TMI Blog2019 (8) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is entitle to claim benefit u/s 54, if the investment was made in purchase of new assets or deposit in account before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier under sub-s. (4) of s. 139. Contention of the ld CIT-DR that the second proviso to section 54E is also relevant, But this is not a case of compulsory acquisition where second proviso to section 54E is applicable similarly the provisions of section 54 and 54B are pari materia, but the provision of section 54E / 54EC are not pari materia with 54B / 54F. We found that the case law cited by the learned AR in the case of Chanchal Kumar Sircar Vs ITO [ 2012 (2) TMI 363 - ITAT KOLKATA] is applicable because of the circumstances in that case it was held that the period of limitation for making deposit or investment in new assets should be reckoned from the date of actual receipt of the consideration- If period is reckoned from date of agreement and receipt of part payment at the first instance, then it would lead to an impossible situation by asking assessee to invest money in specified asset before actual receipt of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) The Ld. CIT(A) failed to consider the genuine reasons which delayed the investment in the purchase of new asset and thereby erred in disallowing the deduction claimed by the assessee u/s 54B. (iii) The Ld. CIT(A) failed to consider that the agricultural land sold by assessee is not an asset u/s 2(14)(iii)(a) or (b) as these provisions stood then and therefore no capital gains are leviable. The agricultural land sold by the assessee is not urban but rural agricultural land. (iv) The Ld. CIT(A) failed to consider the fact that the agricultural land sold by the assessee is not an asset with reference to provisions of section 2(14)(iii)(a) or 2(14)(iii)(b) as these stood then and thus the provisions of capital gains are not attracted in the case in view of notification dated 06.01.1994. 3. Rival contentions have been heard and record perused. The brief facts of the case are that during the year under consideration, the assessee has shown her income from tuition and agriculture. Apart from it, the assessee has sold agricultural land for total consideration of ₹ 5,68,81,546/- and shown long term capital gain of ₹ 5,39,67,384/- and further claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 and the sale consideration was received in the form of advance for an amount of ₹ 21,00,000/- i.e. ₹ 7,00,000/- for each land and balance consideration was received vide cheques dated 06/08/2014 and 05/08/2014 which were cleared and received in the accounts on 12/08/2014, 20/08/2014 and 19/08/2014 for different amounts. It was further mentioned that these cheques have been recorded in the sale deeds executed for these lands. Thus, it was submitted that the consideration has been received in August, 2014 and further the agricultural lands have been purchased on 28/08/2014 through registered sale deeds, hence the deduction was allowable. Further reliance was placed on the provisions of Section 54E proviso 2 and section 54H. The AO rejected these submissions and concluded that since the net consideration was neither deposited in capital gain account balance till the due date for filing the return u/s 139(1) and investments in agricultural land were made on 28/08/2014 i.e. subsequent to the date of filing the return, thus the deduction u/s 54B was not allowable. In the present proceedings, the submissions as made in the assessment proceedings were reiterated. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. As is clear from the facts discussed earlier, the appellant has neither p deposited the amount in the capital gains scheme nor purchased the new asset, not only till the date for filing the return under section 139(1) but even the extended date under section 139(4). The agricultural lands are purchased only on 28.08.2014. The plea taken by the appellant that since the cheques mentioned in the sale deed were post dated and so the consideration has actually been received later and so these conditions could not be fulfilled and appellant has invested the amounts as soon as they were received, needs to be rejected. The AR has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot do anything because capital gain can be charged u/s 45 only on transfer of capital asset. We do not think that this kind of interpretation can be made while interpreting Section 45 r.w.s. 48 by invoking the rule that there cannot be any tax on notional receipt. In view of the facts as above and judicial decision the appellant has clearly not fulfilled the requirements of the provisions of 54B and the deduction disallowed by the AO is confirmed. Ground of appeal is dismissed. 