TMI Blog2015 (11) TMI 1681X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for claim of deduction u/s 54B of the Act pertaining to ₹ 26,84,000/- which was used / invested towards purchase of agriculture land within prescribed time limit of two years from the date of sale of agriculture land out of which capital gain accrued to the assessee. Accordingly the appeal of the assessee is allowed. - I.T.A .No.-3054/DEL/2012 - - - Dated:- 6-11-2015 - SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER Appellant by Sh. Amit Goel, CA. Respondent by Smt. Parwinder Kaur, Sr. DR ORDER PER C. M. GARG, JM This appeal by the assessee has been directed against the order of the Ld. CIT(A)-XXIV, New Delhi, dated 6/10/2010 in Appeal No. 364/2008-09 for A.Y 2006-07. 2. The sole ground raised by the assessee reads as under:- 1. On the facts and circumstances of case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the action of assessing officer of disallowing the claim of deduction of ₹ 26,84,000/- u/s 54B of Income Tax Act, 1961. On the facts and circumstances of the case and in law, the commissioner of income tax should have allowed the claim of exemption/deduction of ₹ 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other related appeal in the case of M/s Gregory Nicholas vs ACIT, the delay in filing appeal may be condoned. 6. On the other hand, the Ld. DR placing reliance on the order of the ITAT A Bench in the case of DCIT V/s M/s Brijwasi Impex Pvt. Ltd. in ITA No. 361/Del/2011 dated 3/9/2014 and submitted that the assessee cannot take shelter of ignorance of law or failure to seek legal advice and these are not sufficient and good causes for condonation of delay. The Ld. DR strongly opposed the prayer of the assessee for condonation of delay. 7. The Ld. AR also placed rejoinder to above contentions of the Ld. DR and submitted that as per ratio of the Hon ble Apex Court in the case of Collector V/s Mst. Katiji Ors 1987 AIR 1353 (Supreme Court), the legislature has conferred powers of condonation of delay to enable the court to do substantial justice to parties by disposing matter on merits and to ensure that the cases having merits may not be dismissed at the threshold merely because the appeal has been filed beyond prescribed time limit because of non-deliberate delay. The Ld. AR vehemently contended that in the case of Brijmasi Impex (supra), the cause was shown as the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and should be in favour of the assessee. 10. In view of above well settled proposition when we analyze the facts and circumstances of the present case, we note that the assessee and his earlier counsel has deposed on affidavit, which remained unrebutted by the Revenue, by collectively stating that the assessee handed over all necessary papers/documents which were required for filing an appeal before this Tribunal and subsequently when the assessee received penalty order, he came to know that the counsel has not filed appeal as per his instructions. The counsel of the assessee has also supported this explanation in his unrebutted affidavit by stating that due to inadvertence, bonafide omission and communication gap, further appeal to ITAT could not be filed. In this situation, it can be safely inferred that the assessee made all necessary efforts to file appeal within the prescribed time but the same could not be filed due to bonafide omission and inadvertent mistake of his counsel and it would not be justified to dismiss the appeal of the assessee in limine merely because there was delay in filing appeal due to mistake of his counsel. Hence, we reach to a fortified conclusion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain account. Reliance is placed on Mumbai ITAT judgement in case of Kishore H Galaiva vs ITO. 5. The amount invested is through banking channel. The bonafide of the transaction is further proved from the fact that the assessee paid brokerage of ₹ 44000/- and most importantly made payment of ₹ 440000/- for stamp papers. This shows the bonafide of the assessee of getting the property registered in his name. However, it was discovered that the vendor trust was required to obtain permission from the court for selling the property. Since the permission was received late, therefore the registry was finally done on 06.08.2010. It has been held in number of cases that where the assessee has actually made the investment but due to some reason either the construction of the house could not be completed or the sale deed could not be executed or the possession could not be given by the vendor, the deduction u/s 54 / 54F / 54B cannot be denied to the assessee. Reliance is placed on the Madras High Court judgement in the case of CIT vs Sardar Mai Kothari (302 ITR 286) and Jodhpur ITAT judgement in the case of Jagan Nath Singh Lodha vs ITO. 6. The Delhi Bench of ITAT in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-2007 - Whether due date for furnishing return of income as per section 139(1) is subject to extended period provided under sub-section (4) of section 139 and, if a person had not furnished return of previous year within time allowed under sub-section (1), assessee could file return under sub-section (4) before expiry of one year from end of relevant assessment year - Held, yes - Whether, therefore, section 54 deduction could not be denied to assessee on this count - Held, yes [in favour of assessee] 8. The Hon ble Mumbai Bench of ITAT in case of Kishore H. Galaiva v. ITO (2012) 24 taxmann. Com 11(Mum) in para 6.4 of the order held as under:- 6.4 The assessee has also made a point that the due date of filing of the return of income u/s 139(1) for the purpose of utilization of the amount for purchase/construction of residential house has to be construed with respect to the due date prescribed for filing of the return u/s 139(4) of the Act. The point made by the assessee is supported by the judgment of the Hon'ble Punjab and Haryana High Court in the case of Ms.Jagriti Aggarwal (supra).In the said case, the Hon'ble High Court observed that section 139(4) provides the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty on 21-12-1995 and earned capital gain - Subsequently, in May, 1996, he purchased residential property - Assessing Officer rejected assessee s claim of exemption under section 54 on ground that assessee had not complied with provisions of section 54(2) by not depositing unappropriated amount of capital gain in Capital Gains Deposit Scheme, 1988 within stipulated time of furnishing return of income-tax under section 139(1) - Assessee s case was that since return for assessment year 1996-97 could be furnished before expiry of one year from end of relevant assessment year or before completion of assessment, whichever is earlier, under sub-section (4) of section 139, he could fulfil requirement under section 54 for exemption of capital gain from being charged to income-tax on sale of property used for residence up to 30-3- 1998 - Whether assessee was entitled to claim benefit under section 54 on entire amount of capital gains - Held, yes 9. The head note of judgment in the case of Sanjeev Lai v CIT (SC) [2014] 46 taxmann.com 300 (SC) is as under:- Section 54, read with section 2(47), of the Income-tax Act, 1961 - Capital gains - Exemption of, profits or sale of residential ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), should be deposited in the scheme of deposit for capital gains. 