standing crops. But no documents/ evidences submitted by the assessee. In absence of proof, plea of assessee is rejected and Rs. 2,41,598/- is added to the income of the assessee. 4.5 The ld. AO has also considered the cost of acquisition at Rs. 13,15,488/- as against Rs. 23,34,480/- claimed by the assessee. 5. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A). A propose to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: "6.3. I have considered the facts of the case and appellant's submissions and I find that the AO restricted the assessee's claim of deduction u/s. 54B to the extent of Rs. 2,84,24,145/- after observing that the assessee failed to fulfill the onditions as laid down u/s. 54B of the Act. These observations of the AO were mainly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year, and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced by the amount of the capital gain.] (2) The amount of the capital gain which is not utilised by the assessee " 6.4.1 A plain reading of this section reveals that the first and foremost condition for claiming exemption u/s, 54B is that the land being sold should have been used by the assessee or his parent or a Hindu Undivided Family for agricultural purposes. In the instant case, the appellant has produced various evidences such as Jamabandi, Girdawar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of consideration or delivery of the deed. Thus the seller may retain the deed pending payment of price and, in that case, there is no transfer until the price is paid and the deed is delivered. This view is affirmed by decision of Hon'ble Bench of the Calcutta High Court in the case of Nitai Chandra Naskar vs. Smt. Champaklata Debi reported in (1919) 29 CLJ 250, wherein while referring to s. 54 of the Transfer of Property Act, it has been held that, "sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. The true test is, what is the intention of the parties to the transaction. If the intention is that title should pass immediately, even though the consideration has not been paid, title passes, that is, failure to pay the consideration for a conveyance does not defeat the conveyance except where there is an agreement that it should take effect only if the consideration is first paid". In the case of Panchoo Sahu vs. Janku Mandar, reported in AIR 1952 Patna 263, it has been held that title does not pass on the mere execution and registration of the sale deed and the answer to the question regarding passing of the title lie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent years. No adverse evidence in thi regard has been brought on record by the AO. The object of provisiori of sec. 54B of the Act is to re invest capital gain arisen out of sale of agriculture land in purchase of agriculture land, which has bec complied with by the appellant. The AO has not conducted any sp enquiries so as to establish that these lands were not in possession the appellant or no agricultural activities were being carried out by : assessee on these lands. 6.4.8. Further, I find no reason to doubt the genuineness of Ikrarnama (sale- agreement) dated 31-01-2013 and 16-07-2013 simply for the reason that both the sellers did not deny to have entered into Ikrarnama (sale-deed) with the assessee. Sh. Madan Lal, seller of agricultural land situated at Chak 14 A. S. (A), Vijaynagar never stated in his statement that deal of this property was below Rs. 80,00,000/- or that he never received any amount against sale of his agricultural land. However, the AO wrongly interpreted his statement by correlating the same with cash flow chart submitted by the assessee. Though it may be true that there was contradiction in statements and cash flow chart submitted by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1. The AO in the show-cause dated 20-12-2017, required the assessee to explain the basis of FMV of Rs. 2,74,000/- as on 01-04-1981, on the basis of which indexed cost was worked out at Rs. 23,34,480/-, The AO having not being satisfied with the assessee's reply allowed indexed cost to tune of Rs. 13,15,488/-. 7.2. The appellant submitted before me that agricultural land sold by him was an ancestral land and was purchased before 01-04-1981. At time of sale of this land in year 2012, value of this land was Rs. 30,00,000/- per bigha and as on 01-04-1981, the same was Rs. 25,000/- per bigha. This value was determined and intimated after getting information regarding FMV of this land from Stamp authority and local property dealers. As per the assessee, Sub Registrar informed him that no other property (agricultural land) got registered in year 1981. The appellant submitted that this agricultural land is situated at Sriganganagar-Hanumangarh National Highway and is 2-3 Kms away from Sriganganagar's residential/population area. Thus, it was claimed that the assessee had rightly taken the FMV at Rs. 2,74,000/- as on 01-04-1984 for total area of 11 bighas whereas the AO consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. 7. The ld DR is heard who has relied on the findings of the assessing officer and submitted that as regard the investment of the property the ld. AO has relied upon the detailed finding in the assessment proceeding based on that finding taken a view that the assessee has not invested the money and even the registration of the property was not in the name of the assessee and even the possession was not passed the denial to the benefit by the ld. AO is based on the detailed reasoning. Even the ld. CIT(A) has not controverted the finding of the based on the cash flow submitted by the assessee. He relying on the statement of Shri Madan Lal submitted that the agreement was for a period of 2 years and sale is not completed as the assessee has not finally executed the sale deed and thus, the sale is not complete and therefore, the benefit is rightly denied by the ld. AO. The ld. DR also relied upon the finding of the ld. AO that the cash not exchange the hand in real terms and relying on the detailed finding and reasons the appeal of the ld. CIT(A) is not considered on the various aspects as recorded in his order. As regards the cost of acquisition the AO has given the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee produced both the seller and their statements were recorded. Both the seller admitted to have sold their agricultural land to the assessee. 