5. Now the assessee is in further appeal before us. The ld AR of the assessee submitted that in this case the sale consideration was received at ₹ 7,00,000/- cash in each case on 09.02.2013, 11.02.2013 12.02.2013. Thus a sum of ₹ 21,00,000/- was received in February 2013. Balance amount was received through cheques and stands accounted for in the bank account of the assessee with Oriental Bank of Commerce in August-2014. Apparently, the sale conditions were such that post-dated cheques were received at the time of sale on 06.02.2013 and the amount of ₹ 5,47,81,456/- (56881546-2100000) was received in August 2014. Soon on receipt of this sale consideration of ₹ 5,47,81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise also on ground of genuine hardship and special features of the case the Learned Assessing Officer should have allowed deduction as claimed by the assessee. The Assessing Officer should have considered the fact that when the sales consideration itself has been received late, how could the assessee be expected to make investments prior to receipt of the sales consideration. It is only when the money is received in hands that assessee could make investments. In support of above proposition he relied upon the following case laws: (i) Chanchal Kumar Sircar vs. INCOME TAX OFFICER (KOLKATA TRIBUNAL) (2012) 16 ITR 0091, (2012) 50 SOT 0289 (ii) S. GOPAL REDDY vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF ANDHRA PRADESH) (1990) 181 ITR 0378 (iii) COMMISSIONER OF INCOME TAX vs. CELLO PLAST HIGH COURT OF BOMBAY (2012) 76 DTR 0439) (iv) RAM AGARWAL vs. JOINT COMMISSIONER OF INCOME TAX (BOMBAY TRIBUNAL) (2002) 81 ITD 0163 (v) COMMISSIONER OF INCOME TAX vs. AKBAR ALI DHALA (HIGH COURT OF MADRAS) (2014) 89 CCH 0209 Chen HC/ 226 Taxman 254 (vi) ACIT vs. KAMLAKAR MOGHA (HIGH COURT OF BOMBAY) (2015) 125 DTR 0273 (Bom), 9. In the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of tax is to secure the revenue for the development of the Country and not to charge assessee more tax than that which is due and payable by the assessee. It is in aforesaid circumstances that as far back as in 11/04/1955 the Central Board of Direct Tax had issued a circular directing AO not to take advantage of assessee's ignorance and/or mistake. Therefore the Circular should always be borne in mind by the officers of the respondent- revenue while administering the said Act. (ii) STREAM INTERNATIONAL SERVICES PVT. LTD. vs. ASSISTANT DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) (2013) 023 ITR 0070 Having heard the rival submissions and perused the relevant material on record, we find that the purpose of income tax assessment is to determine correct income of the assessee. As the Revenue cannot allow an assessee to depress his income, in the same manner, it is not permissible to the Revenue to take advantage of the ignorance or mistake of the assessee in offering more than due income. It is trite that no tax can be collected except as per law. Circular No. 14(XI-35) of 1955 dated 1.4.1955 cautions the Officers of the Department from taking advantage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTR (Guj) 169 CIT(A) and ITAT are competent to entertain any laful claimed which the assessee failed to claim in the return before the Assessing Officer. (v) Anju Mittal v/s ACIT. (ITAT JP) - ITA 201/JP/2014 dt 30.04.15 (vi) Keshavji Ramji v/s CIT (SC) 183 ITR 1 (vii) J.P. Boder Co. v/s CBDT (SC) 223 ITR 271 (viii) CIT v/s Hero Cycles (SC) 228 ITR 463 (ix) CIT v/s National Thermal Power Co. Ltd. (SC) 157 CTR 249 (x) C.I.T v/s Ramco International 332 ITR 306 (P H) (xi) C.I.T v/s Bhaskar Mitter (Cal) 73 TAXMAN 437 (xii) C.I.T v/s Rajasthan Fasteners Pvt. Ltd. (Raj) 100 DTR 152 (xiii) Wipro Vs. CIT 282 CTR 346 (xiv) CIT Vs. Prithvi Brokers and Share Holders Pvt. Ltd. (2012) 252 CTR 151 (Bom) 10. The ld AR has also drawn our attention towards the CBDT CIRCULAR No. 014 (XL-35) and submitted that the Circular no. 014 (XL-35) issued by the Board as back as 11th April 1955 wherein the Board has impressed upon the Officers of the Department that no advantage should be taken on assessee s ignorance to collect more than out of him than is legitimately due from him. It has been specifically mentioned in the circular that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion from tax must be granted whether claimed or not; the other relief about substitution, if not time barred, must be brought to the notice of a taxpayer. (d) Sec. 26A : The benefit to be obtained by registration should be explained in appropriate cases. Where an application for registration presented by a firm is found defective, the officer should point out the defect to it and give it an opportunity to present a proper application. (e) Sec. 33A : Cases in which the ITO or the Asstt. Commissioner thinks that an assessment should be revised, must be brought to the notice of the CIT. (f) Sec. 35 : Mistakes should be rectified as soon as they are discovered without waiting for an assessee to point them out. (g) Sec. 60(2) : Cases where relief can properly be given under this sub-section should be reported to the Board. 