The ITO-2(2), Indore V. Smt. Mohan Bai Pokhrana, Indore

ITA 468/IND/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2211 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 14-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S N AGARWAL CA SHRI
• Keywords: Capital asset; Additional evidence; Corroborative evidences; Revised return
• Section: 54B; 54F; 54

Judgement Text

ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 1 OF 14 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE , ! . . , % BEFORE SHRI C.M. GARG, JM, AND SHRI O.P.MEENA, AM . . . / I.T.A. NO.468/IND/2013 / ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, 2(2) INDORE VS. SMT. MOHAN BAI POKHRANA 225, TEXTILE CLERK COLONY INDORE . . ./ PAN: ACCPP 7087N ( / APPELLANT )*( / RESPONDENT ( + / APPELLANT BY SHRI MOHD. JAVED, SR. D.R. )*( + / RESPONDENT BY SHRI S.N. AGARWAL, CA SHRI PANKAJ MOGRA CA + / DATE OF HEARING 19-05-2017 / + / PRONOUNCED ON 24-05-2017 / O R D E R PER O.P. MEENA, AM. 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 20-02-2013 OF COMMISSIONER OF INCOME-TA X (APPEALS)-1 INDORE (IN SHORT CIT(A)) AND RELATES T O ASSESSMENT YEA 2009-10 ON FOLLOWING GROUNDS OF APPE AL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, INDORE HAS ERRED IN DIRECTING THE AO TO ALLOW THE CLAIM OF EXEMPTION U/S. 54EC OF THE INCOME TAX ACT, PARTICULARLY WHEN THE ASSESSEE HAD NOT MADE DEPOSIT IN REC BOND WITHIN THE SPECIFIED PERIOD OF SIX MONT HS FROM THE DATE OF TRANSFER OF THE ASSET AS SPECIFIED IN SECTION 54EC OF THE INCOME TAX ACT,1961. ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 2 OF 14 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, INDORE HAS FURTHER ERRED IN ACCEPTING THE PLEA OF THE ASSESSEE THAT INVESTMENT IN REC BONDS COULD NOT HAVE BEEN MADE WITHIN SIX MONTHS AS THE APPLICATION FORM WAS NOT AVAILABLE, ESPECIALLY WHEN NO SUPPORTING DOCUMENT WAS FILED BY THE ASSESSEE AND NO SUCH ARGUMENT WAS TAKEN BEFORE THE AO DURING THE COURSE OF ASSESSMENT STAGE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, INDORE HAS ERRED IN DIRECTING THE AO TO ALLOW THE CLAIM OF THE ASSESSEE U/S. 54B OF I T ACT WHEN THE ASSESSEE DID NOT FILE ANY SUPPORTING EVIDENCE BEFORE THE AO TO ESTABLISH HER CLAIM OF FULFILLMENT OF CONDITIONS SP ECIFIED IN SECTION 54B I.E. AGRICULTURAL ACTIVITIES WERE C ARRIED OUT ON THE LAND SOLD FOR A PERIOD OF TWO YEARS, IMMEDIATELY PRECEDING THE DATE OF TRANSFER. 3(I) WHILE HOLDING SO, THE LD. CIT (A) HAS GROSSLY ERRED IN ADMITTING ADDITIONAL DOCUMENTARY EVIDENCE IN VIOLAT ION OF RULE 46A OF I T RULES, 1962. 2. THROUGH GROUND NO. 1 AND 2, THE REVENUE HAS CHALLENGED THE DIRECTION OF LD. CIT (A) TO ALLOW EX EMPTION UNDER SECTION 54EC OF THE ACT EVEN THE ASSESSEE HAD NOT MADE DEPOSIT IN REC BOND WITHIN THE SPECIFIED PERIO D OF SIX MONTHS FROM THE DATE OF TRANSFER OF THE ASSET A S SPECIFIED UNDER SECTION 54EC AND IN ACCEPTING THE P LEA OF THE ASSESSEE THAT INVESTMENT IN REC BOND COULD NOT BE MADE WITHIN SIX FROM DATE OF TRANSFER OF ASSET AS T HE APPLICATION FORM WAS NOT AVAILABLE WITHOUT SUPPORTI NG EVIDENCES. HENCE, THESE GROUNDS OF APPEAL ARE BEIN G DEALT WITH SIMULTANEOUSLY. ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 3 OF 14 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE HAS SOLD AGRICULTURAL LAND ADMEASURING 0.810 HECTARES FOR A CONSIDERATION OF RS. 74,58,000/- ON 05-06-2008 ON W HICH AFTER REDUCING BROKERAGE OF RS. 1,50,000 AND INDEX COST OF RS. 3,22,650/- LONG-TERM CAPITAL GAIN WAS COMPUTED AT RS. 69,85,350/-. THE ASSESSEE HAS CLAIMED EXEMPTION OF RS.50 LACS UNDER SECTION 54EC OF THE ACT ON ACCOUNT OF INVESTMENT IN REC BONDS, RS. 15,49,883/- UNDER SECT ION 54F AND BALANCE LONG-TERM CAPITAL GAIN OF RS. 4,35, 467/- HAS BEEN OFFERED FOR TAX VIDE REVISED RETURN OF INC OME FILED ON 10-06-2011. THIS DEDUCTION OF RS. 4,35,467/- WAS CLAIMED UNDER SECTION 54B OF THE ACT, DURING THE CO URSE OF ASSESSMENT PROCEEDINGS AGAINST THE INVESTMENT MADE IN PURCHASE OF AGRICULTURAL LAND. THE ASSESSING OFFICE R FOUND THAT THE INVESTMENT IN REC BONDS WAS MADE ON 31-03- 2009, AFTER THE DELAY OF FOUR MONTHS; HENCE, THE CL AIM WAS DISALLOWED. 4. THE ASSESSEE HAS CARRIED THE MATTER BEFORE CIT (A). IT WAS CLAIMED THAT THE ASSESSEE WANTED TO CONSTRUCT A RESIDENTIAL HOUSE AND AT THE SAME TIME, INVESTMENT IN CAPITAL GAINS BONDS. HOWEVER, TIME LIMIT FOR CAPITA L GAINS SCHEME WAS EXPIRED ON 05-12-2008 I.E. WITHIN SIX MO NTHS FROM THE DATE OF SALE OF LAND. THUS, AS A PRECAUTIO NARY MEASURE, THE APPELLANT HAS INVESTED AN AMOUNT OF RS . 70 LACS IN CAPITAL GAINS SCHEME ON 02-12-2008 I.E. PRI OR TO 05- 12-2008. THE APPELLANT AS SOON AS BY RECEIPTS OF INVESTMENT FORM OF BONDS INVESTED AN AMOUNT OF RS. ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 4 OF 14 50,00,000/- IN CAPITAL GAINS BONDS. THEREFORE, THE LD. CIT (A) HAS HELD THAT THE APPELLANT ACTUALLY INVESTED T HE AMOUNT WITHIN SIX MONTHS FROM THE DATE OF SALE OF L AND IN CAPITAL GAINS SCHEME DESPITE OF NON-AVAILABILITY O F SPECIFIED BONDS. THIS ACT OF THE APPELLANT SHOWS HE R INTENTION FOR INVESTMENT IN SPECIFIED BONDS ELIGIBL E FOR CAPITAL GAINS SCHEME. THE AMOUNT IN SPECIFIED BONDS WAS ACTUALLY MADE ON 31-03-2009 I.E. WITHIN FINANCIAL Y EAR ONLY. THE APPELLANT RELYING ON THE DECISION IN THE CASE OF LALIT MARDA 23 SOT 250 (KOL-TRIB) AND MUNEER KHAN 4 1 SOT 504 (HYD) SUBMITTED THAT FOR THE CLAIMING EXEMP TION UNDER SECTION 54EC THE SAME FUND IS NOT REQUIRED TO BE INVESTED. THE LD. CIT (A), BY PLACING RELIANCE IN THE CASE OF CIT V. CELLO PLAST [I.T.A. NO. 3731 OF 2010 DATED 2 7-07- 2012] / (2012) 209 TAXMAN 617 (BOM)/ 82 CCH 128 (MUM-HC) 24 TAXMANN.COM 111 (BOM), OBSERVED THAT T HE APPELLANT HAS SET APART THE AMOUNT WHICH IS SUPPOSE D TO BE INVESTED IN THE SPECIFIED