The Dy. Commissioner Income-tax, Jalandhar V. Smt Swarn kaur, Wd/o Sh. Gobin Singh Urf S/o S.Dhanna Singh, Jalandhar

ITA 28/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8809 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR KANCHAN GARG
• Assessee Lawyers: S S KALRA
• Keywords: Capital asset; Additional evidence
• Section: 54B; 148; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO.26(ASR)/2015 ASSESSMENT YEAR: 2009-10 DY. CIT, CENTRAL CIRCLE -1, JALANDHAR. VS. SH. ASSA SINGH S/0 S. DHANNA SINGH VPO SARMAST PUR, TEHSIL KARTARPUR DIST: JALANDHAR. PAN:CZJPS7019F (APPELLANT) (RESPONDENT) I.T.A NO.28(ASR)/2015 ASSESSMENT YEAR: 2009-10 DY. CIT, CENTRAL CIRCLE -1, JALANDHAR. VS. SMT. SWARN KAUR W/O SH. GOBIND SINGH URF S/O S. DHANNA SINGH VPO SARMAST PUR, TEHSIL-KARTARPUR, DIST: JALANDHAR. PAN: (APPELLANT) (RESPONDENT) APPELLANT BY: DR. KANCHAN GARG (DR.) RESPONDENT BY: SH. S.S.KALRA (CA.) DATE OF HEARING: 18.02.2016 DATE OF PRONO UNCEMENT: 11.03.2016 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY REVENUE AGAIN ST THE ORDER OF LEARNED CIT(A), BOTH DATED 17.10.2014, FOR THE ASST. YEAR 2 009-10. ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 2 2. SIMILAR ISSUES ARE INVOLVED IN THESE APPEALS AND THESE WERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. THERE ARE TWO C OMMON ISSUES IN THESE APPEALS, HOWEVER IN ITA NO.26(ASR)/2015,THERE IS AN ADDITIONAL ISSUE OF ALLOWANCE OF DEDUCTION U/S 54B OF THE ACT. FOR THE SAKE OF CONVENIENCE THE GROUNDS OF APPEAL IN ITA 26(ASR)/20 15 ARE REPRODUCED BELOW. 1. A) WHETHER THE DECISION OF THE LD. CIT(A) IS RI GHT IN DELETING THE ADDITION OF RS.2,40,91,01/- MADE BY THE ASSESSING O FFICER ( ON ACCOUNT CAPITAL GAIN), RELYING UPON ON DECISION IN THE CASE OF SANJEEV LAL VS. CIT REPORTED AS (2014) 269 CTR(SC) WHICH IS NOT APPLICABLE TO THE FACTS OF THIS CASE AND BY IGNORIN G THE FACTS SUBMITTED IN REMAND REPORT. (B) WHETHER THE LD. CIT (A0 IS RIGHT IN ALLOWING EX PENSES U/S 48(1) PAID AT RS.78,48,358/- TO THE THIRD PARTLY CULTIVAT ORS OF LAND WHEN THE ASSESSEE IS KHUD KASHT. (C ) WHETHER THE CIT(A) IS RIGHT IN ALLOWING DEDUCT ION U/S 54B WHETHER THE LAND WAS PURCHASED BEFORE SALE OF LAND ON WHICH THE CAPITAL GAIN HAS ARISEN. 3. AT THE OUTSET, THE LEARNED DR SUBMITTED THAT SHE WAS NOT PREPARED FOR THE ARGUMENTS, THEREFORE, SHE FILED AD JOURNMENT LETTERS BUT GOING THROUGH THE FILES WE FOUND THAT APPEALS CAN B E DISPOSED OFF, THEREFORE, ADJOURNMENT APPLICATIONS WERE REJECTED A ND LEARNED AR WAS DIRECTED TO APPRISE ABOUT THE FACTS OF THE CASES. 4. THE BRIEF FACTS OF THE CASES AS NOTED IN THE AS SESSMENT ORDER ARE THAT THE ASSESSMENT IN THESE CASES WAS COMPLETED U/ S 144 OF THE I.T. ACT AS THE ASSESSEES DID NOT CO-OPERATE IN THE ASSE SSMENT PROCEEDINGS. ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 3 THE CASES OF THE ASSESSEE WERE REOPENED U/S 148 AS THE ASSESSING OFFICER HAD INFORMATION THAT ASSESSEES HAD EARNED S UBSTANTIAL CAPITAL GAIN ON THE SALE OF AGRICULTURAL LAND, THEREFORE, T HE ADDITION IN THESE CASES WERE MADE TO THE TUNE OF RS.2,40,91,101/- AND RS.83,58,921/- RESEPCTIVELY. 