11. The ld AR has also drawn our attention towards the provisions of section 2(14)(iii) and submitted that the provisions of section 2(14)(iii) as these stood for the relevant Assessment Year 2013-14 are quoted below:- Section 2(14)(iii)(a) and 2(14)(iii)(b) - [(iii) agricultural land46 in India, not being land situate- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every local authority is not a municipality. Accordingly areas lying within the jurisdiction of any township etc. cannot be said to be areas lying within the jurisdiction of a municipality. Hence the land situated not in the jurisdiction of a municipality cannot be treated as capital asset. . The claim of the assessee is that the land sold by him was agricultural land being not situate in the jurisdiction of a Municipality having population not less than 10000. The assessee submitted that the land sold by her was agricultural land being situate under the jurisdiction of Gram Panchayat Muhana which is not Municipality in any way and also have population less than 10000. These facts remained unconsidered by the Learned Assessing Officer. The above certificates very clearly states that the agricultural land was in the jurisdiction of Gram Panchayat Muhana. It has also been specifically mentioned in both the certificates that the agricultural land did not fall under the jurisdiction and administrative control of Municipality or Council. Thus the conditions of section 2(14)(iii)(a) are fulfilled that the agricultural land is not in the jurisdiction of a Municipality not to speak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the proposed amendment will be that capital gains arising from the transfer of agricultural land situated in municipal or other urban areas or notified adjoining areas will be liable to income-tax for the asst. yr. 1970-71 and subsequent years. However, in view of the proposed amendment to s. 47 of the IT Act, under cl. 11 of the Bill, capital gains arising from transfers of such land effected prior to 1st March, 1970, will be excluded from taxation. Agricultural land which is situated outside such municipal or other urban areas or the notified adjoining areas will, however, continue to be excluded from the term 'capital asset' and no capital gains tax will be payable with reference to the transfer of such agricultural land, as hitherto. ((1970) 75 ITR (St) 69) (B) Further in the memorandum explaining the provision of this Finance Bill it was explained that Presently, capital gains arising from the transfer of a capital asset are chargeable to income-tax. The definition of 'capital asset' excludes from its scope, inter alia, agricultural land in India. Accordingly, no liability to tax arises on gains derived from transfer of agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not an asset u/s 2(14) although it was overall under the control of Delhi Municipal Corporation. The case of the assesse is also that the land situate at Village Borkhandi Khurd falling under the Gram Panchayat of Sohela, Tehsil Peeplu, District Tonk The land was thus under the control of Gram Panchayat Act and not under the Administrative Control of Tonk Municipality. The Hon'ble ITAT has held as under: - From a careful reading of the idea behind the amendment introduced by the Finance Act, 1970 one thing appears to be clear, namely, that the definition of 'capital asset' was enlarged so as to bring within its fold some lands, which are factually agricultural lands, because of the potentiality which such lands possessed in view of the urbanisation. It is well known that the cities in India are growing fast. Those lands which are adjacent to the city areas, which were essentially rural areas, are gradually getting urbanised with the result that the value of such proportion have been going up. It is also well known that the value of urban lands is much higher than the value of lands in the rural areas. The Parliament wanted to bring the surplus arising out of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by separate local self-government, they cannot be treated as a part of municipality. Municipality by its very nature envisages a local urban area. Municipality is nothing but a body for local self-government of an urban area. One cannot conceive of a municipality for a rural area. At the cost of repetition, we may state that the word 'municipality' occurring in s. 2(14) (iii) (a) must be related to the local self-government body for urban areas. Therefore, the area falling within the urban areas of the local self-governing body would be caught within the mischief of s. 2(14) (iii) (a). For an area where there is no municipality and there is only a Panchayat (local self-government for rural areas) s. 2(14) (iii) (a) is out of place. .. . 16. For all the above reasons, we hold that the provisions of s. 2(14) (ii) (a) are not applicable to the rural areas of Union territory of Delhi and Nangal Dewat being a part of the rural area, the agricultural lands therein are outside the definition of capital asset. The capital gains, therefore, cannot be charged on the surplus arising out of the transfer of the lands in the village Nangal Dewat. The order of the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se laws: Sr. no. Decision Remarks/findings 1 DCIT vs. Capital Area Bank Ltd. 123 TTJ 918 When the land for all administrative controls falls within the jurisdiction of Phagwada municipality it cannot be considered within the 8 km of municipal limit of Jalandhar. Urbanisation of an area, then, falls within the exclusive domain of the concerned municipality exercising regulatory as well as administrative control over such area. It is such concerned municipality, id est, the parent municipality or jurisdictional municipality of the area, which has to carry out the urbanisation of the area. Areas situate within the local limits of a Gram Panchayat are govered bylaws applicable to such area and not by any other municipality. 