5. The Ld. CIT(A) has held that the assessee does not fulfill the terms and conditions prescribed in section 54B(2) of the IT Act and did not deposit the unutilized capital gain in the capital gains deposit scheme before the date of filling of return for the relevant assessment year under section 139(1) of the IT Act. 6. Assessee has submitted a list of a number of case laws wherein the assessee retained the unutilized funds with him and there was no deposit at all in capital gain scheme, however, funds were somehow utilized for purchase/construction of new asset before extended period allowed by section 139(4). Accordingly, exemption u/s 54/54F was allowed. In none of these cases court had an occasion to deal with a situation that assessee deposited funds in capital gain scheme after due date specified u/s 139(1). 7. Reliance is made in the case of ITO vs. Smt. Rosamma Korah [2014] 45 taxmann.com 153 (Cochin - Trib.) in this case, assessee's claim of exemption under section 54F was denied on ground that assessee had not deposited unutilized capital gain account scheme within due date for filing return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years from the date of transfer of capital asset being land, then the assessee shall be entitled for deduction either on amount of capital gain or cost of purchased land, whichever is lesser. 15. In the present case, the assessee sold land on 27.12.2005 and entered into an agreement of purchase of agriculture land vide agreement dated 23.3.2007 i.e. well before the expiry of two years period from the sale of land out of which capital gain accrued to the assessee. The AO accepted the fact that the assessee entered into an agreement to purchase the land on 23.2.3007 and the AO has also not controverted the fact that the assessee used ₹ 26,84,000/- towards payment of sale consideration of land, registration, stamp duty and brokerage pertinent to purchase of land. However, the AO denied claim of deduction to the assessee u/s 54B of the Act by observing that there is no registered sale deed and execution of the same was contingent upon permission of the court under the provisions of the Indian Trust Act. Therefore, on the crucial date i.e. 27.12.2007 there was no concluded contract either for purchase or sale. The AO also alleged that as on 27.12.2007, the assessee was not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the section 54B(2) of the Act before the due date of filing of the return for the relevant assessment year u/s 139(1) of the Act, therefore the section 54B(1), which starts with the phrase subject to the provisions of sub section (2) does not provide time period of two years to the appellant to acquire the new asset/agricultural land. Thus it is held that the appellant does not fulfill the terms and conditions prescribed in section 54B(2) of the Act. Hence, the question of depositing the unutilized capital gains in the capital Gain deposit scheme before filing the return for the relevant assessment year u/s 139(1) of the Act does arise as the appellant has not utilized the gains in the acquisition of the new asset with in the due date though the AO erred in not giving such findings and hold that the new asset/agricultural land was required to be acquired with in the period of two years. Even for the sake of discussion, if it is admitted that the new asset/agricultural land was purchased on 23.02.2007, then also the exemption u/s 54B of the Act is not allowable at all in the relevant year as the appellant does not fulfill the terms and conditions prescribed in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Apex Court that where the assessee having executed an agreement to sell in respect of a house property, purchased a new residential property within one year from the date of agreement to sell and subsequently sale deed could not be executed within prescribed time due to an order passed by competent court, a valid transfer did take place within meaning of section 2(47) of the Act by even executing agreement to sell was to be granted by the assessee. In the order of the ITAT Jodhpur, as relied by the assessee, in the case of Jagan Nath Singh Lodha vs ITO (2005) 148 Taxman 1 (Jodhpur Tribunal), it was held that if the assessee had invested a sum then intention of the assessee from the very beginning was to purchase a property (flat) and when due to certain unavoidable circumstances, the contract could not materialize, it could not be said that there was any hanky panky on the part of the assessee to avoid payment of tax. Furthermore, in the case of Kishore H Galaiya vs ITO (2012) 14 Taxman.Com 11 (Mum), it was held by the ITAT Mumbai bench that booking of flat with a builder for purpose of claiming exemption u/s 54 of the Act, if construction is complete within three years, exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shown by the assessee as claim u/s 54B of the Act. When we logically analyse the requirement of eligible deduction u/s 54B of the Act, coupled with conduct of present assessee, we note that from the very beginning the intention of the assessee was to purchase agriculture land with a conscious decision and legal strategy to claim deduction u/s 54B of the Act and in pursuance to the same bonafide intention, the assessee entered into an agreement to purchase on 23.2.2007 and used ₹ 26,84,000/- out of amount of capital gains accrued to him from sale of agriculture land on 27.12.2005. The assessee also made an effort to get the sale deed registered in his name and paid ₹ 4,40,000/- for purchase of stamp duty and also paid ₹ 44,000/- as brokerage and total amount of ₹ 26,84,00/- used/invested was claimed u/s 54B of the Act. The assessee made all efforts and endeavours to ensure compliance of requirement of section 54B of the Act which require purchase of agriculture land within two years from the sale of asset out of which capital gains accrued to the assessee. In our humble opinion, we are in agreement with the ratio laid down by ITAT Mumbai in the case of Kish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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