BONDS, UNDER SECTION 54 EC ON 02-12-2008 WITHIN 6 MONTH FROM THE DATE OF SALE OF LAND AND PRIMARILY COMPLIED WITH, CONDITIONS AS IM POSED WITHIN SECTION 54 EC OF THE ACT. AND THE APPELLANT HAS FINALLY INVESTED IN THE SPECIFIED BONDS ON 31-03-20 09 DURING THE ACCOUNTING YEAR ITSELF. THUS ON TECHNICA L GROUNDS, THE AO WAS NOT JUSTIFIED IN DENYING THE EX EMPTION UNDER SECTION 54 EC OF THE ACT. 5. BEING AGGRIEVED WITH, THE LEARNED SR. D.R. SUBMITTE D THAT THE ASSESSEE WAS REQUIRED TO MAKE INVESTMENT I N REC BONDS BY 05-12-2008, BUT SAME WAS MADE ON 31-03-200 9 ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 5 OF 14 ON THE GROUND THAT THAT THE REQUITE APPLICATION FOR MS FOR BONDS WERE NOT AVAILABLE. HOWEVER, THE ASSESSEE DID NOT GIVE SUPPORTING EVIDENCES AGAINST THIS CLAIM. FURTH ER, AS PER THE AO, THE SALE CONSIDERATION WAS FIRST DISTR IBUTED AMONG THE FAMILY MEMBERS BY WAY OF LOAN AND THE INVESTMENT IS MADE OUT OF BORROWED FUNDS FROM THE F AMILY MEMBERS AND SOME PART OF SALE CONSIDERATION. THE DE CISION RELIED BY LEARNED CIT (A) ARE DISTINGUISHABLE ON FA CTS AND DELAY OF 4 MONTHS IN INVESTMENT IS NOT JUSTIFIED. T HE LEARNED SR. D.R. RELIED ON THE DECISION IN THE CASE OF SMT. DAKSHABEN R. PATEL V. ACIT 2(1) BARODA [ I.T.A. NO . 2803/AHD/2011 (A.Y. 08-09) DATED 31-05-2012] WHO CLAIMED THAT SECTION 54EC CLEARLY STATES THAT THE INVESTMENT IN THE SPECIFIED BONDS IS TO BE MADE WI THIN SIX MONTHS AFTER THE DATE OF SUCH TRANSFER. AS THE INV ESTMENT IN THE SPECIFIED BONDS HAS NOT BEEN MADE WITHIN THE PERIOD OF 6 MONTHS FROM THE DATE OF SALE, THEREFORE, THE A SSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54 EC OF T HE ACT. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS INVESTED A N AMOUNT OF RS. 70,00,0 00/-ON 02-12-2008 I.E. WITHIN SIX MONTHS FROM THE DATE OF SALE OF ASSET UNDER THE CAP ITAL GAIN SCHEME AND FINALLY INVESTED IN REC BONDS ON 31 -03- 2009, OUT OF THE MATURITY AMOUNT OF FIXED DEPOSITS. THUS, IF THE INTENTION OF THE ASSESSEE WAS NOT TO CLAIM DEDU CTION UNDER SECTION 54EC, IN THAT CASE, THE ASSESSEE WAS NOT REQUIRED TO INVEST THE AMOUNT UNDER CAPITAL GAINS S CHEME, WITHIN 6 MONTHS FROM THE DATE OF SALE OF PROPERTY, I.E. BY ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 6 OF 14 02-12-2088, AS THE AMOUNT IN FIXED DEPOSITS CAN BE INVESTED PRIOR TO DATE OF FILING OF RETURN OF INCOM E I.E. BY 31-07-2009. HENCE, THE INTENTION OF THE ASSESSEE WA S VERY CLEAR TO CLAIM EXEMPTION UNDER SECTION 54EC OF THE ACT. THE ASSESSEE HAS ALSO PARTED WITH THE MONEY RECEIVE D ON SALE CONSIDERATION OF LAND BY THE DEPOSITING THE SA ME UNDER THE CAPITAL GAIN SCHEME. IN SUPPORT OF THIS PROPOSITION, THE LEARNED COUNSEL FOR THE ASSESSEE H AS PLACED RELIANCE ON FOLLOWING CASE LAWS: CIT V. CELL O PLAST [I.T.A. NO. 3731 OF 2010 DATED 27-07-2012] / (2012) 209 TAXMAN 617 (BOM)/ 82 CCH 128 (MUM-HC) 24 TAXMANN.COM 111 (BOM) , SUNIL KUMAR SHAHA [ I.T.A. NO. 1052/KOL/2014 (KOL-TRIB) DTD. 22-03-2016 (PB16), CI T V. AKBAR ALI DHALA [I.T.A. NO.1693/MDS/2012 (CHENNAI) DATED 25-06-2013] AS AFFIRMED IN T. C. (A) NO. 49 O F 2014 DATED 14-07-2014 OF HON`BLE MADRAS HIGH COURT, OM ELECTRONICS [ I.T.A. NO. 7681/MUM/2011DTD 31-07-201 3] ASHOK CHAWLA [I.T.A. NO. 9074/MUM/2010 DTD. 06-02- 2013] AND ACIT V. SHRI KAMALKAR MOGHE [ I.T.A. NO. 104 OF 2013 DATED 04-09-2015 OF HON`BLE BOMBAY HIGH COURT ] 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE ASSESSEE HAS SOLD HER CAPITAL ASSET ON 05-06-2008 A ND EARNED LONG-TERM CAPITAL GAIN THEREON. THE ASSESSEE HAS INVESTED A SUM OF RS. 70 LAKHS ON 02-12-2008 IN CAP ITAL GAINS SCHEME WITHIN 6 MONTHS FROM THE DATE OF SALE OF LAND WITH A VIEW TO CLAIM EXEMPTION UNDER SECTION 54EC O F THE ACT. WHEN THE REC BONDS WERE AVAILABLE, THE ASSESSE E HAS ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 7 OF 14 MADE INVESTMENT OF RS. 50 LAKHS IN REC BONDS ON 31- 03- 2009 AND CLAIMED EXEMPTION UNDER SECTION 54EC OF TH E ACT. THE CIT(A) HELD THAT THE INTENTION OF THE ASSE SSEE WAS THAT TO INVEST IN REC BONDS, IF THAT WAS NOT THE I NTENTION, THE ASSESSEE COULD HAVE INVESTED IN CAPITAL GAINS SCHEME UP TO THE DATE OF FILING OF RETURN I.E. BY 31-7-200 9. THUS, WE FIND THAT THE ASSESSEE HAS INVESTED THE AMOUNT O F RS.50 LAKHS IN CAPITAL GAIN SCHEME WITHIN THE PERIOD OF 6 MONTHS FROM THE DATE OF SALE OF ASSET FOR PURCHASING REC B ONDS. THE LEARNED COUNSEL FOR THE ASSESSEE, HAS RELIED IN THE CASE OF CIT V. AKBAR ALI DHALA [I.T.A. NO. 49 OF 2014 DT D 14-07- 2014] OF HON`BLE MADRAS HIGH COURT WHEREIN IT WAS HELD THAT PARA 7 THAT THERE IS NO HARD AND FAST RULE TH AT THE ASSESSEE SHOULD INVEST ON A PARTICULAR DATE WITHIN THE SIX MONTHS PERIOD SPECIFIED IN THE SAID PROVISION. THIS IS MORE SO TAKING IN TO CONSIDERATION THE FACT THAT THE ASS ESSEE IS ENTITLED TO INVESTMENT IN ANY SUCH LONG-TERM SPECIF IED ASSETS, SPECIFIED IN EXPLANATION (B) TO SECTION 54E C (3) THAT WOULD BE MOST BENEFICIAL TO HIM. IT IS ALSO POSSIBL E THAT THE ASSESSEE CAN WAIT TILL THE LAST DATE TO SEE WHETHER ANY BOND I.E. PROFITABLE TO HIM IS ISSUED. SIMILARLY THE DEC ISION OF HON`BLE HIGH COURT AND HON`BLE BOMBAY HIGH COURT IN THE CASE OF SHRI KAMLAKAR MOGHE (SUPRA) WHEREIN THE ASS ESSEE WANTED TO INVESTMENT IN REC BONDS AND IN FACTS INVE STED IN REC BONDS ON 24-01-2007 , HIS SPECIFIC STAND THA T THE BONDS WERE NOT AVAILABLE DURING THIS PERIOD, IS NOT FOUND TO BE INCORRECT AND FALSE BY ANY OF THE AUTHORITIES. S INCE, IN THE PRESENT CASE THIS CLAIM OF THE ASSESSEE THAT RE C BOND ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 8 OF 14 APPLICATION FORM WERE AVAILABLE DURING THE RELEVANT PERIOD IS NOT SUBSTANTIATED BY REVENUE, WHEREAS THE ASSESS EE HAS INVESTED THE SAME WITHIN SIX MONTHS IN CAPITAL GAIN S SCHEME. HENCE, THE RATIO OF ABOVE DECISION