Case Law Details

Case Name : ITO Vs Smt. Uma Dnyanoba Bhintade (ITAT Pune)
Appeal Number : ITA No.1485/PUN/2017
Date of Judgement/Order : 09/07/2019
Related Assessment Year : 2011-12
Courts : All ITAT (6332) ITAT Pune (214)

ITO Vs Smt. Uma Dnyanoba Bhintade (ITAT Pune)

The limited issue which arises in the present appeal filed by Revenue is against directions of CIT(A) in allowing the benefit claimed under section 54B of the Act by Assessing Officer, in case the assessee has fulfilled all the conditions laid down in the said section. Admittedly, the assessee had not offered any income from Long Term Capital Gains or Short Term Capital Gains on sale of agricultural land in its hands, in the return of income. However, it had shown exempt agricultural income on account of sale of agricultural land which was duly reflected in the return of income. The Assessing Officer sought information from the Municipal authority and since the land sold by assessee was within 8 Kilometers from the Municipal limits, the Assessing Officer held that gain arising from the sale of agricultural land was taxable in the hands of assessee and computes the income from Long Term Capital Gains and Short Term Capital Gains. However, the claim of assessee during assessment proceedings in allowing the benefit of deduction under section 54B of the Act i.e. on account of investment in new agricultural land was denied to the assessee on the ground that no such claim was made in the return of income and hence, not allowable as per the ratio laid down by the Hon’ble Supreme Court in M/s. Goetze India Pvt. Ltd. Vs. CIT (supra). The CIT(A) on the other hand, allowed the claim of assessee in turn, relying on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders (supra). In this regard, we find no merit in the appeal filed by Revenue, wherein the matter has been decided by the CIT(A) observing that the assessee would be entitled to the aforesaid deduction under section 54B of the Act, in view of the dictate of the Hon’ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders (supra). We find no error in the order of CIT(A) in this regard. The decision of jurisdictional High Court is squarely binding and in view of the said ratio laid down, the CIT(A) was duty bound to allow the claim of assessee though not made in the return of income. It may be pointed herein itself that even the income from sale of agricultural land as either Long Term Capital Gains or Short Term Capital Gains, was never offered by assessee in its return of income. In such circumstances, when the Assessing Officer computing income from capital gains in the hands of any assessee, then it is his duty not only to compute income under the respective heads but also to allow exemptions which are duly allowable to the assessee. The CIT(A) had in all fairness directed the Assessing Officer to verify whether the assessee has fulfilled the conditions laid down in section 54B of the Act and had further observed that in case they are not so fulfilled, then no deduction under section 54B of the Act is to be allowed to the assessee. We find no error in the order of CIT(A) in this regard. So, we dismiss the grounds of appeal raised by Revenue.

Whether when an assessee mistakenly fails to claim deduction in its return, the same can be allowed as additional claim by the CIT(A) and the Tribunal in exercise of discretion – YES: ITAT
FULL TEXT OF THE ITAT JUDGEMENT

The appeal filed by Revenue is against order of CIT(A)-4, Pune, dated 12.02.2017 relating to assessment year 2011-12 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).

2. The Revenue has raised the following grounds of appeal:-

1. On the facts and circumstances of the case and in law, the CIT(A) has erred in allowing the claim of deduction u/s 54B of Rs.1,27,28,116/-which has neither been claimed by the assessee in the return of income nor has filed the revised return.

2. On the facts and circumstances of the case and in law, the CIT(A) is not correct in ignoring the decision of the Hon’ble Supreme Court in the case of M/s. Goetze India Pvt. Ltd. 284 ITR 323 (SC), wherein it has been held that such claim can only be allowed when the assessee filed a revised return.

3. For this and such other reasons as may be urged at the time of hearing, the order of the CIT(A) may be vacated and that of the Assessing Officer be restored.

3. The issue raised in the present appeal filed by Revenue is against allowability of deduction claimed under section 54B of the Act.

