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2015 (7) TMI 73

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..... r has taken ₹ 95,25,836/- only) on account of sale of Gatrad agriculture land. Assessing Officer has not allowed the exemption u/s.54B on the ground that basic requirement of claim of exemption u/s.54B is that first condition of land should be used by assessee being an individual or his parent or HUF for agriculture purpose has not been complied with. We have decided this issue in preceding favour in favour of assessee. Regarding allowability of claim of claim of ‘’on-money’’ the ld. AR drew our attention to the decision of Hon’ble Gujarat High Court in the case of CIT vs. Suman Paper & Boards Ltd. (2009 (2) TMI 66 - GUJARAT HIGH COURT) wherein it was held that in view of amendment on the provisions of section 158BB by the Finance Act, 2002 with retrospective effect from 1st July, 1995 the assessee was entitled to claim deduction under sec.80-I or section 80-IA in block assessment of the block period. The Revenue has acknowledged the benefit of deduction with regard to undisclosed income of the block period. Thus assessee is entitled for getting benefit of exemption under section 54B with regard to the ‘on money’. See Commissioner of Income Tax, Central II, Versus M/s. Sh .....

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..... of Section 54B of the Act clearly state that the land should be used by the assesse being an individual or his parents. which has not been fulfilled in this case. 3. Assessee is engaged in business of construction of Housing Projects. During previous year relevant to assessment year under consideration, assesse has sold various agricultural lands in which he was having co-ownership and claimed exemption u/s.54B of the Act. The details of such land on which assesse claimed exemption is given as under: Sr. No. Block No. Ownership ratio Sale Consideration (Being assessee s share) Amount of exemption claimed u/s.54B on Capital Gains (Being assessee s share) 1. 253 One-third 25,74,590 25,30,094 2. 260 One-third 6,98,723 4,14,535 3. 277 One-third 4,41,337 4,33,710 4. 283 One-sixth .....

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..... bmitted an agreement with Shri Dalpatsinh Abhaysinh Chauhan, who is claimed to be an agriculturist. As per this agreement, Shri Dalpatsinh A. Chauhan has the right to carry out agricultural activity on the land and is obliged to share part of the produce. Thus, primarily the assessee deriving agricultural income, if any, in the form of rent rather than by carrying out agricultural activities. The assessee, thus, has not cultivated the land personally, but it has been cultivated, if at all, by a third person. Further, the assesses has not even furnished any evidence as discussed supra to prove that any agricultural activity has been carried out on the land in the two years immediately preceding the date on which transfer of such agricultural land took place irrespective of who carried it out. As stated above, the assessee to support his contention has submitted the aforesaid agreement for carrying-out cultivation on agricultural land. This clearly established that agricultural activity, if any, was not carried out by the assessee or his parents. According to one of the terms of this agreement, the agricultural activities have to be carried out on the land in question up to fi .....

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..... sesse is eligible to that relief u/s.54B of the Act, 1961 while computing capital gain. ii. Whether relief in computation u/s.54B of the Income Tax Act,1961 can be claimed against unaccounted additional sale receipt in the form of on money not reflected in sale consideration. It is not in dispute that assessee s relevant record for agriculture i.e. 7/12 reveals the crops at the said land at relevant point of time. Assessing Officer has disallowed the claim of assesse on the ground that assesse or his parents were not cultivator of the said land. So, according to Assessing Officer, assesse was not eligible to get exemption u/s.54B of the Income Tax Act,1961. For the sake of convenience, we reproduce the provision of Section 54B(1) of the Income Tax Act which reads as under: 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 assesse being an individual or his parent, or a Hindu undivided family ] for agricultural purposes [(hereinafter referred to as the original asset)], and the assesse .....

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..... uestion cannot be negated on the basis of not shown agricultural income it its return of income. It does not affect assessee s claim u/s. 54B of the Income Tax Act, once, it is established that land was being used for agricultural purpose, assessee becomes entitled for claim u/s.54B of the Income Tax Act. In case before us, assesse has proved beyond doubt on the basis of relevant revenue record that he was in cultivator possession of the agricultural land in question. Even this fact has not been disputed in the remand report by Assessing Officer. In appeal, CIT(A) verified the same and found that as per revenue record, land in question was used for agricultural purpose. The explanation used for agricultural purpose in Section 54B can only be description of agricultural land which is subject matter of transfer and not condition precedent for granting relief u/s.54B. Even if, assesse is not in cultivator possession himself but getting it cultivated in his supervision even then it will remain agricultural land until proves otherwise. It will be no more agricultural land in case assesse has changed the use with permission or without permission for residential purpose or otherwise. It i .....

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..... nt of on money for the purpose of claim u/s. 54B of the Act, 1961. 6.1 At the appellate proceeding, assessee was asked to explain that claim u/s. 54B of Income Tax Act, 1961 be allowed against on money received by him out of books. He explained that after disclosure u/s. 132(4) of Income Tax Act, 1961, money so received has become part of his sale consideration and was eligible for claim u/s. 54B of the Act. Assessee has not disclosed the payment of on money in his books before purchase of new land. According to assessee, bifurcation of disclosure made during course of search proceeding was as under: Nature of Disclosure Amount Remarks 1) On Money received on sale of agriculture land situated at Village: Gatrad, Ta. Dist. Ahmedabad ₹ 8,00,00,000/- Disclosed in the hands of 6 individual who have sold the agriculture land situated at Village: Gatrad, Ta. Dist. Ahmedabad A.Y. 2011-12 2012-13 2) 'On Money' received on sale ,, of residential house situated at Nirmal Bunglows, Vastral, Ahmedabad. Rs.43,00,000/- .....

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..... ti 3277017 11515920 14792937 1287140 6 Yatin K. Prajapati 1229325 4729724 5959049 2829574 21645350 80000002 101645352 64771324 On going through above table, it may be seen that assessee has received ₹ 1,90,88,759/- (including on money) (Assessing Officer has taken ₹ 95,25,836/- only on which the exemption u/s.54B was claimed) on account of sale consideration of of Gatrad land. The said sale consideration includes mount of sale consideration shown in sale deed and on money received thereon. Out of sale consideration received, assessee has invested ₹ 92,47,100/- (Assessing Officer has mistakenly taken as ₹ 90,90,582/-) in another new agriculture land within the prescribed period. Assessee is entitled for relief of exemption u/s.54B to the extent of his contribution of ₹ 92,47,100/- (which has been mistakenly taken by Assessing Officer as ₹ 90,90,582/-) towards purc .....

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