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2018 (12) TMI 1745 - AT - Income TaxExemption u/s.54B withdrawn - new asset so transferred is not a capital asset - assessee has subsequently sold the new asset on 27.05.2005 i.e. within the period of 3 years from this purchase - HELD THAT:- It is seen that the assessee has transferred agricultural land and resultant capital gain thereon has been claimed exemption on account of purchase of new asset. However, the new asset being a non-capital asset has been transferred within the period of 3 years i.e. 25.07.2005. Therefore, the cost of new asset for computing the capital gain u/s.45 of the Act would be considered as nil as per provisions of section 54B(1)(2) of the Act. Since the assessee has not satisfied the basic condition to avail the exemption u/s.54B(1) of the Act as the new asset is transferred before 3 years of its purchase, the capital gain is worked out after deducting the exemption out of such gains so benefited on the transfer of old asset. This, further stipulates that there should be a capital gain of transfer of such land, hence the assessee has invested in his land it will not be further taxable to capital gain as the land is rural agricultural land, it is not a capital asset. Basic condition to avail the exemption has not been fulfilled by the assessee, therefore there is no relevance of the fact that new asset was capital asset or non-capital asset. Further, there is no specific provision in section 54B of the Act as mentioned in section 54F(3) of the Act. Therefore, the withdrawal of exemption would be made in respect of long term capital gain chargeable on old assets sold during the relevant assessment year. As new asset so transferred is not a capital asset, hence no capital gain chargeable on the same. In view of these facts, we are of the considered opinion that the Lower Authorities have justified in withdrawing the exemption claim u/s.54B of the Act as basic conditions stipulated u/s.54B(1)(2) has not been satisfied. Therefore, this grounds of appeal of the assessee are dismissed.
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