TMI Blog2016 (10) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the fair market value of ₹ 10,45,000/- as on 01/04/1981 stated by the Tehsildar is not based on value adopted by his office for the purpose of stamp duty valuation. The valuation of the Tehsildar is based on guesswork and not based on the sound evidences or Rules, which could justify the market value as four times the value adopted for stamp duty purposes. In such circumstances, in our opinion the directions given by the learned Commissioner of Income-tax (Appeals) to the Assessing Officer to adopt the fair market value of the agricultural land transferred as on 01/04/1981 at ₹ 10, 45,000/- is not justified. ' We feel it appropriate to restore the matter to the file of the Assessing Officer with the direction to make a reference to the valuation officer in terms of section 55A of the Act for ascertaining the fair market value of the land transferred by the assessee and then compute the capital gain in accordance with law. Eligibility for exemption u/s 54B - HELD THAT:- We find from the plain language of section 54B of the Act that benefit under section would be allowed when the capital gain arising on transfer of land used for agricultural purposes, is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accepting the view of Sub Registrar that the Market Rate of Agricultural Land would be at four times of the collector rate as this is not basis for this estimate. Sub-Registrar was supposed to give Fair Market Value based on comparable instance or other revenue records maintained in his office. No supporting evidences were made available by the Sub Registrar to prove the basis on which the Market Valuation of land in question has been arrived at ₹ 10,45,000/- (@₹ 8 Lacs per acre) 4. The Appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off. 2. The grounds of appeal raised by the assessee in ITA No. 3543/Del/2012 are as under: That on the facts and in the circumstances of the case and in law, the authorities below erred in denying exemption u/s 54B of the Incometax Act, 1961. The assessee having complied with the requirements of investment in terms of the cited section was entitled to the exemption. The authorities below be directed to allow the same as per law. 3. The facts in brief of the case are that the assessee was engaged in running a petrol pump. The assessee filed return of income decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cost of acquisition of the transferred agriculture land or its fair market value as on 01.04.1981 for computing the capital gains, however, in absence of any reply from the assessee, the Assessing Officer computed the cost of acquisition as nil and computed the capital gain from the transfer of agriculture land as follows: Sale price of agricultural land : ₹ 60, 89, 903/- less: cost of acquisition : Rs. Nil long-term capital gains : ₹ 60, 89, 903/- 3.4 Aggrieved with the order of the Assessing Officer, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals) and filed the certificate from the Tehsildar in support of the fair market value of the transferred agricultural land as 01/04/1981, as additional evidence in terms of Rule 46A of the Income Tax Rules, 1962. The learned Commissioner of Income-tax (Appeals) forwarded the additional evidences to the Assessing Officer and after getting remand report and the rejoinder of the assessee, he allowed the claim of the assessee of cost of acquisition of the transferred land and directed the Assessing Officer to compute the long-term capital gain accordingly. 3.5 On the second issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer for his comments and after taking into his comments, the learned Commissioner of Income-tax (Appeals) has agreed with the contention of the assessee of having fair market value of the transferred agricultural land at ₹ 10,45,000/- and accordingly, he directed the Assessing Officer to compute the capital gain. Accordingly, he prayed that finding of the learned Commissioner of Income-tax (Appeals) on the issue in dispute might be upheld. 5.3 We have heard the rival submission and perused the material on record, including the paper book filed by the assessee. We find from the ground No. 2 taken by the Revenue that the Revenue has objected to the additional evidences admitted by the learned Commissioner of Income-tax (Appeals) in respect of fair market value of the land in question as on 01/04/1981. From the facts of the case, we find that the assessee was not granted sufficient opportunity of hearing by the Assessing Officer for producing evidence in support of fair market value, which is evident from the assessment order and, therefore, in our opinion, the action of the learned Commissioner of Income-tax (Appeals) of admitting the additional evidence is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. On the perusal of the said certificate of the Tehsildar and subsequent explanation given to the Assessing Officer, we find that there is no basis for estimation of the fair market value in the report of the Tehsildar. We find that the Tehsildar has provided sale instance of 1977 and on the basis, he arrived the rate for the year 1981 at ₹ 2,08,225/- per acre. But thereafter, he mentioned that generally the market rate was four times the rate adopted by the Collector for stamp duty purpose and, therefore, the market value of the land in question should be ₹ 8.00 lacs per acre. We find that the Tehsildar has not provided any basis for taking four times of the stamp duty value as the fair market value of the land in question. Thus, the fair market value of ₹ 10,45,000/- as on 01/04/1981 stated by the Tehsildar is not based on value adopted by his office for the purpose of stamp duty valuation. The valuation of the Tehsildar is based on guesswork and not based on the sound evidences or Rules, which could justify the market value as four times the value adopted for stamp duty purposes. In such circumstances, in our opinion the directions given by the learned Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/06/2008 i.e. the date of transfer of the property within the meaning of section 2(47)(V) of the Act and therefore the assessee should be allowed deduction under section 54B of the Act. 14. We have heard the rival submission and perused the relevant material on record. On perusal of the submissions of the parties, it is evident that the sale consideration on transfer of the asset was received by the assessee on 24/10/ 2008 and investment in the new agricultural land was made on 13/10/2008 and 23/10/2008, which is prior to the receipt of sale consideration and, therefore, the money received on account of capital gains has not been utilized towards purchase of new asset. It is relevant to reproduce the section 54B of the Act as under : Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 15. We find from the plain language of section 54B of the Act that benefit under section would be allowed when the capital gain arising on transfer of land used for agricultural purposes, is invested in the purchase of new agricultural land within two years from the date of the agricultural land transferred. Thus, the thrust is on the utilization of the money received on sale of the agricultural land leading to capital gain towards purchase of new agricultural land. The learned Commissioner of Income-tax (Appeals) has decided the issue in dispute as under: 7. The denial of exemption u/s 54B was contested in grounds no. 3 to 6 of appeal. The submissions made by the AR in this regard are summarized as under:- The possession of the agriculture land sold was given on 3.6.2008 itself as mentioned in the sale deed executed on 31.3.2009. Therefore, the transfer took place on 3.6.2008 itself in terms of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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