5. AGGRIEVED WITH THE ORDERS THE ASSESSEES FILED AP PEALS BEFORE LEARNED CIT(A) AND SUBMITTED VARIOUS SUBMISSIONS WH EREIN THE ASSESSEES CLAIMED THAT THE CAPITAL GAIN WORKED OUT BY ASSESSING OFFICER WAS WITHOUT TAKING INTO ACCOUNT INDEXED COST OF SOL D LAND. THE ASSESSEES ALSO SUBMITTED THAT THE ASSESSEES HAD TO MAKE CERTAIN PAYMENTS TO THE PERSONS WHO WERE OCCUPYING THE SAID LAND AND THEREFORE, THESE EXPENSES WERE ELIGIBLE FOR DEDUCTI ON U/S 48(1) OF THE ACT. THE ASSESSEES IN THIS RESPECT HAD ALSO SUBMITT ED ADDITIONAL EVIDENCES WHICH WERE FORWARDED TO ASSESSING OFFICER AND LEARNED CIT(A) AFTER GOING THROUGH THE REMAND REPORT ALLOWED RELIE F TO THE ASSESSEES BY HOLDING SIMILAR FINDINGS. FOR THE SAKE OF COMPLETEN ESS THE FINDINGS OF LEARNED CIT(A) AS CONTAINED IN PARA 7 TO 10 IN THE CASE OF SH. ASSA SINGH ARE REPRODUCED BELOW. 7. I HAVE CONSIDERED THE FACTS OF THE CASE, THE AR GUMENTS OF THE AR DURING ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. THE COMMENTS OF THE ASSESSING OFFICER DURING REMAND PRO CEEDINGS HAVE ALSO BEEN CONSIDERED. IT IS SEEN THAT THE APPELLANT HAD CLAIMED THAT AN AMOUNT OF RS. 3,17,60,750/- HAD BEEN PAID TO 11 PER SONS FOR EVICTING THEM FROM THE IMPUGNED PIECE OF LAND BEFORE THE TRA NSACTION COULD BE FINALIZED FOR SALE. THE DETAILS REGARDING THE EVICT ION MONEY PAID TO DIFFERENT PERSONS HAD BEEN SUBMITTED DURING THE APP ELLATE PROCEEDINGS AND THE ASSESSING OFFICER HAS VERIFIED THE CONTENTI ONS OF THE APPELLANT IN ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 4 THIS REGARD TO BE CORRECT. SINCE THE SAID AMOUNT PA ID AS EARNEST MONEY HAD TO BE PAID FOR ENSURING THE SMOOTH SALE OF THE IMPUGNED PROPERTY THE SAID AMOUNT HAS TO BE REDUCED FROM THE GROSS SALE C ONSIDERATION TO WORK OUT THE NET SALE CONSIDERATION FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN. THE ASSESSING OFFICER HAS VERIFIED DURING THE REMAND PROCEEDINGS THAT THE LAND SOLD BY THE APPELLANT HAD BEEN USED F OR AGRICULTURAL PURPOSES AND THE LAND PURCHASED WAS ALSO BEING USED FOR THE PURPOSES OF AGRICULTURE ONLY. 8. THE NEXT ISSUE RAISED BY THE ASSESSING OFFICER IS THAT SINCE THE LAND IN QUESTION IS BEING USED FOR THE AGRICULTURAL PURPOSES BY THE PERSONS WHO HAD THE POSSESSION OF THE LAND AND THOS E PERSONS HAD TO BE PAID EVICTION CHARGES AS DETAILED ABOVE, THE CLAIM OF THE ASSESSEE WOULD NOT FALL UNDER THE PURVIEW OF SECTION 54B AS THE SA ID LAND WAS NOT BEING USED BY THE ASSESSEE HIMSELF FOR AGRICULTURAL PURPO SES, I DO NOT AGREE WITH THE VIEW OF THE ASSESSING OFFICER ON THE ISSUE AS THE REQUIREMENT OF USAGE OF AGRICULTURAL LAND IS WITH REFERENCE TO THE LAND AND NOT WITH REFERENCE TO THE PERSON WHO OWNS IT. FOR INSTANCE, IF A PERSON OWNS AGRICULTURAL LAND AND DERIVES RENT FROM THE SAME, I T ALSO QUALIFIES AS AGRICULTURAL INCOME NOT TAXABLE UNDER INCOME TAX AC T, 1961 EVEN THOUGH THE AGRICULTURAL OPERATIONS ARE NOT PERFORMED PERSO NALLY BY SAID OWNER OF AGRICULTURAL LAND. THE SITUATION IN THE CURRENT CA SE IS ALSO SAME AS THE OWNER OF THE LAND HAD GIVEN IMPUGNED AGRICULTURAL L AND FOR THE PURPOSE OF TILING WHO IN THE COURSE OF TIME DEVELOPED VESTE D INTEREST IN THE FORM OF POSSESSION OF LAND BUT THE FACT REMAINS THAT LAND I TSELF HAD BEEN USED FOR AGRICULTURAL PURPOSES ALL ALONG AND DOES NOT LOSE I TS CHARACTER OF BEING USED AS AGRICULTURAL LAND WHETHER THE OPERATIONS AR E PERFORMED BY THE OWNER OR THE TENANT. THEREFORE, THE VIEW OF THE ASS ESSING OFFICER ON THE ISSUE IS REJECTED. THE SECOND ISSUE RAISED BY THE A SSESSING OFFICER IN THE REMAND REPORT IS THAT CERTAIN REGISTRATIONS IN RESP ECT OF PURCHASE OF AGRICULTURAL LAND HAD BEEN