2 K. Parameshwaran vs. Income Tax Officer 2 ITD 371 It is clear from what we have set out that the concept of municipalities relates to urban local self-government and the concept of panchayat to rural self-government. Both these concepts which are mutually exclusive were well-known an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds falling within said town panchayat would not fall within municipality, and hence is not a capital asset as per the definition under section 2(14)(iii). 5 Income Tax Officer vs. Uppala Bhatkavatsala Rao 12 Taxman 40 Land situate in a gram panchayat is not in a municipality with the meaning of Andrapradesh Municipality Act as such land cannot be treated as capital asset. 6 CIT vs. Charan Singh and Nafe Singh 101 ITR 46 (Del) The decision clearly laid down that although the land was situate in the overall jurisdiction of Delhi Municipality but was governed by Gaon Sabha Nagal Dewat having population less than 10000 and hence the same was not an asset. The village was under the Administrative Control of Gaon Sabha Nagal Dewat and hence it was rural agricultural land. The crux of the matter is that once the agricultural land is found to be rural agricultural the provisions of section 2(14)(iii) (a) or (b) are not applicable. In the case of the assessee the land sold was rural agricultural land. The learned A.O. erred in applying the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette 47 ;] So far as provisions of section 2(14)(iii)(b) are concerned it is submitted that these provisions require the agricultural land to situate within 8 km of the local limits of the municipality as notified by Central Govt. It is submitted that in this regard the Central Govt. issued notification on 06.01.1994 and thereafter there has been no notification on the issue. A copy of this notification dated 06.01.1994 is available on paper book cited supra. As per this notification explanation 2 the local limits of the municipality shall be reckoned as on the date of the unification i.e. 06.01.1994. In other words the lands situate within 8 km of the municipal limits as on 06.01.1994 shall be covered under the provisions of section 2(14)(iii)(b). It is submitted that as on 06.01.1994 the land of the assessee was not within the distance of 8 km. from the municipal limits. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay High court in the case of commissioner of Income Tax Nagpur Vs . Ramesh Chandra Chordia (2015) 57 taxmann.com 394 (Bombay) and Punjab and Haryana High court in the case of Commissioner of Income Tax II, Ludhiana Vs, Satinder Pal Singh (2010) 188 Taxman 54(Punj Har.) The Hon'ble Tribunal has held that distance of 8 km shall be of municipal limit as on the date of 06.01.1994. 14. On the other hand, the ld CIT-DR has vehemently supported the orders of the authorities below and contended that for claiming deduction u/s 54B, the new agriculture lands should have been purchased on or before 05.08.2013 i.e. the date of filing of ROI and if the sale consideration is not used for purchase of agriculture land, then the same should have been deposited in the capital gains deposit account scheme. It is an undisputed fact that no such deposits were made in that scheme by the assessee. 15. Reliance was placed by the ld. CIT-DR on the decision of the Hon'ble High Court of Bombay in the judgement dated 18.08.2016 in the case of Humayun Suleman Merchant Vs CCIT [2016] 73 taxmann.com 2 (Bombay) considered a number of decisions on the issue including the case of CIT vs. K. Ramac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. In this case admittedly the entire amount of capital gains on sale of asset which is not utilized has not been deposited in a specified bank account before due date of filing of return under section 139(1). Therefore, where the amounts of capital gains is utilized before filing of the return of income in purchase/construction of a residential house, then the benefit of exemption under section 54F is available, (emphasis supplied) It is an undisputed position that except ₹ 35 lakhs, the balance of the amounts subject to capital gains tax has not been utilized before date of furnishing of return of income, i.e., 4-11- 1996 under section 139.Therefore, on plain interpretation of section 54F, it appears that the impugned order of the Tribunal cannot be faulted. [Para 6(i)] The mandate of section 54F(4) is clear that amount which has not been utilized in construction and/or purchase of property before filing the return of income, must necessarily be deposited in an account duly notified by the Central Government, so as to be exempted. [Para 6(o)] Further, section 54F(4) specifically provides that the amounts which have not been invested either in purchase/construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs was earned - Assessee purchased an under construction residential property for total consideration of ₹ 98 lakhs and claimed deduction under section 54F - Assessee paid ₹ 52.47 lakhs out of consideration on sale of shares before due date of filing of return - Assessee did not deposit balance net consideration on sale of shares with capital gain account maintained with bank as stipulated under section 54F(4) before filing of return - Whether assessee would be entitled to exemption of amount which was invested in acquiring new residential property till date of filing of return of income - Held, yes [Para 9]. 