8.3 The ld. AR of the assessee contended that for claiming deduction u/s 44B of the Act. The provisions of section 54B required that sale deed must be registered the only requirement is that the sale consideration decided should be invested in purchase of agricultural land. The ld. AR of the assessee, during the course of argument relied upon the Co-ordinate Bench decision in the case of Sh. Anil Bishnoi vs. ACIT in ITA No. 1459/Chd/2016. The ld. AR of the assessee also relied the decision in the case of Dharmendra J. Patel in ITA No. 561/Ahd/2020 of Ahmedabad Bench. 8.4 The ld. AR of the assessee in addition to the decision relied upon also argued that for claiming the deduction u/s 54B of the Act possession of loan is more relevant as per provision of section 53A of the Transfer of Property Act and the provision of section 2(47) of the Income Tax Act. The ld. AR of the assessee has categorically proved and argument that both the buyers were summoned and appeared before the lower authorities and confirmed to have received of cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused the material on record. We are of the considered view that the Ld. CIT(Appeals) has erred in not looking at the facts of the instant case in the correct perspective. In our considered view, one must not lose sight of the fact that section 54B of the Act is a beneficial provision and aimed at investment of proceeds from sale of agricultural property into new agricultural property. In a recent judgment of Mother Superior Adoration Convent [2021] 126 taxmann.com 68 (SC), the Supreme Court held that beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. In reference to Dilip Kumar's case (Supreme Court), it held that the Constitution bench has not made any distinction between exemption granted generally and exemption provisions that have a beneficial purpose, therefore, it cannot be said that for beneficial exemption liberal rule of construction has been done away with. In other words, for construction of beneficial exemption strict rule of interpretation may not be required to be applied. The Supreme Court in this case observed as under: "This being the case, it is obvious that the beneficial pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT in ITA number ITA No. 1136/CHD/2014, the Assessing officer noted that the assessee has sold his land on 19th February 2009 but the registration deed of purchase of the other land was dated 9.6.2008. In this connection the assessee has submitted that though the land was sold on 19.2.2009, yet actual possession of the land was handed over earlier in April 2008 and this land was purchased for Rs. 51,80,000/- by way of withdrawals from his saving bank account dated 9.6.2008 and 10.6.2008. However, the Assessing officer noted that in the sale deed dated 19.2.2009, it has been mentioned that possession of the above land was given to the company on the spot. Therefore, the contention of the assessee that possession was given earlier was not found tenantable. In view of this, the Assessing officer withdrew the exemption claimed u/s 54B of the I.T. Act and computed the capital gain at Rs. 55,59,363/-. The ITAT while allowing relief to the assessee made the following observations: 14. We have considered the rival submissions. The assessee has filed copy of the sale deed dated 19.2.2009 in the paper book in which it is specifically mentioned that assessee received various advances fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible and should be considered as investment made out of sale proceeds for purposes of section 54B. 6.4 Similarly, the Chennai ITAT in the case of ITAT Chennai Bench in the case of ACIT Vs. Dr. S. Balasundarm in (2013) 36 CCH 107, held as under:- "According to the AO, the purchase consideration paid by the assesses was not eligible for deduction u/s 54B of the Act. It was not the case of the AO that the sale consideration received by the assesses under use for the purpose of purchase of the property. The only dispute was the assessee has purchased the property before transfer of the property. Therefore, the AO had denied the claim of the assessee. From the record, it was found that the assessee had entered into an agreement to sell the property. As it was a fact that though the sale deed was executed on 30.12.2008, but the assessee purchased three properties with the sale consideration received. The intention of the Legislature was that the assessee had to use the sale consideration received for the purpose of buying agricultural land. In the present case, the assessee sold agricultural land was not disputed by the AO and also purchased agricultural land. The CIT (A) in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers. As per the assessee, Sub Registrar informed him that no other property (agricultural land) got registered in year 1981. The appellant submitted that this agricultural land is situated at Sriganganagar-Hanumangarh National Highway and is 2-3 Kms away from Sriganganagar's residential/population area. Thus, it was claimed that the assessee had rightly taken the FMV at Rs. 2,74,000/- as on 01-04- 1984 for total area of 11 bighas whereas the AO considered the FMV at Rs. 1,54,000/- as on 01-04-1981 without any basis. The appellant contended that the AO before taking this value did not even issue show-cause notice or afforded opportunity to the assessee to explain in this regard. Finding "7.3. I have considered the facts of the case and appellant's submissions and I find that while computing the LTCG, the assessee had worked out the indexed cost of acquisition in respect of agricultural land sold at Rs. 23,34,480/-, however, the AO allowed indexed cost to the extent of Rs. 13,15,488/- only. The appellant's claim is that he had rightly taken the FMV of the land at Rs. 2,74,000/- as on 01-04-1981. whereas the AO without any basis or without affording any opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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