4. Briefly, in the facts of the case, the assessee as individual had furnished original return of income declaring total income of Rs. 4,89,780/- and agricultural income of Rs. 3,65,06,625/-. The case of assessee was picked up for scrutiny. The Assessing Officer noted that the assessee had shown profit of Rs.3.60 crores on sale of agricultural land and claimed the same as exempt. On verification of sale deed, it was noted that the lands were situated at Saswad, Akhatpur Village, near Saswad and Kumbhoshi Village. The Assessing Officer sought information from Saswad Municipal Corporation to provide the distance of Akhatpur from the municipal limits of Saswad. In reply, the Chief Officer confirmed that the distance between Saswad and Akhatpur village was 5 Kilometers and 2 Kilometers from the limits of Saswad Municipal Corporation. In view thereof, the assessee was show caused as to why sale consideration received of Rs. 1.39 crores offered for long term capital gains purpose was not offered for LTCG/STCG purpose. It was also proposed that the same is to be assessed in the hands of assessee. In reply, the assessee pointed out that profit of Rs. 1.27 crores was declared as agricultural income in the return of income i.e. after correcting discrepancy brought to the notice of assessee. In addition, the assessee claimed that it had purchased agricultural land within time prescribed and would be entitled to the claim of exemption under section 54B of the Act and the same be allowed to the assessee. However, the Assessing Officer relying on the ratio laid down by the Hon’ble Supreme Court in M/s. Goetze India Pvt. Ltd. Vs. CIT reported in 284 ITR 323 (SC) held that any claim could be allowed only when the assessee files revised return. Therefore, the claim of assessee was disallowed and sum of Rs. 1.27 crores i.e. Short Term Capital Gains of Rs. 71,23,306/- and Long Term Capital Gains of Rs. 56,04,810/- was brought to tax under the head ‘Income from capital gains’.

5. The CIT(A) noted the plea of assessee and observes that where the assessee had not disclosed any income from capital gains in the return of income, then there was no basis for not allowing legitimate claim of deduction under section 54B of the Act, if otherwise all the conditions had been fulfilled by assessee. The CIT(A) in turn, relying on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders reported in 349 ITR 336 (Bom) held that exemption under section 54B of the Act claimed during assessment proceedings should be allowed. However, in order to verify whether the assessee had fulfilled all the conditions as prescribed in section 54B of the Act, the said issue for examination was remitted back to the Assessing Officer and it was held that in case the conditions are not satisfied, then exemption under section 54B of the Act shall be denied to the assessee.

6. The Revenue is in appeal against aforesaid findings of CIT(A).

7. The learned Departmental Representative for the Revenue in this regard pointed out that where no claim was made in the return of income, then how can the said exemption was allowed to assessee.

8. The learned Authorized Representative for the assessee in counter pointed out that even the income from capital gains was not offered in the return of income, hence the Assessing Officer while computing income from capital gains should have computed the same as per relevant provisions of the Act and allow the benefit of deduction claimed under section 54B of the Act.

9. We have heard the rival contentions and perused the record. The limited issue which arises in the present appeal filed by Revenue is against directions of CIT(A) in allowing the benefit claimed under section 54B of the Act by Assessing Officer, in case the assessee has fulfilled all the conditions laid down in the said section. Admittedly, the assessee had not offered any income from Long Term Capital Gains or Short Term Capital Gains on sale of agricultural land in its hands, in the return of income. However, it had shown exempt agricultural income on account of sale of agricultural land which was duly reflected in the return of income. The Assessing Officer sought information from the Municipal authority and since the land sold by assessee was within 8 Kilometers from the Municipal limits, the Assessing Officer held that gain arising from the sale of agricultural land was taxable in the hands of assessee and computes the income from Long Term Capital Gains and Short Term Capital Gains. However, the claim of assessee during assessment proceedings in allowing the benefit of deduction under section 54B of the Act i.e. on account of investment in new agricultural land was denied to the assessee on the ground that no such claim was made in the return of income and hence, not allowable as per the ratio laid down by the Hon’ble Supreme Court in M/s. Goetze India Pvt. Ltd. Vs. CIT (supra). The CIT(A) on the other hand, allowed the claim of assessee in turn, relying on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders (supra). In this regard, we find no merit in the appeal filed by Revenue, wherein the matter has been decided by the CIT(A) observing that the assessee would be entitled to the aforesaid deduction under section 54B of the Act, in view of the dictate of the Hon’ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders (supra). We find no error in the order of CIT(A) in this regard. The decision of jurisdictional High Court is squarely binding and in view of the said ratio laid down, the CIT(A) was duty bound to allow the claim of assessee though not made in the return of income. It may be pointed herein itself that even the income from sale of agricultural land as either Long Term Capital Gains or Short Term Capital Gains, was never offered by assessee in its return of income. In such circumstances, when the Assessing Officer computing income from capital gains in the hands of any assessee, then it is his duty not only to compute income under the respective heads but also to allow exemptions which are duly allowable to the assessee. The CIT(A) had in all fairness directed the Assessing Officer to verify whether the assessee has fulfilled the conditions laid down in section 54B of the Act and had further observed that in case they are not so fulfilled, then no deduction under section 54B of the Act is to be allowed to the assessee. We find no error in the order of CIT(A) in this regard. So, we dismiss the grounds of appeal raised by Revenue.

10. In the result, the appeal of Revenue is dismissed.

Order pronounced on this 9th day of July, 2019.

Download Judgment/Order

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *