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TMI Blog2025 (5) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) has erred in law and on facts in not allowing deduction u/s 54B of Rs. 1,49,52,000/- claimed by assessee. 5. That the learned CIT(A) has erred in law and on facts in not allowing deduction u/s 54F of Rs. 35,00,000/- claimed by assessee. 6. That the learned CIT(A) has erred on facts in confirming the additions of Rs. 2,49,21,043/- made by the AO by observing that assessee had not filed any details during appellate proceedings. 7. That the learned CIT(A) has erred in law and on facts in passing the order u/s 250 without adherence to principles of natural justice. 8. That the appellant craves leave to add, alter, amend or to substitute the above grounds of appeal either before or at the time of hearing of case." 3. Briefly the facts of the case are that the assessment in this case was completed under section 144 r.w.s 147 of the Act vide order dt. 13/03/2015 wherein the AO brought to tax long term capital gains on sale of land amounting to Rs. 2,49,21,043/- in the hands of the assessee. In this case, it is noted that the AO had issued two notices under section 148 of the Act. In terms of reasons recorded before issuance of the first notice under section 148 on 21/23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of valid return of income having ever been filed by the assessee. 5. Against the said findings and the directions of the Ld. CIT(A), the assessee is in appeal before us. 6. During the course of hearing, the Ld. AR submitted that broadly two issues are involved in the present case. Firstly, the incorrect computation of cost of acquisition by way of fair market value of land as on 01/04/1981 and secondly, denial of claim of deduction under section 54B of the Act. In this regard, it was submitted that the assessee has claimed index cost of acquisition of Rs. 1,10,14,333/- whereas the AO has allowed the index cost of acquisition only to the extent of Rs. 641,457/- and secondly, as against the claim of deduction of Rs. 1,49,52,000/- under section 54B, the whole of the claim has been denied by the Ld. CIT(A). 6.1 Firstly, regarding the cost of acquisition, it was submitted that the AO has taken the cost of acquisition as on 01/04/1981 on the basis of sale deed dt. 27/06/1981 in Village Jaroda, Dist. Yamuna Nagar which was supplied by the Sub Registrar, Jagadhri. It was submitted that the AO has not explained why such deed is indicative of FMV of land as on 01/04/1981 even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old agricultural land for Rs. 30,93,063/- upon which AO has computed long term capital gain by adopting indexed cost of acquisition at Rs. 77,616/- resulting into capital gain of Rs. 30,15,450/-. The AO has made the valuation as on 01.04.1981 on the basis of sale deed no. 2354 dt. 27/06/1981 as per which 4 kanal, 9 marla of land was sold for Rs. 11,000/ -. On such basis the AO computed the cost of the land sold by the appellant (6 kanal, 1 marla) at Rs. 14,955/-. During the appellate proceedings it has been explained that the appellant is a farmer and he has invested the sale consideration in the purchase of new agricultural land and thus, was eligible for deduction u/s 54B of the Act. Further, it was explained that the AO has applied rates of land sold situated in village- Jaroda which was about 6.7 km away from the land sold by the appellant. The appellant has given particulars of comparable lands acquired by the Ministry of Defence for Rs. 1,91,000/- measuring (04 kanal, 10 marla) situated in village-Bhatauli whose distance was less. On such basis, the value of land sold by the appellant as on 01.04.1981 worked out for Rs. 2,56,789/-(index cost of acquisition at Rs. 13,32,734/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere duly submitted before the Ld. CIT(A) and it was prayed that deduction under section 54B should be allowed on such purchase of agriculture land while computing the income by way of long term capital gains. It was submitted that the ld CIT(A) however has denied such claim holding that the same cannot be entertained in absence of income tax return being filed by the assessee. It was submitted that such observation by the Ld. CIT(A) cannot be sustained as there is no such provision in the Act as applicable for A.Y. 2007-08 which restricted claim under section 54B in absence of filing of the return of income. It was submitted that such restriction has only been provided by way of amendment to 6th proviso to Section 139 by Finance Act No. 2 of 2019 and such amendment has been made effective prospectively from A.Y. 2020-21 onwards. Further, reliance was placed on the decision of Coordinate Delhi Bench in case of Mayur Batra (ITA No. 1002/Del/2018), Mumbai Bench decision in case of Prashant Chandra (ITA No. 619/Mum/2023), and Bangalore Bench decision in case of Thimme Gowda Shekha (ITA No. 1080/Bang/2022). It was accordingly submitted that the assessee be allowed the necessary relief u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the assessee's land is situated at much further distance than Village Bhatauli. It was further submitted that the Ld. CIT(A), Panchkula in its order dt. 13/10/2016 in the case of Shri Kuldeep Singh has considered the cost of acquisition of land situated in Village Ratauli as on 01/04/1981 @ 85000/- per acre on the basis of valuation report of the approved valuer and the same should be considered as both villages Kansapur and Ratauli are situated closely and there is no much difference / distance between two and it would be appropriate to adopt the cost of acquisition of land taking into consideration the valuation report in respect of land situated in Village Ratauli @ 85,000/- per acre as against the assessee's claim of 3,40,000/- per acre in respect of land situated at Village Bhatauli. 