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Case Law Details

Case Name : Kamal Kishore Mukati Vs PCIT (ITAT Indore)
Appeal Number : ITA No. 870/Ind/2019
Date of Judgement/Order : 28/06/2021
Related Assessment Year : 2009-10
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Kamal Kishore Mukati Vs PCIT (ITAT Indore)

The facts in brief are that the assessee entered into an agreement in March 2006 for sale of agricultural land used for agricultural purpose. He received sale consideration in parts through banking channels. Sale deed was finally registered between March 2006 and April 2008. Before registering the sale deed assessee purchased other agricultural land from the sale consideration so received and claimed it as deduction u/s 54B of the Act against the capital gain earned from transferring of the capital asset being land used for agricultural purpose in two years immediately preceding the dates on which the transfer took the place.

Ld. AO allowed the claim during the assessment proceedings. Ld. Pr. CIT during the course of proceedings u/s 263 of the Act observed that the assessee had not complied with the provision of section 54B of the Act since this benefit was available only if the assessee had made the investments in other agricultural land after the date registered sale deed. As per the Ld. Pr. CIT this aspect was not examined by the Ld. AO and thus needed to be set aside for reexamining the issue of computing capital gain at the end of ld. AO.

We, however, note that the agreement for sale of agricultural land was made on 31.03.2006 but finaly registry was executed on 11.04.2008. Respective assessees received their shares of sale consideration through banking channels within few months of entering the sale agreement. The amount so released was utilized by the assessee towards purchase of new agricultural land. Though the sale agreement was registered on 11.04.2008 but the nexus of investment in new agricultural land is from the sale consideration received from sale of land.

In light of the above decisions we observe that in the instant case also the agreement to sale was not cancelled and the same was acted upon on at the same sale consideration and finally executed the registered sale deed with the same person though acting on behalf of the company as its director and since the assessee has utilized the same sale consideration for purchasing new agricultural land he should be allowed the benefit of section 54F of the Act, so as to fulfill the very object of section 54B of the Act for which it has been created in the act. This view was adopted by the Ld. AO to allow the deduction u/s 54B of the Act which is legally permissible view and thus, cannot be taken as a basis to assume jurisdiction u/s 263 of the Act and holding the orders of Ld. AO as erronous. In view of this the grounds of appeal raised in the case of Subhash Mukati (ITANo.425/Ind/2018) also deserves to be allowed and proceedings u/s 263 of the Act are directed to be quashed.

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