TMI Blog2014 (10) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for agricultural purposes for full two years immediately preceding the date of transfer and that it is sufficient if it was so used in the whole of the preceding year and for some days in the year earlier to preceding year – thus, the exemption u/s 54B is available to the assessee. Land used by assessee or not – Held that:- The objection that land was not used by assessee himself is proved by the assessee from the fact that agricultural income has been accepted by the department - Besides in additional evidence a certificate to this effect has been furnished by the assessee - assessee used the land for himself in earlier years. Part purchase of land in the name of name lender – Held that:- Assessee can purchase a new asset or part thereof in the name of his wife - For this there are sufficient justifications like stamp duty rebate, social, security for ladies, as long as the funds are invested by the assessee, exemption cannot be denied – thus, the order of the CIT(A) is upheld – Decided against revenue. - ITA No. 1413/Del/2010, ITA No. 1808/Del/2010 - - - Dated:- 28-2-2014 - SHRI R.P. TOLANI AND SHRI T.S. KAPOOR, JJ. For The Appellant : Shri Salil Agarwal Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65/- has been offered for taxation. (ii) Sale of 16 kanals for consideration of ₹ 1,13,42,800/-, after reducing purchase price and expenses Short term capital gains of ₹ 1,20,00,000/-. 2.2. Assessing officer qua the claim of long terms capital gain held that assessee was not entitled to LTC on for exemption u/s 54B as for this sale of agriculture land also the holding period of 36 months was required as against the claim of 24 months u/s 10 (37). The AO was of the view the claim of LTC was on following counts (i) Agricultural land were not held for 3 years. (ii) Land was not used for a period of three years (iii) Girdawari was in the name of one Shri Subhash and not assessee (iv) Assessee or his parent did not use the land for agricultural purposes. 2.3.Beside assessing officer alternatively held that the cost of new agricultural land purchased was less than the required investment. Assessee furnished evidence in support of purchase of land for ₹ 44,76,000/- in his own name and the remaining investment of ₹ 16,84,700/- was claimed to be made by his wife Smt. Ranjana Verma which was not unexplained. In fine the AO proposed to treat t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, (i) if the amount of the capital gain is greater than 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.] 2.8. In this back drop following further submissions were made: I The amount of ₹ 21,93,065/- was offered for tax as capital gains, and not as long term or short term . Mere mentioning Long term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fulfillment of the second requirement the same is discussed in Para below. e. A copy of Girdawari was filed before Assessing Officer as evidence of cultivation of land by assessee but the same has been rejected by Assessing Officer as inconclusive. The learned Assessing Officer rejected the claim of the assessee with respect to fulfillment of condition mentioned at clause-iii) above on the following grounds:- (i) The Girdawari was in the name of one Sh. Subhash and not in the name of assessee (last para of page 4) (ii) No evidence regarding sale of agricultural produce has been furnished (Point no (iv) at page 5). (iii) No agricultural income has been shown in the return of income for the year under consideration i.e. for the period 01.04.2005, to 31.03.2006. [Point no (v) at page 5} The land was held by the assessee from 02.07.2003 to 25.09.2005. Thus, excluding the period from 01.04.2005 to 25.09.2005 for which not even an iota of evidence has been furnished regarding performance of agriculture, sale of agriculture produce and earning of agriculture income, the earlier period for which the land was held i.e. 02.07.2003 to 31.03.2005 is less than two years. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gains as short-term capital gains and has accordingly disallowed the exemption claimed u/s 54B of the Income Tax Act, 1961. The appellant had pleaded during the course of assessment proceedings vide his reply dated 03-12-2008 in para 3 that no such condition of 36 months is required for the claim u/s 54B. the appellant had not cited at that time any judicial decision in support of his contention but now in the appeal proceedings, the Ld. A.R. of the assessee has relied upon the decision of the Pune Tribunal in the case of Shri Ramesh Narhari Jakhad vs. ITO (1992) 41 ITD (PN) 368 wherein it has been held that for the claim of exemption u/s 54B,it is not necessary that the land should have been used for agricultural purposes for full two years immediately preceding the date of transfer and that it is sufficient if it was so used in the whole of the preceding year and for some days in the year earlier to preceding year. In view of such ratio, which is found to be quite relevant and rational, the assessee becomes entitled to exemption u/s 54B of the Income Tax Act, 1961. As to the A.O. s other objection that no evidence was furnished to show that the land sold was being used two ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-2008, the source of investment of ₹ 16,84,700/- in the land purchased was duly explained and authenticated. The A.O. has not controverted these pleas and evidences anywhere in assessment or appeal proceedings. Keeping in view such discussion, therefore, the long-term capital gains of ₹ 60,00,000/- stand fully explained as genuine. Therefore, the assessee is entitled to exemption u/s 54B of the Income Tax Act, 11961. Accordingly, the A.O. is directed to allow the same. 3. Ld. DR contends that ld CIT(A) has admitted the additional evidence in contravention of provisions of rule 46A. when the assessee was given sufficient opportunity of being heard, there was no justification no admit the same and called for the remand report. 3.1. Apropos merits ld DR contends that assessee could not satisfy the conditions of user of land by himself or parents as agricultural land, therefore the condition of sec 54B was not complied with. Besides the new agricultural land s should be purchased in the name of assessee himself and not in the name of his wife. Alternatively, the reduction of exemption of capital gains u/s 54B is justified. Order of AO is relied on and that of CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Shri Subhash who is the agriculturist from whom the land is purchased. Assessee contended that in land record it takes time to mutate it besides in additional evidence assessee filed Tahsildars certificate and other record to this effect. Therefore, there is no doubt to the fact that the land was cultivated by the assessee. It is further evident from the fact that agricultural income amounting to ₹ 10,000/- is declared in that assessment year and is accepted by the department. The evidence of the Girdhawari also clearly shows the land was used for self and for assessee s own use in the assessment year. 4.4. Apropos the issue about part purchase of land from assesses fund in the name of wife Smt Ranjana Verma it is pleaded that her name of the wife was mentioned to avail of the registration fee rebate and provide her social security. She is only a name lender and all the investments had been made by the appellant out of his own sources which is not disputed by AO. Besides assessee's wife has no independent source of any funds a fact which is also not disputed by AO. 4.5. Ld. Counsel further relies on Pune Tribunal in the case of Shri Ramesh Narhari Jakhad vs. IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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