10. Further regarding the claim of deduction under section 54B of the Act, referring to the Remand Report submitted by the AO during the appellate proceedings, the Ld. DR submitted that the assessee has furnished a list comprising of 17 pieces of new agricultural land purchased for total purchase consideration of Rs. 1,49,52,000/-. The assessee has also furnished copies of registered purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the village in which land is sold is app. 6.7 Kms whereas the aerial distance is app. 2.9 Kms and the assessee has relied upon the value of land sold in Bhatauli Village which is 6.7 Kms by road but the aerial distance as provided u/s 2(14)(iii)(b) is only 2.4 Kms and copies of Google Maps as downloaded from the internet were duly submitted before the lower authorities. It was accordingly submitted that the value of land as on 01.04.1981 as requested by the assessee may kindly be accepted especially in light of the fact that the same has been accepted in case of the assessee's son on principle of parity. 12. As regards the claim of deduction under section 54B, it was submitted that out of 17 pieces of agricultural land purchased by the assessee, the AO's objection is restricted to two plots valuing at Rs 25,50,000/- and Rs 11,20,000/- which were purchased by the assessee in the name of his wife. Therefore, as far as the remaining 15 pieces of agricultural land, there is no dispute that the assessee is eligible for claim of deduction under section 54B of the Act. As far as the land purchased in the name of the wife of the assessee is concerned, it was submitted that the wife of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Defence, Government of India had purchased 4 Kanal 10 Marla land on 03/11/1981 stating that the assessee's land is situated in Village Kansapur at much farther distance than the Village Bhatauli. The AO in the remand report has however proposed to adopt the fair market value of land on the basis of land situated at village Ratauli in the case of another assessee, Sh. Kuldeep Singh as approved by the ld CIT (Appeals), Pankchula in his order dated 13/10/2016 stating that both the Villages Kansapur and Ratauli are situated closely and there is no much distance/difference between the both. We therefore, have a situation where the land which has been sold and whose fair market value has to be determined is situated at village Kansapur and since, there is no material available on record as to the fair market value of land at Village Kansapur, the AO has proposed to adopt the fair market value of land situated at village Ratauli where as the assessee's contention is that the fair market value of land situated at Village Bhatauli be considered. The reasoning adopted by the AO is that Villages Kansapur and Ratauli are situated closely and there is no much distance/difference betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a claim was made for the first time during the appellate proceedings before the ld CIT(A) and necessary documentation in support thereof were submitted and remand report was called from the AO. Being a legal claim, there is nothing under law for the impugned assessment year 2007-08 which prevented the ld CIT(A) in examining such a claim more so where the AO has not objected to such a claim in his remand report except where the agriculture land has been purchased in two instances in the name of wife of the assessee. We refer to remand report dated 10/05/2018 submitted by the AO during the appellate proceedings and the relevant contents thereof read as under: "As regards the assessee's claim with regard to deduction u/s 54B of the Income Tax Act, 1961, the assessee has furnished a list comprising of 17 pieces of new agricultural land purchased for total purchase consideration of Rs. 1,49,52,000/-. The assessee has also furnished copies of registered purchase deeds as documentary evidence. However, on examining the registered purchase deeds dated 13.02.2017 and 06.02.2017 as mentioned at Sr. No. '16' & '17' of the said list for purchase of land for purchase consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival contentions. Here it is relevant to note that the legal proposition so arrived at in these cases have been arrived at taking into consideration relevant facts and circumstances of the respective cases. It is therefore essential to set out the facts of the present case as emerging from the records before I examine the applicability of these authorities in the context of the said facts. 