TMI Blog1992 (2) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... 1984 for Rs. 8,32,000 and possession was taken on 10- 12-1984 of which the payments to the vendors of the land amounted to Rs. 7,14,700 up to 3-8-1987. Another land at Mhasrul in survey No. 32-2/4 2/2 was agreed to be purchased on 9-4-1985 with possession on the same date for a cost of Rs. 16,000. Another agricultural land at survey No. 53A/1 at Anandwalli was agreed to be purchased on 11-2-1988 of which possession was taken on the same date for Rs. 2,27,500. It is pertinent to point out that except the land at Ambad purchased by the assessee, conveyance deed has not been obtained by the assessee in respect of other three lands till the date on account of disputes and non-agreement among the family members of the vendors and the dispute is pending in the Court on account of which the conveyance deeds of lands were not executed by the vendors. 2. In this context, the ITO passed a very short order treating the capital gains arising on the sale of Anandwalli land as short term capital gains on the basis that the land was a short term capital asset or it was held for not more than 36 months. Therefore, he assessed the entire capital gains arising on the sale of the land to short te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) concluded that in the light of the judgment of the Bombay High Court in the case of CIT v. Smt. R. R. Sood capital gains was short term capital gains and not long term capital gains as claimed by the assessee. 4. The CIT(A) was satisfied that the distinction between short term capital gains and long term capital gains has no significance and the lands, possession of which was taken over by the assessee were used for agricultural purposes only. However, the condition that the new agricultural lands should have been purchased within a period of 2 years after the date of sale for being used for agricultural purposes was not satisfied by the assessee. According to him, certain amounts were invested by the assessee in the new lands even prior to the date of transfer, i.e. on 17-2-1986, though the requirement of section 54B is that the investment should be made within a period of 2 years after the date of transfer. In fact even the investment of Rs. 6.06 lakhs made by the assessee after the date of conveyance deed for Anandwalli property, namely, 17-2-1986, the condition of section 54B was not satisfied, because the sale deeds for those lands were not registered yet, and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the date of possession of the house property and the delay in registration was immaterial, the Andhra Pradesh High Court held that the assessee was entitled to exemption from capital gains under section 54(1) of the Income-tax Act, 1961. Applying the aforesaid decision to the case of the assessee, it was contended that the assessee also invested substantial portion of the capital gains arising out of the transfer of the land on several new lands, possessions of which have been taken over by the assessee on the date of entering into agreements in respect of these lands. The learned counsel for the assessee also relied on the decision of the Bombay Bench 'D' of the Income-tax Appellate Tribunal in the case of V.M. Dujodwala v. ITO [1991] 36 ITD 130 wherein similar view has been taken. Referring to the paper compilation, he pointed out that from the details of payments made by the assessee in respect of new lands an amount of Rs. 2,15,471 was invested up to 16-2-1986, i.e., before the sale deed of Anandwalli property was registered on 17-21986 and therefore, in accordance with the spirit of the Circular No. 359, dt. 10-5-1983 cited earlier, the learned counsel for the assessee urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l asset being land which was being used for agricultural purposes in the two years preceding the date of transfer and therefore it contemplates assets held for less than 36 months as well as assets held above 36 months. Therefore, it is clear that this section contemplates capital gains arising on transfer of both short term as well as long term capital assets. In any case, the CIT(Appeals) has conceded this point in his appellate order and therefore, it is academic to go into the question. 9. Another aspect that is required to be considered is that the section contemplates user of agricultural land in the two years immediately preceding the date of transfer and therefore, the reference is to the years and not during the whole period of two years as viewed by the authorities. In other words, if the asset has been used for the whole of the immediately preceding year and some days of the year earlier to the preceding year, still the requirement of section 54B would be satisfied. Applying the definition of short term capital asset with reference to the word " held ", it could be said that any asset held in the two years immediately preceding the date of transfer would be eligible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B also. Therefore, the ratio of the Andhra Pradesh High Court in the case of Mrs. Shahzada Begum would apply with equal force to the assessee's case also. Applying the ratio of the Andhra Pradesh High Court, it could be reasonably held that the assessee has purchased the lands in respect of which he has obtained domain and control and on which he has invested Rs. 2,15,471 up to 16-2-1986 and Rs. 6,06,000 from 17-2-1986 to 16-2-1988. All these amounts were invested by the assessee out of the advances received from M/s IBP Co. Ltd. during the period 23-10-1984 and 25-10-1986. In view of the judgment of the Andhra Pradesh High Court in the case of Mrs. Shahzada Begum, the obtaining of domain and control is relevant and the delay in obtaining registration deed is not relevant for the purpose of relief under section 54(1). The reason for the delay in getting the registration of purchase deed is said to be dispute among the family members of the vendors and now that the Court case has been settled, registration would be effected in favour of the assessee by the vendors of the land. Even ignoring the fact of registration of sale deed to be effected later on, we hold that the assessee is e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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