17. Reliance was also placed on by the ld. CIT-DR the decision in the case of Shri Hariharan Ramasubramanian Vs ITO in I.T.A. No. 1616/Mum/2017 dated 29.08.2018, it has been held by the Hon'ble Mumbai Tribunal that: 6 We have considered rival contention and perused the material on record including cited case laws. The facts of the case are elaborately discussed by us in preceding para's of this order which are not repeated again. The dispute between rival parties is in narrow compass and the Hon'ble Bombay High Court in Humayun Suleman Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of filing of return of income under s.139(1) of the Act. Thus, the amount of capital gains which is not utilized by the assessee for purchase or construction of new house before the date of furnishing of return of income ought to be deposited by him under the capital gains accounts scheme before the due date of furnishing the return. 9.1 In the instant case, the assessee claims to have utilized ₹ 15 lakhs (50% of ₹ 30 lakhs invested towards purchase of new residential House) before the due date of filing of return of income. The assessee simultaneously claims that another ₹ 5 lakhs (50% of ₹ 10 lakhs similarly invested) has been invested in the residential property before the actual filing of the return on 25/08/2011 i.e. within the time limit provided under s.139(4) of the Act. 9.2 Section 54(2) enjoins that the capital gain is required to be appropriated by the assessee towards purchase of new asset before furnishing of return of income under s. 139 of the Act. Alternatively, in the event of non-utilization of capital gains towards purchase of new asset, the assessee is required to deposit the capital gains in specified bank account before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when an assessee furnishes return subsequent to due date of filing return under s.139(1) but within the extended time limit under s,139(4), the benefit of investment made upto the date of furnishing return of income under 139(4) cannot be denied on such beneficial construction. However, any investment made after the furnishing of return of income but before extended date available under s.139(4) would not receive beneficial construction in view of unambiguous and express provision of s.54(2) of the Act. The suggestion on behalf of the assessee on eligibility of payments subsequent to furnishing of return of income is not aligned with and militates against the plain provision of law certified in s.54(2) of the Act. 9.4 In the light of the mandate of section 54(2) as noted above, we shall now turn to the facts of the case. It is the case of the assessee that ₹ 40 lakhs in aggregate has been utilized towards purchase of new asset before furnishing the return of income under s.139(4) of the Act. The assessee claims to have invested ₹ 20 lakhs (being 1A of her share) for purchase of new asset. However, we notice that assessee appears to have shown a total investment & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed payments in August, 2014. It is pertinent to mention here that the cheques as appearing in the sale deeds of land sold by the assessee were deposited in the bank account of the assessee in August, 2014 and the assessee did not submit any reason for not depositing these cheques on an earlier date or receiving the post dated cheques. Thus, the assessee has to blame itself and not the department. Reliance is placed on the decision of Hon'ble ITAT, Chandigarh in the case of Hussan Lai Puri Vs ITO [2013] 38 taxmann.com 7 (Chandigarh), which has been discussed by the Ld. CIT(A) on page 12 of her appellate order. 20. It was further contended by the ld CIT-DR that the Ld. AR has relied upon a number of judicial pronouncements, which are related to exemption u/s 54E/54EC, whereas in the instant case, exemption is claimed u/s 54B. It is to be noted that sections 54E/54EC and 54B operate in altogether different spheres. In section 54E/54EC, the investment in the bonds are to be made within 6 months from the date of transfer of capital asset, whereas u/s 54B, the agriculture land is to be purchased before filing of ROI. Further, there is no concept of deposit in capital gains deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was extended by the Hon'ble Court as the relevant bonds were not available during the period of six months from the date of transfer of the capital asset. The case of Ram Agarwal Vs. JCIT is relating to Sec. 54, however, in the said case, the deposit in the specified scheme could not be made on 31.08.1995, being the last date on account of bank strike and consequently the deposit was made on 01.09.1995, which was allowed by the Hon'ble Tribunal. In the case of CIT Vs. Akhbar AM Dhala and ACIT Vs. Kamlakar Mogha, the issues were relating to sec. 54EC and the investment in the bonds was allowed beyond the period of 6 months as the relevant bonds were not available in part of relevant period. 