EFFECTED BEFORE THE DATE OF SALE AND THEREFORE WOULD NOT STRICTLY GET COVERED BY THE PROVISIONS OF SECTION 54B. THE FACTS OF THE CASE ARE CLEAR THAT THE PAYMENT FOR PURCHASE OF LAND HAS BEEN MADE OUT OF ADVANCE RECEIVED BY ASSESSEE AGAINST SA LE OF LAND. INFACT, PAYMENTS HAVE BEEN MADE DIRECTLY BY THE BUYER OF TH E AGRICULTURAL LAND FROM THE ASSESSEE TO THE SELLERS WHO SOLD THE LAND TO THE APPELLANT. THE AR HAS BROUGHT ON RECORD THE CIRCULAR OF CBDT NO. 3 59 DATED 10.05.1983 WHICH IS WITH REFERENCE TO SECTION 54/THE SAID CIR CULAR QUALIFIES THE SITUATION AS UNDER:- 'SECTION 54 OF THE INCOME TAX ACT, 1961 PROVIDES FO R EXEMPTION OF LONG TERM CAPITAL GAINS IF THE NET CONSIDERATION IS INVESTED BY THE ASSESSEE IN SPECIFIED ASSETS WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER. A TECHNICAL INTERPRETATI ON OF S.54E COULD MEAN THAT THE EXEMPTION FROM TAX ON CAPITAL GAINS W OULD NOT BE AVAILABLE IF PART OF THE CONSIDERATION IS INVESTED PRIOR TO THE DATE OF EXECUTION OF THE SALE DEED AS THE INVESTMENT CANNOT BE REGARDED AS HAVING BEEN MADE WITHIN A PERIOD OF SIX MONTHS A FTER THE DATE OF TRANSFER. ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 5 ON CONSIDERATION OF MATTER IN CONSULTATION WITH THE MINISTRY OF LAW, IT IS FELT THAT THE FOREGOING INTERPRETATION W OULD GO AGAINST THE PURPOSE AND SPIRIT OF THE SECTION. AS THE SECTION C ONTEMPLATES INVESTMENT OF THE NET CONSIDERATION IN SPECIFIED AS SETS FOR A MINIMUM PERIOD AND AS EARNEST MONEY OR ADVANCE IS P ART OF THE SALE CONSIDERATION THE BOARD HAVE DECIDED THAT IF T HE ASSESSEE INVESTS THE EARNEST MONEY OR THE ADVANCE RECEIVED I N SPECIFIED ASSETS BEFORE THE DATE OF TRANSFER OF ASSET THE AMO UNT SO INVESTED WILL QUALIFY FOR EXEMPTION UNDER S. 54E OF THE INCO ME TAX ACT, 1961.' 9. IT HAS BEEN CLARIFIED THAT THE INTENTION OF THE LEGISLATURE WAS TO ENSURE THAT THE NET CONSIDERATION WAS INVESTED IN S PECIFIED ASSETS AND EARNEST MONEY OR ADVANCE BEING PART OF SALE CONSIDE RATION SHOULD BE CONSIDERED TO HAVE BEEN INVESTED FOR EXEMPTION UNDE R SECTION 54E OF THE INCOME TAX ACT, 1961. THE FACTS OF THE PRESENT CASE ARE ON THE SAME LINES AND THE LEGISLATURE'S INTENTION IN RESPECT OF SECTION 54B CANNOT BE SAID TO BE DIFFERENT AS THE ESSENTIAL PURPOSE OF IN CORPORATING THE IMPUGNED PROVISION OF SECTION 54B IS TO ENSURE THAT ANYBODY SELLING AGRICULTURAL LAND SHOULD NOT BE SUBJECTED TO TAXATI ON IF THE PROCEEDS THEREOF ARE USED FOR BUYING AGRICULTURAL LAND. THE FACT THAT THE ADVANCE/ EARNEST MONEY HAD BEEN USED FOR MAKING THE CONSEQUE NTIAL PURCHASE SHOULD NOT COME IN THE WAY OF ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 54B. EVEN OTHERWISE, THE AR HAS PLACED RELI ANCE ON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF SANJEEV LAI ET C. VS. CIT 269 CTR 1 WHICH IS DIRECTLY ON THE ISSUE OF DEFINITION OF 'TR ANSFER' UNDER SECTION 2(47) AND CLAIM OF DEDUCTION UNDER SECTION 54. THE HON'BL E COURT HAS OBSERVED THAT EVEN AN AGREEMENT TO SELL COULD AMOUNT TO A TR ANSFER FOR THE PURPOSES OF SECTION 2(47)/54. THE SPECIFIC OBSERVAT IONS OF THE HON'BLE COURT ARE AS UNDER: 'IN NORMAL CIRCUMSTANCES BY EXECUTING AN AGREEMENT TO SELL IN RESPECT OF AN IMMOVEABLE PROPERTY, A RIGHT IN PERSO NAM IS CREATED IN FAVOUR OF THE TRANSFEREE/VENDEE. WHEN SUCH A RIG HT IS CREATED IN FAVOUR OF THE VENDEE, THE VENDOR IS RESTRAINED F ROM SELLING THE SAID PROPERTY