TMI Blog2016 (3) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... . The transferor is restrained from selling the said property to someone else because the transferee, in whose favour the right in personam is created, has a legitimate right to enforce specific performance of the agreement, if the transferor for some reasons do not execute the sale deed. Therefore, when the assessee purchased land by way of execution of an agreement by the transferor irrespective of the fact that sale deed could not be entered the assessee is eligible to enforce his right and therefore, he has rightly held that assessee is deemed to have purchased the land. In view of the above findings of learned CIT(A), he has rightly allowed the exemption u/s 54B of the Act. - Decided in favour of assessee. Deduction of eviction charges u/s 48(1) - payments for eviction of land was made as the Assessing Officer had verified the confirmation of payments received by eleven persons who were paid the amounts for eviction - Held that:- CIT(A) has rightly allowed the deduction of such eviction charges u/s 48(1) of the Act. We further find that in the case of a joint owner Mr. Jit Singh who had also paid similar eviction charges and learned CIT(A) has deleted the addition made by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in on the sale of agricultural land, therefore, the addition in these cases were made to the tune of ₹ 2,40,91,101/- and ₹ 83,58,921/- resepctively. 5. Aggrieved with the orders the assessees filed appeals before learned CIT(A) and submitted various submissions wherein the assessees claimed that the capital gain worked out by Assessing Officer was without taking into account indexed cost of sold land. The assessees also submitted that the assessees had to make certain payments to the persons who were occupying the said land and therefore, these expenses were eligible for deduction u/s 48(1) of the Act. The assessees in this respect had also submitted additional evidences which were forwarded to Assessing Officer and learned CIT(A) after going through the remand report allowed relief to the assessees by holding similar findings. For the sake of completeness the findings of learned CIT(A) as contained in para 7 to 10 in the case of Sh. Assa Singh are reproduced below. 7. I have considered the facts of the case, the arguments of the AR during assessment proceedings as well as appellate proceedings. The comments of the Assessing Officer during remand proceedings h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report is that certain registrations in respect of purchase of agricultural land had been effected before the date of sale and therefore would not strictly get covered by the provisions of Section 54B. The facts of the case are clear that the payment for purchase of land has been made out of advance received by assessee against sale of land. Infact, payments have been made directly by the buyer of the agricultural land from the assessee to the sellers who sold the land to the appellant. The AR has brought on record the circular of CBDT no. 359 dated 10.05.1983 which is with reference to section 54^/The said circular qualifies the situation as under:- Section 54 of the Income Tax Act, 1961 provides for exemption of long term capital gains if the net consideration is invested by the assessee in specified assets within a period of six months after the date of such transfer. A technical interpretation of S.54E could mean that the exemption from tax on capital gains would not be available if part of the consideration is invested prior to the date of execution of the sale deed as the investment cannot be regarded as having been made within a period of six months after the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not executing the sale deed. Thus, by virtue of the agreement to sell some right is given by the vendor to the vendee. Though the entire property cannot be said to have been sold at the time when an agreement to sell is entered into. Looking at the provisions of Section 2(47) of the Act, which defines the word transfer in relation to a capital asset, one can say that if a right in the property is extinguished by execution of an agreement to sell, the capital asset can be deemed to have been transferred. In the light of definition of transfer as defined under Section 2(47) of the Act, it is clear that when any right in respect of any capital asset is extinguished and that right is transferred to someone, it would amount to transfer of a capital asset, an agreement to sell in respect of a capital asset had been executed on 27th December, 2002 for transferring the residential house/original asset in question and a sum of ₹ 15 lakhs had been received by way of lest money. It is also not in dispute that the sale deed could not be executed because of pendency of the litigation between R on one hand and the assessee on the other as R had challenged the validity of the Will un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of Legislature or the purpose with which the said provision has been given to him in respect of paying income tax on the long term capital gain. The intention of the Legislature or the purpose with which the said provision has been incorporated in the Act, is also very clear that the assessee should be given some relief. Though it has been very often said that common sense is a stranger and an incompatible partner to the Income Tax Act ^and it is also said that equity and tax are strangers to each other, still this Court has often observed that purposive interpretation should be given to the provisions of the Act. Considering the principles with regard to the interpretation of statute pertaining to the tax laws, one can very well interpret the provisions of s.54 r/w s.2(47), i.e. definition of 'transfer' which would enable the assessee to get the benefit under s.54- Oxford University Press vs. CIT(2001) 165 CTR (SC) 629: (2001) 3SCC 359 applied. In view of the peculiar facts of the case and looking at the definition of the term 'transfer' as defined under s.2(47) the assessee were entitled to relief under s. 54 in respect of long term capital gain which they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,73,37,500/- in the purchase of fresh agricultural land. The fact of land sold and purchased being agricultural land is not disputed. As regards objection of Assessing officer in his remand report that since the Assessee was not carring out agricultural activities, therefore, he was not eligible for exemption u/s 54 the learned AR submitted that even rent received from agricultural land is assessed as agricultural income therefore, learned CIT(A) has rightly allowed the relief. As regards other objection of Assessing officer in his remand report that few of purchases in agricultural land predated the date of sale, the learned AR submitted that payment for purchases of agricultural land were made out of advances recevied against sale of agricultural land and learned CIT(A) has recorded a finding of fact in this respect. As regards the objection of Assessing Officer that a part of investment amounting to ₹ 53,00,000/- cannot be considered as investment as the registry was not got done, the learned AR submitted that sale deed of this property could not be executed due to some dispute but the agreement to sell was duly executed and learned CIT(A) has given a clear finding that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee against sale of land and in fact he has held that payments were directly made by buyer of agricultural land to the seller who had sold land to the appellant. The learned CIT(A) has further relied upon the CBDT circular No.359 dated 10.05.1983 which refers to section 54E of the Act. As per said circular the exemption u/s 54 E of the Act is available to an assessee if part of sale consideration or earnest money or the advances received against sale of asset is invested in specified assets before the date of transfer of assets. The learned CIT(A) has further held that intention of legislator in respect of section 54B cannot be different as the essential purposes of incorporating the provisions of section 54B is to be ensure that anybody selling agricultural land should not be subjected to tax if the proceeds thereof are used by assessee for purchase of agricultural land. 12. As regards the objection of Assessing Officer in remand report that assessee himself was not using the land for agriculture purposes, we find that it is immaterial as to whether the agricultural land owned by assessee is used by himself or is used by some other persons as the nature of land will rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges by learned CIT(A). This fact is verifiable from paper book page 4 where a copy of grounds of appeal filed by Jit Singh in ITA No. 21 is placed. In view of these facts, we do not find any infirmity in the order of learned CIT(A) in this respect. Therefore, Ground No.1(b) is also dismissed. 15. In view of the above appeal in ITA No.26(Asr)/2015 is dismissed. 16. Now coming to ITA No. 28(Asr)/2015. Ground No.1(a) is similar to Ground No.1(a) in ITA No.26(Asr)/2015 where also the learned CIT(A) has recorded a finding of fact that out of gross sale consideration of sale of agricultural land for ₹ 61.20 lacs the amount of ₹ 17,63,125 was deducible as amounts paid for eviction of land u/s 48(1) of the act and for the rest of sale consideration amounting to ₹ 43,56,875/-, the assessee had made purchase of another agricultural land for which the payments were directly made by M/s Bhagwati Agricultural Farms to the seller Mr. Sucha Singh for amount of ₹ 50,25,000/- and therefore he has rightly held that no capital gain arose as the assessee was eligible u/s 54B of the Act. In view of the above Ground No.1(a) is dismissed. 17. As regards Ground No.1(b), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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