DCIT Vs Rajesh Jain (ITAT Dehradun)
Deduction under section 54B cannot be denied merely because the unutilised amount was not deposited in the Capital Gains Account Scheme, where the assessee has actually invested the sale consideration in purchase of agricultural land within the prescribed two-year period.
Issue: Whether exemption under section 54B could be denied solely because the assessee did not deposit the unutilised amount in the Capital Gains Account Scheme (CGAS), despite having invested the sale proceeds in new agricultural land within two years from the date of transfer.
Facts: The assessee earned long-term capital gains on sale of agricultural land and claimed deduction under section 54B of ₹2,78,84,118. The Assessing Officer disallowed the claim on the ground that the amount was not deposited in the CGAS before the due date of filing the return under section 139(1). The CIT(A) deleted the disallowance after noting that the assessee had invested ₹2,89,94,871 out of the total sale consideration of ₹2,92,01,133 in purchase of agricultural land within two years from the date of transfer.
Tribunal’s Findings: The Tribunal observed that the fact of purchase of new agricultural land out of the sale proceeds was undisputed. It held that section 54B(2), which requires deposit in the CGAS, applies only when the capital gains are not utilised for purchase of new agricultural land before the due date of filing the return. Once the amount is actually invested within the statutory period of two years, non-deposit in the CGAS is only a procedural lapse and does not disentitle the assessee to exemption.