TO SOMEONE ELSE BECAUSE THE VENDEE, I N WHOSE FAVOUR THE RIGHT IN PERSONAM IS CREATED, HAS A LEGI TIMATE RIGHT TO ENFORCE SPECIFIC PERFORMANCE OF THE AGREEMENT, IF T HE VENDOR, FOR SOME REASON IS NOT EXECUTING THE SALE DEED. THUS, B Y VIRTUE OF THE AGREEMENT TO SELL SOME RIGHT IS GIVEN BY THE VENDOR TO THE VENDEE. THOUGH THE ENTIRE PROPERTY CANNOT BE SAID TO HAVE B EEN SOLD AT THE TIME WHEN AN AGREEMENT TO SELL IS ENTERED INTO. LOO KING AT THE PROVISIONS OF SECTION 2(47) OF THE ACT, WHICH DEFIN ES THE WORD 'TRANSFER' IN RELATION TO A CAPITAL ASSET, ONE CAN SAY THAT IF A RIGHT IN THE PROPERTY IS EXTINGUISHED BY EXECUTION OF AN AGREEMENT TO SELL, THE CAPITAL ASSET CAN BE DEEMED TO HAVE BEEN TRANSFERRED. IN THE LIGHT OF DEFINITION OF 'TRANSFER' AS DEFINED UN DER SECTION 2(47) OF THE ACT, IT IS CLEAR THAT WHEN ANY RIGHT IN RESP ECT OF ANY CAPITAL ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 6 ASSET IS EXTINGUISHED AND THAT RIGHT IS TRANSFERRED TO SOMEONE, IT WOULD AMOUNT TO TRANSFER OF A CAPITAL ASSET, AN AGR EEMENT TO SELL IN RESPECT OF A CAPITAL ASSET HAD BEEN EXECUTED ON 27TH DECEMBER, 2002 FOR TRANSFERRING THE RESIDENTIAL HOUSE/ORIGINA L ASSET IN QUESTION AND A SUM OF RS. 15 LAKHS HAD BEEN RECEIVE D BY WAY OF LEST MONEY. IT IS ALSO NOT IN DISPUTE THAT THE SALE DEED COULD NOT BE EXECUTED BECAUSE OF PENDENCY OF THE LITIGATION BETW EEN R ON ONE HAND AND THE ASSESSEE ON THE OTHER AS R HAD CHALLEN GED THE VALIDITY OF THE WILL UNDER WHICH THE PROPERTY HAD D EVOLVED UPON THE ASSESSEE. BY VIRTUE OF AN ORDER PASSED IN THE S UIT FILED BY R, THE ASSESSEE WERE RESTRAINED FROM DEALING WITH THE SAID RESIDENTIAL HOUSE AND A LAW- ABIDING CITIZEN CANNOT BE EXPECTED TO VIOLATE THE DIRECTION OF A COURT BY EXECUTING A SAL E DEED IN FAVOUR OF A THIRD PARTY WHILE BEING RESTRAINED FROM DOING SO. IN THE CIRCUMSTANCES, FOR A JUSTIFIABLE REASON, WHICH WAS NOT WITHIN THE CONTROL OF THE ASSESSEE, THEY COULD NOT EXECUTE THE SALE DEED AND THE SALE DEED HAD BEEN REGISTERED ONLY ON 24 TH SEPTEMBER, 2004, AFTER THE SUIT FILED BY R, CHALLENGING THE VALIDITY OF THE WILL, HAD BEEN DISMISSED. IN THE LIGHT OF THE AFORESTATED FAC TS AND IN VIEW OF THE DEFINITION OF THE TERM 'TRANSFER', ONE CAN COME TO A CONCLUSION THAT SOME RIGHT IN RESPECT OF THE CAPITAL ASSET IN QUESTION HAD BEEN TRANSFERRED IN FAVOUR OF THE VENDEE AND THEREFORE, SOME RIGHT WHICH THE ASSESSEE HAD, IN RESPECT OF THE CAPITAL A SSET IN QUESTION, HAD BEEN EXTINGUISHED BECAUSE AFTER EXECU TION OF THE AGREEMENT TO SELL IT WAS NOT OPEN TO THE APPELLANTS TO SELL THE PROPERTY TO SOMEONE ELSE IN ACCORDANCE WITH LAW. A RIGHT IN PERSONAM HAD BEEN CREATED IN FAVOUR OF THE VENDEE, IN WHOSE FAVOUR THE AGREEMENT TO SELL HAD BEEN EXECUTED AND WHO HAD ALSO PAID RS.15 LAKHS BY WAY OF EARNEST MONEY. NO DOUBT, SUCH CONTRACTUAL RIGHT CAN BE SURRENDERED OR NEUTRALIZED BY THE PARTIES THROUGH SUBSEQUENT CONTRACT OR CONDUCT LEADING TO N O TRANSFER OF THE PROPERTY TO THE PROPOSED VENDEE BUT THAT IS NOT THE CASE AT HAND. IN ADDITION TO THE FACT THAT THE TERM 'TRANSFER' HA S BEEN DEFINED UNDER SECTION 2(47) OF THE ACT, EVEN IF LOOKED AT T HE PROVISIONS OF SECTION 54 OF THE ACT WHICH GIVES RELIEF TO A PERSO N WHO HAS TRANSFERRED HIS ONE RESIDENTIAL HOUSE AND IS PURCHA SING ANOTHER RESIDENTIAL HOUSE EITHER BEFORE ONE YEAR OF THE TRA NSFER OR EVEN TWO YEARS AFTER THE TRANSFER, THE