ARE CLE ARLY APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSE E HAS PURCHASED THE REC BONDS WITHIN THE REASONABLE PERIO D WHEN THE BONDS WERE MADE AVAILABLE FOR INVESTMENT. BEFORE THAT, THE ASSESSEE HAD INVESTED AN AMOUNT OF RS. 70 LAKHS ON 02-12-2008, WITHIN THE SPECIFIED TIME LIMIT UNDE R SECTION 54EC OF THE ACT. NO CONTRARY DECISION HAS B EEN BROUGHT TO OUR KNOWLEDGE BY THE LD. SR. D.R. THE LD . SR. D.R. HAD RELIED IN THE CASE OF SMT. DAKHABEN R PATE L (SUPRA) BUT THE FACTS OF THAT CASE ARE DISTINGUISHA BLE. AS IN THE SAID CASE THE ASSESSEE HAS MADE INVESTMENT IN R EC BONDS BEFORE THE SALE OF ASSET, THEREFORE, THE TRI BUNAL HAS HELD THE INVESTMENT IN REC BONDS HAS TO BE WITHIN S IX MONTH FROM THE DATE OF TRANSFER OF ASSET AND NOT BE FORE THE DATE OF TRANSFER OF ASSET. WHEREAS IN THE INSTANT C ASE, THE INVESTMENT IN REC BONDS HAS BEEN MADE WITHIN FINANC IAL YEAR ONLY AND BEFORE THAT THE ASSESSEE HAS INVESTED IN CAPITAL GAINS SCHEME WITHIN THE SPECIFIED PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF ASSET. CONSIDER ING THE AFOREMENTIONED FACTS, REASONS AND CASE LAWS, WE DO NOT FIND ANY INFIRMITY AND PERVERSITY IN THE ORDER OF LD. CIT (A). IN VIEW OF THIS MATTER, THE APPEAL OF THE REVE NUE ON GROUND NO. 1 AND 2 IS DISMISSED. 8. GROUND NO. 3 AND 3.1 RELATES TO ALLOWING CLAIM OF THE ASSESSEE UNDER SECTION 54B OF THE ACT EVEN WHEN ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 9 OF 14 CONDITIONS THAT AGRICULTURAL ACTIVITIES ARE CARRIED OUT FOR A PERIOD OF TWO YEARS IMMEDIATELY TO PRECEDING YEAR O N DATE OF TRANSFER ARE NOT FULFILLED. 9. FACTS APROPOS OF THIS GROUND ARE THAT THE ASSESSEE HAS SOLD AGRICULTURAL LAND FOR RS. 74.58 LACS ON WH ICH EARNED CAPITAL GAIN OF RS. 73.08 LACS WHICH OUT OF THIS RS. 15.49 LACS IS CLAIMED DEDUCTION U/S. 54F AND RS. 50 LACS U/S. 54EC AND RS. 4,35,467/- U/S. 54B HOWEVER, THE CLAIM U/S. 54B WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAS DISALLOWED THE CLAIM UNDER SECTION 54B OF THE ACT ON THE SAID AGRICULTURAL LAN D WAS FOUND TO BE DIVERSIFIED USE FOR PURPOSE OF OTHER TH AN AGRICULTURE. HOWEVER, LD. CIT (A) HAS ALLOWED THE S AME WITH FINDING THAT THE LAND SOLD BY THE APPELLANT DI VERTED FOR NON AGRICULTURE PURPOSES ON 11-11 2003, BUT THE SAM E WAS STILL BEING USED BY HER FOR AGRICULTURAL PURPOS ES IN VIEW OF THE DETAILS FILED BY THE ASSESSEE BEING LAN D RECORD IN FORM P-II IN WHICH THE AGRICULTURE CROPS HAVE BE EN SHOWN AND ACCEPTED THE SAME WITH DOCUMENTARY EVIDEN CE WITH VERIFICATION. 