Case Law Details
ITO Vs Rajendra Singh Yadav (ITAT Indore)
The Income Tax Appellate Tribunal (ITAT), Indore Bench, dismissed the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, which had allowed exemption under Section 54B of the Income-tax Act, 1961 to the assessee for AY 2015-16. The assessee had jointly sold agricultural land with his two brothers on 10.12.2014 for Rs. 9.31 crore and claimed exemption under Section 54B on capital gains of Rs. 3.09 crore by investing in another agricultural land purchased on 26.08.2016 for Rs. 3.11 crore. During scrutiny assessment, the Assessing Officer accepted that the new agricultural land was purchased within the prescribed two-year period under Section 54B but denied the exemption because the assessee had not deposited the capital gains in the Capital Gain Deposit Scheme before the due date under Section 139(1). The AO, however, allowed exemption under Section 54F for separate investment in a residential property. In appeal, the CIT(A) held that Section 54B is a beneficial provision intended to promote reinvestment in agricultural land and that the substantive requirement of investment within the stipulated period had been fulfilled. The CIT(A) relied on judicial precedents and granted the exemption. The ITAT agreed with this reasoning and observed that exemption under a beneficial provision cannot be denied on a hyper-technical procedural lapse when the investment in the new agricultural asset had been made within the prescribed period. The Tribunal relied on earlier decisions of the Delhi and Bangalore Benches of the ITAT and upheld the order of the CIT(A), dismissing the Revenue’s appeal as devoid of merit.
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by appeal-order dated 24.01.2024 passed by learned Commissioner of Income-tax (Appeal), NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 11.12.2017 passed by ITO, 3(5), Indore [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2015-16, the revenue has filed this appeal on following effective ground:
“(2) That the learned AO erred in law and fact of the case and made disallowance of exemption claimed u/s 54B of the Income-tax Act, at Rs. 3,09,64,475/- without considering full facts and reasoning. The addition made is totally wrong and illegal on the facts of the case.”.
2. The background facts leading to this appeal are such that the assessee-individual filed return of AY 2015-16 declaring a total income of Rs. 4,64,460/-. In the return so filed, the assessee declared capital gain from sale of an agricultural land after claiming exemption u/s 54B. The case of assessee was subjected to scrutiny-assessment due to large claim of exemption. During proceedings, the AO found that the assessee, jointly with his two brothers, sold an agricultural land situated at Gram Tigriya Badshah, Indore on 10.12.2014 for a consideration of Rs. 9,31,38,041/-. The assessee declared 1/3rd share in land at Rs. 3,10,46,013/- against which claimed indexed cost of acquisition of Rs. 81,538/-, leaving net capital gain of Rs. 3,09,64,475/-. From such capital gain, the assessee claimed exemption u/s 54B of Rs. 3,09,64,475/- on the strength of investment in another agricultural land situated at Gram Bijukhedi, Indore purchased for Rs. 3,11,00,000/- on 26.08.2016. When the AO asked assessee to explain the exemption claimed, the assessee submitted details of purchase of aforesaid new agricultural land for which exemption u/s 54B had been claimed. Additionally, the assessee also made a new claim of exemption u/s 54F on the basis of another investment of Rs. 16,44,370/- in a residential house property. The AO allowed exemption u/s 54F to assessee but disallowed the exemption u/s 54B. Aggrieved, the assessee carried matter in first-appeal and contested the issue of availability of exemption u/s 54B. The CIT(A) accepted assessee’s claim. Now, the revenue has come in this appeal.
3. Heard the learned Representatives of both sides and case records perused.
4. In Para 3 to 5 of assessment-order, the AO has noted that the assessee sold agricultural land on 10.12.2014 during the financial year 2014-15 relevant to AY 2015-16 and made investment in new agricultural land on 26.08.2016. Thus, the new investment has been made within the prescribed period of 2 years in section 54B which is not disputed by AO. However, the sole reason of denial of exemption u/s 54B as assigned by AO in assessment-order is such that assessee did not follow the procedure of depositing capital gain in Capital Gain Deposit Scheme by the due date for filing of return u/s 139(1) for AY 2015-16. The AO is of the view that the proper procedure would have been to deposit money in Capital Gain Deposit Scheme before due date u/s 139(1) and thereafter utilize such deposited money in new investment within 2 years.
5. The CIT(A) has, in first-appeal, accepted assessee’s submission that the section 54B is a beneficiary provision and must be interpreted in a beneficial manner. He accepted that the purpose of section 54B is to encourage re-investment in agricultural land which stands satisfied. The CIT(A) relied upon certain decisions and granted exemption u/s 54B holding that the investment has been ultimately made in new land within the stipulated period of section 54B.
6. During hearing before us, Ld. DR for revenue/appellant supported the order of AO. Per contra, Ld. AR for assessee/respondent relied upon order of CIT(A).
7. We have considered rival submissions of both sides and perused the orders of lower-authorities and facts of case in the light of judicial view. The undisputed fact is that the assessee has made investment in new agricultural land within the prescribed period of 2 years as per section 54B. The only point is that the assessee has not followed the route of Capital Gain Deposit Scheme while making such investment. This very situation has been directly dealt in following cases where it has been held that the exemption provision is a beneficial law and the benefit of same cannot be denied on hyper-technical ground of procedural lapse where the assessee has made investment in new asset within the prescribed period:
i. ITAT, Delhi in Ms. Sarita Gupta Vs. PCIT, ITA No. 1174/Del/2022 order dated 07.12.2023
ii. ITAT, Banglore in Sri Ramaiah Dorairaj Vs. ITO, Bangalore, ITA No. 1899/Bang/2018 order dated 09.12.2020
8. The view taken by CIT(A) is supported by above decisions of ITAT benches. Therefore, we do not find any illegality in the order of CIT(A) granting exemption u/s 54B to assessee. Accordingly, the order of CIT(A) is hereby upheld and the revenue’s appeal is dismissed being devoid of merit.
9. Resultantly, this appeal is dismissed.
Order pronounced in the open court on 07.10.2024.
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