23. As per the ld CIT-DR, the issue is also covered by the decision of ITAT, Special Bench in the case of Jyotindra H Shodhan Vs ITO (2003) 87 ITD 312 (Ahd) wherein, it has been held by the Special Bench that: The question to be decided is whether for the purpose of allowing deduction under section 54E, the period of six months is to be reckoned from the date of transfer or from the date of final receipt of sale consideration. Separate provisions have been made in the Act f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot acceptable. [Para 17] The benefit of section 54E(1) was, therefore, not allowable to the assessee. The appeal of the assessee was to be dismissed. [Paras 18 and 19] The above decision of Special Bench was affirmed by the Hon'ble Gujarat High Court in the case of Jyotindra H. Shodhan Vs ITO [2015] 54 taxmann.com 342 (Gujarat), wherein it has been held that: 6. We have heard learned advocate for the parties and perused the material on record. In our view, the contention of learned advocate for the appellant-assessee is misconceived inasmuch as the six months' period will have to be counted when sale-deed was executed i.e. from 07.08.1982. Therefore, we are of the opinion that the contention of learned advocate for the appellant-assessee is not acceptable. 7. Further, the Tribunal in paragraph No.17 of its order has observed as under:- 17. From the aforesaid discussion, it is very clear that an assessee who desired to avail benefit of section 54E must strictly satisfy all those conditions which are provided therein. One of the conditions of the section is that assessee is to deposit whole or any part of the net consideration in any specified as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for the relevant periods. Further, the said document does not reflect raising of any crops on the said land during the period as required by the provisions of section 54B. It is humbly submitted that in the interest of justice, this aspect of the matter may kindly be considered by the Hon'ble Tribunal. In view of the above submission, the ld. CIT-DR has contended that the orders of the lower authorities for declining the claim of deduction U/s 54B of the Act may be upheld. 25. We have considered the rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld. AR and ld. DR during the course of hearing before us in the context of factual matrix of the case. From the record we found that during the year under consideration the assessee had sold agricultural land as under: - Particulars of lands Date of sale Value Details of consideration received Agricultural land at Munaha, Sanganer Khasra No. 1168 06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2767957 Capital gain 54113589 Deduction u/s 54B 55000000 Deduction 54113589 Purchase of agricultural land on Capital gain Nil However during the course of assessment proceedings the Assessing Officer disregarded the submissions of the assessee that she could not invest the sale consideration by the due date u/s 139(1) i.e. 31.07.2013 for filing return of income as the funds were stipulated to be received in August-2014 as such there was no question for investing the same earlier by 31.07.2013. In view of this the Assessing Officer disregarded the claim of the assessee and made addition accordingly. However Ld. CIT(A) was conscious that the sale proceeds could be invested in extended period available for filing of return u/s 139(4). It is in the background of this that the Ld. CIT(A) has observed on page 11 of the appellate order that the appellant has neither deposited t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ather-in-law on 2nd Jan, 2007, and filed her return on 28th March, 2007, i.e., before the extended due date of filing of return under s. 139(4) for the relevant asst. yr. 2006-07-Therefore, assessee is entitled to exemption under s. 54 26. Similarly in the case of Mohan Singh vs. Assistant Commissioner of Income Tax, (2015) 173 TTJ 634 (Chd): In the case of the assessee, the period under section 139(4) would be expiring on 31.03,.2011. Since the assessee made deposit of ₹ 50 lacs under Capital Gain Accounts Scheme on 14.10.2010. Therefore, it was deposited within the period prescribed under section 139(4) of the Act. Therefore, assessee would be entitled for exemption under section 54B of the Income Tax Act in respect of ₹ 50 lacs deposited with Punjab National Bank. This ground of appeal of the assessee is accordingly, allowed. The Assessing Officer is directed to give relief to the assessee accordingly. (ii) CIT vs. Rajesh Kumar Jalan (2006) 286 ITR 0274 (ITAT Gauhati) From a plain reading of sub-s. (2) of s. 54, it is clear that