14. In the present case, the sequence of events and relevant dates are as follows. The assessee executed a will on 10/04/2007 where on his death, it has been stated that all his properties will devolve on his grandson. The sale deed for transfer of original agriculture land was executed by the assessee on 11/11/2009. The fresh purchase of another agriculture land was done through agreement to sell by the assessee on 10/01/2020 and it is clear that the consideration for purchase of the agriculture land was paid by the assessee out of sale proceeds of the original agriculture land. The assessee thereafter expired on 17/06/2010. The notice u/s 148 was issued by the AO in name of legal heir, the grandson of the assessee on 24/03/2017, thereafter the return in response to the said notice was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retation to the word "assessee" as that would frustrate the object of granting the exemption and considering the fact that the very same assessee immediately after the sale of the house entered into an agreement for purchasing of another house and paid a sum of Rs. 1,000/- as earnest money and subsequently the legal representative completed the transaction within a period of one year from the date of the death of the deceased, it was held that the sale and purchase are two links in the same chain and accordingly matter was decided in favour of the assessee and while deciding so, the Hon'ble High Court relied on the earlier decision of Hon'ble Madras High Court in the case of C.V. Ramanathan Vs. CIT [1980] 125 ITR 191 and it would be equally relevant to refer to the said decision of the Hon'ble Madras High Court. 16. In case of C.V. Ramanathan Vs. CIT (supra), the question for consideration before the Hon'ble Madras High Court was whether the Tribunal was right in holding that the provision of Section 54 of the Act are not applicable to the assessment made on the legal heirs of the deceased assessee. In that case, late Shri C.V. Venkateswaran executed a will in July 1966 wherein h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive, he had not sold the property though he may have acquired a new one and rejected the said contention as mere delimma holding that scheme of taxation of capital gains did not expressly stipulate that the vendor and the purchaser must be same. The benefit of section 54 was accordingly granted to the legal heir in whose hands the assessment was framed by the AO. 17. In the aforesaid two cases, we find that the issue for consideration before the Hon'ble High Courts was claim of deduction under section 54 in the hands of the legal representative on behalf of the deceased assessee where the subsequent transaction of purchase of new property was initiated by the late assessee during his life time for the purposes of his own residence however on account of death of the assessee, the said transaction was subsequently completed by and in the name of the legal representative. In that factual background, it was held that the word "assessee must be given a wide and liberal interpretation so as to include his legal heirs and the legal heirs cannot be differentiated from the assessee and where he was liable to pay the tax, he cannot be denied the benefit of section 54 of the Act. In the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial property was purchased by the assessee jointly with her husband, the Hon'ble Karnataka High Court held that where the entire investment has flown from the assessee and no consideration has flown from her husband, merely because in the sale deed, assessee's husband name is also mentioned, the same would not disentitle the assessee and the assessee would continue to be entitled for the benefit of section 54 of the Act for the entire investment made by her. It is again a case of joint investment in name of the assessee and her husband and while holding so, the Hon'ble Karntaka High Court has followed the decision of the Hon'ble Punjab & Haryana High Court in case of Gurnam Singh (supra). 21. In case of Kamal Wahal (supra), where the entire investment in purchase of the new house had come out of the sale proceeds of the original property and the new house was purchased in name of wife of the assessee, applying the rule of purposive construction and the object which the section seeks to achieve, the Hon'ble Delhi High Court held that for purposes of section 54F, the new residential house need not be purchased by the assessee in his own name nor it is necessary that it should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would have provided for the same expressly. It has been held by the Hon'ble High court that an assessee can purchase an asset or part thereof in the name of his wife but he would not be entitled to the benefit of section 54B of the Act. While holding so, the Hon'ble High Court has followed its earlier decision in case of Jai Narayan (supra). 24. In case of Kamal Kant Kamboj (supra), the issue for consideration before the Hon'ble Punjab & Haryana High Court was whether the Tribunal was correct in law in holding that for claiming exemption under section 54B, the investment in new land cannot be made in the name of wife of the assessee. The Hon'ble High Court held that the matter stand concluded against the assessee by its earlier decision in case of Jai Narayan's case and in view of the binding precedents in case of Jai Narayan and Dinesh Verma cases, the Hon'ble High court held that it is unable to subscribe to the view taken by the Hon'ble Delhi High Court in Kamal Wahal case. 25. I have also gone through the decisions of the Coordinate Benches relied upon by the ld AR but find that the same doesn't act as a binding precedent as the decisions of the Hon'ble Punjab & Haryana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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