Chinnappa Anthonappa Vs ACIT (ITAT Bangalore)
It is seen that the assessee has invested a sum of Rs.4.68 crores by paying advance for purchase of agricultural lands. It is not disputed that had the sale been completed pursuant to those agreements, the assessee would be entitled to benefits of deduction u/s. 54B of the Act. It is also not disputed that due to pending litigation, the sale could not be completed between these parties. However, in respect of agreement between assessee and Narayanappa & Others., the litigation has ended and assessee had got title of property on 03.07.2019, copy of the sale deed was filed before us. We are of the view that even otherwise, the assessee has complied with the conditions for grant of deduction u/s. 54B of the Act inasmuch as he has utilised, within a period of two years from the date of transfer of capital taxguru.in asset, the capital gain in purchasing another land for being used for agricultural purposes. The fact that the assessee did not get legal title to the lands is no ground to deny the benefit of deduction u/s. 54B. The decision of the Hon’ble Delhi High Court in the case of Kuldeep Singh (supra) as well as the decision of the Hon’ble High Court of Karnataka in the case of Sambandam Udaykumar (supra) clearly supports the plea of assessee. In the given facts and circumstances of the case, the assessee should be entitled to benefit of deduction u/s. 54B of the Act. We hold and direct accordingly. To the extent capital gain over and above the sum of Rs.4.68 crores excluding the stamp duty and registration fees but including the actual stamp duty and registration charges paid for acquiring title to the property from Narayanappa & Ors. vide Sale Deed dated 3.7.2019, the assessee should be allowed deduction u/s. 54B of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order dated 19.02.2015 of the CIT(Appeals)-4, Bangalore relating to assessment year 2010-11.
2. The issue involved in this appeal by the assessee is with regard to the validity of initiation of proceedings u/s. 147 of the Income-Tax Act, 1961 [“the Act”] with regard to allowability of assessee to exemption u/s. 54B of the Act.
3. There is a delay of two days in filing this appeal by the assessee before the Tribunal. The assessee is 84 year old senior citizen with health issues. Because of old age and taxguru.in ill-health, the assessee could not contact the counsel and file the appeal in time. The delay in filing the appeal is only two days and hence keeping in mind that there is no negligence or lack of diligence in filing the appeal belatedly, we condone the delay of two days in filing the appeal.
4. The assessee is an individual. He sold agricultural lands belonging to him in Sy.No.165/17, Doraisanipalaya, Bilekahalli Village, Begur Hobli for a consideration of Rs.6,95,00,000 under an agreement dated 06.09.2007 whereby possession of the property was also delivered to the purchaser in AY 2008-09. The assessee deposited Rs.6 crores in capital designated capital gain deposit account with Syndicate Bank, Jayanagar Market Branch on 14.12.2007. The provisions of section 54B of the Act are as follows:-
“Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases.
54B.(1) 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 assessee or a parent of his for agricultural purposes (hereinafter referred to as the original asset)], and the assessee has, within a period of two years 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 utilised by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited 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.”
5. As can be seen from the provisions of Sec.54-B (2) of the Act, if the capital gain is not utilized as contemplated u/s.54-B(1) of the Act within the due date for filing return of income u/s.139 of the Act, to claim exemption/ deduction, the Assessee has to deposit the capital gain in a specified account. As per proviso to section 54B(2), if the amount deposited in the capital gains account is not utilised wholly or partially for purchase of new asset within the period specified in sub-section (1) i.e., within a period of two year after the date of transfer of capital asset which gives rise to capital gain, then the amount not so utilised shall be charged u/s. 45 as income of the previous year in which period of two years from the date of transfer of the original asset expires. In that case the capital gain will not be taxed in the year of transfer but will be taxed in the previous year within which it had to be utilized and if not so utilized it will be charged to capital tax in that year in which the period for utilization of the capital gain expires. This is how the deduction u/s.54B of the Act came up for consideration in AY 2010-11 even though the transfer of the capital asset which gave raise to capital gain was in AY 2008-09.
6. The assessee contemplated buying of another agricultural land and claimed exemption from tax of capital gain u/s. 54B of the Act. As far as AY 2010-11 is concerned, the assessee had filed return of income on 20.05.2011. As to whether, there was any intimation u/s. 143(1) or 143(3) order is not clear from the order of assessment passed u/s. 143(3) r.w.s. 147 of the Act. However, the assessment order mentions the fact that assessment was being reopened by issue of notice u/s. 148 of the Act as it was found that assessee did not reinvest the sale proceeds received on transfer of agricultural land which was deposited in the capital gain scheme account within the stipulated time. In the reassessment proceedings, the assessee submitted that the net capital gain of transfer of capital asset was Rs.5,24,56,600 which was not disputed because this is the sum brought to tax as capital gain (long term) in the reassessment proceedings.
7. The assessee submitted that it had utilised the capital gain for purchase of another agricultural land and paid the following sums to the following persons under agreement for sale:-