only s. 139 is mentioned in s. 54(2) in the context that the un-utilized portion of the capital gain on the sale of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heques as mentioned in the three sale deeds were realized only in August 2014 as the cheques tendered against sales consideration were post-dated. Return was filed well within time on 05.08.2013. In view of this it is clear that the assessee was not in a position to invest in the new asset that agricultural land by 05.08.2013 as the sales consideration itself was received in August 2014 and immediately thereafter in August 2014 itself assessee made investment in the purchase of agricultural land. From the record we found that soon on realization of sales consideration the assessee had invested in the purchase of agricultural land. Thus the spirit of law stands complied with. The Assessing Officer should have considered the fact that when the sales consideration itself has been received late, how could the assessee be expected to make investments prior to receipt of the sales consideration. It is only when the money is received in hands that assessee could make investments. In view of this when the spirit of law stands complied with, the deduction claimed by the assessee u/s 54B should have been allowed. 29. For this purpose, reliance may be placed on the following judicial prono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee-Held, a person cannot be expected to make the investment on the first possible date on which the bonds were made available after the expiry of the six months period-During the period the bonds were unavailable a person is likely to invest elsewhere-To expect him not to do so would be unjust for reasons too obvious to state-Considering that the bonds were not available for such a long period, an extension of merely nine days is extremely reasonable in the present facts-Section 54EC having given the respondent a choice of investing in bonds, revenue cannot insist that the respondent ought to have invested in the bonds of the National Highway Authority-Revenue s appeal dismissed In this case also investment within the statutory period was beyond the control of the assessee as the bonds were not available and hence delayed investment in the bonds was accepted. In the case of the assessee also investment within statutory period was beyond his control. Hence the ratio of the case is applicable. (iv) RAM AGARWAL vs. JOINT COMMISSIONER OF INCOME TAX (BOMBAY TRIBUNAL) (2002) 81 ITD 0163 Capital gains-Exemption under s. 54F-Time-limit for making deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs after date of such transfer, in long-term specified asset-There is no hard and fast rule that assessee should invest on a particular date within six months period specified in said provision-More so when assessee is entitled to invest in any such long term specified asset specified in Explanation (b) to Section 54EC(3) that would be most beneficial to him-Assessee will be entitled to exercise his option during entire period of six months-Thus assessee can wait till last date to see whether any bond that is profitable to him is issued/available in market-Fact that REC Bonds were not available for a period of 51 days shows that prejudice was caused to assessee, as he will not be able to exercise right any time during entire period of six months-Non availability of bonds from 1.4.2007 to 1.7.2007, creates an artificial cut-off period contrary to Section 54EC- Statutory benefit granted u/s 54EC cannot be curtailed on ground that said option should have been exercised in a period earlier to six months, even though such right was available to assessee for a period of six months as a whole, because assessee cannot be expected to visualize unforeseen eventualities and do the impossible- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o concept of deposit in capital gains deposit account scheme u/s 54E/54EC, whereas, u/s 54, 54B, 54F, if the amount of capital gains is not invested in the purchase of land before filing of ROI, then the same has to be deposited in capital gains deposit account scheme. In this regard, we observe that the contention of the learned DR is not acceptable on the ground that the amount of capital gain can be invested in purchase of land only on receipt of the sale consideration and the intention of the legislature is that the amount of sale consideration should not be utilized otherwise other than purchase of agriculture land and in the instant case the assessee has invested the wholesale consideration in purchase of another agriculture land within two days which is clear from the bank statement of the assessee. The period of six month or condition of investment prior to the filing of ROI is applicable only in the cases where sale consideration has been received before filing of ROI. When the sales consideration itself was received after filing of ROI then the case law relied upon by the AR is squarely applicable in the instant case. Specially the case of CIT Vs Jagriti Aggarwal (High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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