INTENTION OF THE LEGI SLATURE IS TO GIVE HIM RELIEF IN THE MATTER OF PAYMENT OF TAX ON THE L ONG TERM CAPITAL GAIN. IF A PERSON, WHO GETS SOME EXCESS AMOUNT UPON TRANSFER OF HIS OLD RESIDENTIAL PREMISES AND THEREAFTER PURCHAS ES OR CONSTRUCTS A NEW PREMISES WITHIN THE TIME STIPULAT ED UNDER SECTION 54 OF THE ACT, THE LEGISLATURE DOES NOT WAN T HIM TO BE BURDENED WITH TAX ON THE LONG TERM CAPITAL GAIN AND THEREFORE, RELIEF HAS BEEN GIVEN TO HIM IN RESPECT PAYING INCO ME TAX ON THE LONG TERM CAPITAL GAIN. THE INTENTION OF LEGISLATUR E OR THE PURPOSE WITH WHICH THE SAID PROVISION HAS BEEN GIVEN TO HIM IN RESPECT OF PAYING INCOME TAX ON THE LONG TERM CAPITAL GAIN. TH E INTENTION OF ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 7 THE LEGISLATURE OR THE PURPOSE WITH WHICH THE SAID PROVISION HAS BEEN INCORPORATED IN THE ACT, IS ALSO VERY CLEAR TH AT THE ASSESSEE SHOULD BE GIVEN SOME RELIEF. THOUGH IT HAS BEEN VER Y OFTEN SAID THAT COMMON SENSE IS A STRANGER AND AN INCOMPATIBL E PARTNER TO THE INCOME TAX ACT AND IT IS ALSO SAID THAT EQUITY AND TAX ARE STRANGERS TO EACH OTHER, STILL THIS COURT HAS OFTEN OBSERVED THAT PURPOSIVE INTERPRETATION SHOULD BE GIVEN TO THE PRO VISIONS OF THE ACT. CONSIDERING THE PRINCIPLES WITH REGARD TO THE INTERPRETATION OF STATUTE PERTAINING TO THE TAX LAWS, ONE CAN VERY WE LL INTERPRET THE PROVISIONS OF S.54 R/W S.2(47), I.E. DEFINITION OF 'TRANSFER' WHICH WOULD ENABLE THE ASSESSEE TO GET THE BENEFIT UNDER S.54- OXFORD UNIVERSITY PRESS VS. CIT(2001) 165 CTR (SC) 629: (2 001) 3SCC 359 APPLIED. IN VIEW OF THE PECULIAR FACTS OF THE C ASE AND LOOKING AT THE DEFINITION OF THE TERM 'TRANSFER' AS DEFINED UNDER S.2(47) THE ASSESSEE WERE ENTITLED TO RELIEF UNDER S. 54 IN RESPECT OF LONG TERM CAPITAL GAIN WHICH THEY HAD EARNED IN PURSUANCE OF TRANSFER OF THEIR RESIDENTIAL PROPERTY AND USED FOR PURCHASE OF A NEW ASSET/RESIDENTIAL HOUSE. THE AUTHORITIES ARE DIRECTED TO REASSESS THE INCOME OF THE ASSESSEE FOR ASST, YEAR 2005-06 AFTER TAKING INTO A CCOUNT THE FACT THAT THE ASSESSEE WERE ENTITLED TO THE REL IEF, SUBJECT TO FULFILLMENT OF OTHER CONDITIONS -SANJEEV LAI ETC . ETC. (JUDGMENTS DT. 29 TH JAN, 2013 OF THE PUNJAB AND HARYANA HIGH COURT IN IT APPEAL NO.S 153& 154 OF 2012) SET ASIDE.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND DI RECT JUDICIAL PRONOUNCEMENTS BY THE APEX COURT ON THE IS SUE, THE APPELLANT'S CLAIM FOR DEDUCTION UNDER SECTION 54 IS ALLOWED. THE DIFFERENCE OF RS.8,55,448/- POINTED OUT BY THE ASSESSING OFFICER BETWEEN SALE AND PURCHASE CONSIDERATION ALS O WOULD NOT LEAD TO ANY TAXABLE CAPITAL GAIN AS BENEFIT OF INDEXATION GIVEN ON ANY REASONABLE VALUE WOULD LEAD TO NEGATIV E GAIN. THEREFORE NO CAPITAL GAIN IS LEVIABLE ON THE IMPUGN ED TRANSACTION. THE ADDITION MADE BY THE ASSESSING OFF ICER IS THEREFORE DIRECTED TO BE DELETED. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. THE LEARNED AR FIRST TOOK UP THE APPEAL IN ITA N O.26 IN THE CASE OF SH. ASSA SINGH. AT THE OUTSET, LEARNED AR SUBMIT TED THAT THE ASSESSEES WERE RELATED TO EACH OTHER AND IN ONE OF THE CASE OF SH. JIT SINGH WHO WAS CO-OWNER OF LAND THE LEARNED CIT(A) H AD ALLOWED EVICTION CHARGES PAID TO PEOPLE OCCUPYING LAND AND REVENUE H AD NOT FILED ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 8 APPEAL BEFORE THE TRIBUNAL AGAINST SUCH ALLOWANCE O F SUCH EXPENSES AND THEREFORE, IN A WAY THE REVENUE SHOULD HAVE NOT BEEN AGGRIEVED IN THE PRESENT CASES ALSO AGAINST PAYMENT OF SIMILAR C HARGES AND IN THIS RESPECT LEARNED AR INVITED OUR ATTENTION TO PAPER B OOK PAGE 4 WHERE GROUNDS OF APPEAL FILED BY REVENUE IN THE CASE OF M R. JIT SINGH WERE PLACED AND HE SUBMITTED THAT THERE IS NO SUCH GROUN D TAKEN BY REVENUE AGAINST EVICTION CHARGES ALLOWED BY LEARNED CIT(A). THE LEARNED AR ALSO INVITED OUR ATTENTION TO PAPER BOOK PAGE 1 WHERE ASSESSING OFFICER HAD ACCEPTED THAT RS.78,48,358/- WERE PAID FOR THE EVICTION OF LAND TO PERSONS IN POSSESSION OF LAND. IN VIEW OF THE ABOVE FINDINGS OF ASSESSING OFFICER IN REMAND REPORT IT W AS ARGUED THAT OUT OF SALE PROCEEDS OF RS.2,72,42,500/- IF THE AMOUNT OF EVICTION CHARGES ARE DEDUCTED THE NET SALE PROCEEDS COMES OUT AT RS.1,93 ,94,142/- AND ASSESSEE HAD INVESTED AN AMOUNT OF RS.1,73,37,500/- IN THE PURCHASE OF FRESH AGRICULTURAL LAND. THE FACT OF LAND SOLD A ND PURCHASED BEING AGRICULTURAL LAND IS NOT DISPUTED. AS REGARDS OBJEC TION OF ASSESSING OFFICER IN HIS REMAND REPORT THAT SINCE THE ASSESSE E WAS NOT CARRING OUT AGRICULTURAL ACTIVITIES, THEREFORE, HE WAS NOT ELIG IBLE FOR EXEMPTION U/S 54 THE LEARNED AR SUBMITTED THAT EVEN RENT RECEIVED FROM AGRICULTURAL LAND IS ASSESSED AS AGRICULTURAL INCOME THEREFORE, LEARNED CIT(A) HAS RIGHTLY ALLOWED THE RELIEF. AS REGARDS OTHER OBJECT ION OF ASSESSING OFFICER IN HIS REMAND REPORT THAT FEW OF PURCHASES IN AGRIC ULTURAL LAND PREDATED THE DATE OF SALE, THE LEARNED AR SUBMITTED THAT PAYMENT FOR ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 9 PURCHASES OF AGRICULTURAL LAND WERE MADE OUT OF ADV ANCES RECEVIED AGAINST SALE OF AGRICULTURAL LAND AND LEARNED CIT(A ) HAS RECORDED A FINDING OF FACT IN THIS RESPECT. AS REGARDS THE OBJ ECTION OF ASSESSING OFFICER THAT A PART OF INVESTMENT AMOUNTING TO RS.5 3,00,000/- CANNOT BE CONSIDERED AS INVESTMENT AS THE REGISTRY WAS NOT GOT DONE, THE LEARNED AR SUBMITTED THAT SALE DEED OF THIS PROPERT Y COULD NOT BE EXECUTED DUE TO SOME DISPUTE BUT THE AGREEMENT TO S ELL WAS DULY EXECUTED AND LEARNED CIT(A) HAS GIVEN A CLEAR FINDI NG THAT AGREEMENT TO SELL AMOUNTED TO TRANSFER OF RIGHTS IN THE PROPERTY . 8. ARGUING UPON APPEAL IN ITA NO.28(ASR)/2015, THE LEARNED AR SUBMITTED THAT ISSUE OF EVICTION CHARGES IS SAME AS IN ITA NO.26(ASR)/2015 AND CALCULATION OF CAPITAL GAIN IS ALSO SIMILAR AS THIS ASSESSEE WAS ALSO A CO-OWNER OF LAND. 9. AS REGARDS OBJECTION OF THE ASSESSING OFFICER TH AT LAND WAS NOT TRANSFERRED IN THE NAME OF ASSESSEE WITHIN TWO YEAR S, THEREFORE, SHE WAS NOT ELIGIBLE FOR CLAIM U/S 54, THE LEARNED AR S UBMITTED THAT LEARNED CIT(A) RELYING UPON THE CASE LAW OF SANJEEV LAL DEC IDED BY HONBLE APEX COURT HAS RIGHTLY HELD THAT IF A RIGHT IN THE PROPE RTY IS EXTINGUISHED BY EXECUTION OF AN AGREEMENT TO SELL, THE CAPITAL ASSE T CAN BE DEEMED TO HAVE BEEN TRANSFERRED. 10. THE LEARNED DR, ON THE OTHER HAND, PLACED HER R ELIANCE ON THE ORDERS OF ASSESSING OFFICER. ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 10 11. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIRST TAKE UP THE APP EAL IN ITA NO.26(ASR)2015, WE FIND THAT THE FIRST GRIEVANCE OF REVENUE IS THE ACTION OF LEARNED CIT BY WHICH HE HAD DELETED AN ADDITION OF RS.2,40,9,101/- RELYING UPON THE DECISION OF SH. SANJEEV LAL VS. CI T 269 CTR 0001 DECIDED BY HONBLE APEX COURT. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD NOT CO-OPERATED DURING THE ASSESSMENT PROCEEDIN GS AND THEREFORE, ASSESSMENT WAS COMPLETED U/S 144 AND IT IS ONLY DUR ING APPELLATE PROCEEDINGS THAT ASSESSEE FILED HIS SUBMISSIONS. TH E LEARNED CIT(A) FORWARDED THE SUBMISSIONS TO ASSESSING OFFICER FOR REMAND REPORT. THE ASSESSING OFFICER IN HIS REMAND REPORT HAD OBSERVED THAT ASSESSEE FOR THE CLAIM U/S 54B HAD PURCHASED AGRICULTURAL LAND M EASURING 61 KANAL AT VILLAGE KINGRA FOR RS.1,20,37,500/- BUT HE OBSERVED THAT DATE OF PURCHASE OF THIS LAND PREDATE THE DATE OF SALE O F THE LAND SOLD BY THE ASSESSEE AND HE RAISED FURTHER OBJECTION REGARDING ANOTHER LAND MEASURING 28 KANAL 17 MARLAS FOR RS.53,00,000/-. TH E ASSESSING OFFICER OBSERVED THAT THE FINAL REGISTRY OF THIS LA ND WAS NOT GOT DONE IN FAVOUR OF ASSESSEE AS THE MATTER WAS UNDER APPEAL. THEREFORE IT WAS SUBMITTED THAT THE ELIGIBILITY OF EXEMPTION U/S 54B MAY BE DECIDED ACCORDINGLY. AS REGARDS THE FIRST OBJECTION OF PURC HASE OF SOME PART OF AGRICULTURAL LAND BEFORE THE DATE OF SALE, THE LEAR NED CIT(A) HAS MADE A CLEAR FINDING OF FACT THAT PAYMENT FOR PURCHASE OF SUCH LAND WAS MADE OUT OF ADVANCES RECEIVED BY ASSESSEE AGAINST SALE O F LAND AND IN FACT HE ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 11 HAS HELD THAT PAYMENTS WERE DIRECTLY MADE BY BUYER OF AGRICULTURAL LAND TO THE SELLER WHO HAD SOLD LAND TO THE APPELLA NT. THE LEARNED CIT(A) HAS FURTHER RELIED UPON THE CBDT CIRCULAR NO.359 DA TED 10.05.1983 WHICH REFERS TO SECTION 54E OF THE ACT. AS PER SAID CIRCULAR THE EXEMPTION U/S 54 E OF THE ACT IS AVAILABLE TO AN A SSESSEE IF PART OF SALE CONSIDERATION OR EARNEST MONEY OR THE ADVANCES RECE IVED AGAINST SALE OF ASSET IS INVESTED IN SPECIFIED ASSETS BEFORE THE DA TE OF TRANSFER OF ASSETS. THE LEARNED CIT(A) HAS FURTHER HELD THAT INTENTION OF LEGISLATOR IN RESPECT OF SECTION 54B CANNOT BE DIFFERENT AS THE E SSENTIAL PURPOSES OF INCORPORATING THE PROVISIONS OF SECTION 54B IS TO B E ENSURE THAT ANYBODY SELLING AGRICULTURAL LAND SHOULD NOT BE SUB JECTED TO TAX IF THE PROCEEDS THEREOF ARE USED BY ASSESSEE FOR PURCHASE OF AGRICULTURAL LAND. 12. AS REGARDS THE OBJECTION OF ASSESSING OFFICER I N REMAND REPORT THAT ASSESSEE HIMSELF WAS NOT USING THE LAND FOR AG RICULTURE PURPOSES, WE FIND THAT IT IS IMMATERIAL AS TO WHETHER THE AGR ICULTURAL LAND OWNED BY ASSESSEE IS USED BY HIMSELF OR IS USED BY SOME O THER PERSONS AS THE NATURE OF LAND WILL REMAIN AGRICULTURAL LAND TILL T HE TIME THE LAND IS USED FOR AGRICULTURAL OPERATIONS. IT IS UNDISPUTED FACT THAT LAND WAS USED FOR AGRICULTURAL PURPOSES, THEREFORE, LEARNED CIT(A) HAS RIGHTLY HELD THAT AGRICULTURAL LAND WILL REMAIN AGRICULTURA L LAND IRRESPECTIVE OF THE FACT THAT WHETHER IT WAS USED FOR AGRICULTURAL PURPOSES BY OWNER OR BY SOME OTHER PERSONS. ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 12 13. AS REGARDS THIRD OBJECTION OF ASSESSING OFFICER REGARDING LAND OF RS.53,00,000/- FOR WHICH REGISTRY COULD NOT BE DONE , WE FIND THAT LEARNED CIT(A) HAS HELD THAT AGREEMENT TO SELL IS S UFFICIENT DOCUMENT TO INDICATE THE TRANSFER OF PROPERTY. FURTHER HE HAS P LACED HIS RELIANCE ON THE DEFINITION OF TERM TRANSFER OF PROPERTY OF SEC. 2(47) OF THE INCOME TAX ACT, WHICH DEFINES THE TRANSFER, IN RELATION TO A CAPITAL ASSET, THE EXTINGUISHMENT OF ANY RIGHTS THEREIN. THE LEARNED C IT(A) HAS