TMI Blog2010 (11) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993 and onwards. Held that:- recomputation of capital gain based on the amended provisions does not arise at all. Since computation or recomputation of capital gain was not required, and the capital gain deposited by the assessees was not utilised by them for purchase of agricultural land. decided against Assessee. - 188, 347 and 471 of 2009 - - - Dated:- 12-11-2010 - RAMACHANDRAN NAIR C. N., BHABANI PRASAD RAY JJ. JUDGMENT C. N. Ramachandran Nair J.- 1. Under the relevant instruction issued by the Central Board of Direct Taxes, these appeals filed by the Revenue in February, 2004, are not maintainable for the reason that the tax effect is much below the minimum required for the Revenue to file the appeal, that is, Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1993-94. However, for payment of tax on capital gains for the assessment year 1993-94, the assessees once again computed capital gains on the same transaction by applying the amended provisions of section 48 which provides for deduction of the indexed cost of acquisition and the indexed cost of improvement in the computation of long-term capital gain. The amendment to section 48 introducing the above method of computation of capital gains came into force only from April 1, 1993, onwards. The Assessing Officer rejected the assessees' claim and processed the returns by just demanding tax on the capital gains that was carried over to the assessment year 1993-94, but not utilised for the purchase of agricultural land in terms of section 54B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justment, which is only demand of tax on taxable income. On the merits, the standing counsel submitted that the Tribunal held against the assessees. However, senior counsel, Sri Joseph Markose, appearing for the legal heirs of the deceased assessees contended that assessment of capital gains cannot be made through prima facie adjustment in the course of processing returns under section 143(1)(a) of the Act and the Tribunal's finding against the assessees that the amended provisions of section 48 which came into force with effect from April 1, 1993, are not applicable is also not correct. In other words, according to him, even though capital gains on sale of agricultural land is assessable in the assessment year 1993-94 on account of non-uti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) The amount of the capital gain which is not utilised by the assessee for the purchase of the new asset before the date of fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as prescribed by the Central Government. Admittedly, the assessees have done this and so much so, if the deposits were utilised within two years for the acquisition of agricultural land, they would not have been liable to pay any tax. However, the admitted position is that the assessees did not utilise the deposited capital gains on which exemption was claimed and allowed in the year in which it was assessable, that is, the assessment year 1991-92, within two years for acquisition of agricultural land. So much so by virtue of clause (i) of the proviso to section 54B(2), the unutilised capital gain shall be deemed to be income chargeable to tax under section 45 as the income of the previous year in which the period of two years from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year in which the amount was assessable, but for the claim of exemption made in that year, the same will be treated as income chargeable to tax under section 45 of the Act. In other words, no computation or recomputation of capital gain is required to be made in the year in which capital gain obtained on sale of agricultural land is assessable by virtue of the proviso to section 54B(2) of the Act. So much so an assessee who claims exemption by deposit of capital gain for two years will automatically be liable to pay tax in the assessment year immediately following the expiry of the period of two years, if the capital gain deposited and in respect of which exemption was claimed, was not utilised for acquisition of agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X
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