RIGHTLY HELD THAT BY EXECUTING THE AGREEMENT TO SELL BY TRA NSFEROR A RIGHT IS CREDITED IN FAVOUR OF TRANSFEREE. THE TRANSFEROR IS RESTRAINED FROM SELLING THE SAID PROPERTY TO SOMEONE ELSE BECAUSE THE TRANS FEREE, IN WHOSE FAVOUR THE RIGHT IN PERSONAM IS CREATED , HAS A L EGITIMATE RIGHT TO ENFORCE SPECIFIC PERFORMANCE OF THE AGREEMENT, IF T HE TRANSFEROR FOR SOME REASONS DO NOT EXECUTE THE SALE DEED. THEREFORE, WH EN THE ASSESSEE PURCHASED LAND BY WAY OF EXECUTION OF AN AGREEMENT BY THE TRANSFEROR IRRESPECTIVE OF THE FACT THAT SALE DEED COULD NOT B E ENTERED THE ASSESSEE IS ELIGIBLE TO ENFORCE HIS RIGHT AND THEREFORE, HE HAS RIGHTLY HELD THAT ASSESSEE IS DEEMED TO HAVE PURCHASED THE LAND. IN V IEW OF THE ABOVE FINDINGS OF LEARNED CIT(A), HE HAS RIGHTLY ALLOWED THE EXEMPTION U/S 54B OF THE ACT. IN VIEW OF THE ABOVE, GROUND NO.1(A ), (C) OF ITA NO. 26(ASR)/2015 ARE DISMISSED. 14. AS REGARDS GROUND NO.1(B), WE FIND THAT ASSESSI NG OFFICER IN HIS REMAND REPORT HAS CLEARLY HELD THAT PAYMENTS FOR EV ICTION OF LAND WAS MADE AS THE ASSESSING OFFICER HAD VERIFIED THE CONF IRMATION OF ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 13 PAYMENTS RECEIVED BY ELEVEN PERSONS WHO WERE PAID T HE AMOUNTS FOR EVICTION. THEREFORE, LEARNED CIT(A) HAS RIGHTLY ALL OWED THE DEDUCTION OF SUCH EVICTION CHARGES U/S 48(1) OF THE ACT. WE FURT HER FIND THAT IN THE CASE OF A JOINT OWNER MR. JIT SINGH WHO HAD ALSO PA ID SIMILAR EVICTION CHARGES AND LEARNED CIT(A) HAS DELETED THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF EVICTION CHARGES, AND THE DEP ARTMENT HAS NOT FILED ANY APPEAL FOR ALLOWANCE OF EVICTION CHARGES BY LEARNED CIT(A). THIS FACT IS VERIFIABLE FROM PAPER BOOK PAGE 4 WHER E A COPY OF GROUNDS OF APPEAL FILED BY JIT SINGH IN ITA NO. 21 IS PLACE D. IN VIEW OF THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) IN THIS RESPECT. THEREFORE, GROUND NO.1(B) IS ALSO DISMISSE D. 15. IN VIEW OF THE ABOVE APPEAL IN ITA NO.26(ASR)/2 015 IS DISMISSED. 16. NOW COMING TO ITA NO. 28(ASR)/2015. GROUND NO.1 (A) IS SIMILAR TO GROUND NO.1(A) IN ITA NO.26(ASR)/2015 WHERE ALSO TH E LEARNED CIT(A) HAS RECORDED A FINDING OF FACT THAT OUT OF GROSS SA LE CONSIDERATION OF SALE OF AGRICULTURAL LAND FOR RS.61.20 LACS THE AMOUNT O F RS.17,63,125 WAS DEDUCIBLE AS AMOUNTS PAID FOR EVICTION OF LAND U/S 48(1) OF THE ACT AND FOR THE REST OF SALE CONSIDERATION AMOUNTING TO RS. 43,56,875/-, THE ASSESSEE HAD MADE PURCHASE OF ANOTHER AGRICULTURAL LAND FOR WHICH THE PAYMENTS WERE DIRECTLY MADE BY M/S BHAGWATI AGRICUL TURAL FARMS TO THE SELLER MR. SUCHA SINGH FOR AMOUNT OF RS.50,25,0 00/- AND THEREFORE HE HAS RIGHTLY HELD THAT NO CAPITAL GAIN AROSE AS T HE ASSESSEE WAS ITA NOS. 26 & 28(ASR)/2015 ASST. YE AR: 2009-10 14 ELIGIBLE U/S 54B OF THE ACT. IN VIEW OF THE ABOVE G ROUND NO.1(A) IS DISMISSED. 17. AS REGARDS GROUND NO.1(B), THIS IS THE SIMILAR TO GROUND AS GROUND NO.1(B) IN ITA 26(ASR)2015, WE HAVE ALREADY HELD THE SAID EVICTION OF CHARGES TO BE ELIGIBLE AS DEDUCTION U/S 48(1), THEREFORE, RESPECTFULLY FOLLOWING OUR DECISION IN ITA NO.21(AS R)2015, GROUND NO.1(B) IS ALSO DISMISSED. IN VIEW OF THE ABOVE, TH E APPEAL IN ITA NO.28(ASR)2015 IS DISMISSED. 18. IN NUTSHELL, THE APPEALS IN ITA NOS.26 & 28 (ASR)/2015 FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 11.03.2016. /PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.