10. BEFORE THE TRIBUNAL, THE LEARNED SR. D.R. VEHEMENTL Y SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT AS PER PROVISION OF SECTION 54B, THE SO-CALLED LAND SHOULD BE USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE IN LAST TW O YEARS FROM THE DATE OF SALE OF LAND. THE DOCUMENTARY EVID ENCE IN FORM OF P-II (PB-77 TO 82) ARE RELATED TO YEAR 2010 -11N 2001-02, AND 2002-03 WHILE FORM P-II FOR FIRST TWO YEARS PRIOR TO DATE OF TRANSFER I.E. THE YEAR 2006-07 AND 2007-08 ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 10 OF 14 HAVE NOT BEEN FILED BEFORE THE AO. THEREFORE, THE FINDING OF THE CIT (A) ARE INCORRECT AND WITHOUT VERIFICATION AND THEREFORE, MAY BE SET-ASIDE. THE EVIDENCE IN FORM O F P-II ADMITTED ARE WITHOUT PROVIDING AND CALLING REMAND R EPORT ARE CLEARLY IN VIOLATION OF RULE 46A OF INCOME-TAX RULES, 1962. 11. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE CIT (A) HAS DEALT WITH THE ISSUE OF ALLOWABILITY OF CLAIM UNDER SECTION 54B OF THE ACT IN PARA 5.3 OF HIS ORDER. THE CIT (A) HELD THAT THE CLAIM U/S. 54B WAS NOT MADE IN THE COMPUTATION OF TOTAL I NCOME, BUT THE INFORMATION REGARDING CLAIM UNDER SECTION 5 4B WAS AVAILABLE WITH BALANCE SHEET AND DETAILS FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAS ALSO CLAIMED EXEMPTION UNDER SECTION 54B DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND SAME WAS DENIE D BY THE AO FOR THE REASONS STATED THEREIN. THE LEARNED COUNSEL SUBMITTED THAT THE APPELLATE AUTHORITIES ARE EMPOWE RED TO ENTERTAIN LEGAL CLAIM AS HELD BY THE HON`BLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS AND SHAREHOLDE RS PVT. LTD. [I.T.A. NO. 390 OF 2010 DTD. 21-06-2012] WHERE IN THE DECISION OF GOETZE (INDIA) LTD. V CIT [2006] 284 IT R 323 (SC) WAS ANALYZED AND IT WAS HELD THAT LEGAL CLAIM CAN BE ENTERTAINED BY APPELLATE AUTHORITIES. THE LEARNED C OUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS PURCHASED AGRICULTURAL LAND ON 10-07-1997. THE USE OF SAID L AND WAS CHANGED FROM AGRICULTURE TO NON-AGRICULTURAL ON 11- 11- 2003. HOWEVER, TILL THE DATE OF SALE OF LAND, THE SAID LAND ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 11 OF 14 BEING USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSE S. THE LEARNED COUNSEL REFERRING TO PAPER BOOK PAGE NO. 77 TO 82 SUBMITTED THAT THE LAND WAS BEING USED FOR AGRICULT URAL PURPOSES. IT WAS SUBMITTED THAT AS PER PROVISIONS O F SECTION 54B, THE WORD USED IS ONLY LAND AND NOT AGRICULTURAL LAND. HOWEVER, THE PURPOSE AND USE OF LAND MUST BE FOR AGRICULTURAL PURPOSES. IN THE PRESENT C ASE, THE ASSESSEE HAS USED THE LAND FOR AGRICULTURAL PURPOS ES. HENCE, CLAIM OF THE ASSESSEE UNDER SECTION 54B WAS LEGAL AND PROPER. THE LEARNED COUNSEL RELYING ON THE DECI SION IN THE CASE OF CIT V. SMT. SAVITA RANI (2003) 133 TAXM AN 712 (P&H) SUBMITTED THAT EXEMPTION IS AVAILABLE TO SEL LER OF A CAPITAL ASSET BEING LAND. IT DOES NOT RESTRICT THE BENEFIT TO THE AGRICULTURAL LAND ONLY. HOWEVER, THE LAND AGAIN ST WHICH BENEFIT IS SOUGHT MUST HAVE BEEN USED BY THE ASSESS EE OR HIS PARENTS FOR AGRICULTURAL PURPOSES BEFORE TWO YE ARS IMMEDIATE PRECEDING THE DATE OF SALE. IN THE CASE O F SMT. ASHA GEORGE [I.T.A. NO. 114 OF 2012 DATED 17-02-201 2, THE HON`BLE KERALA HIGH COURT HELD THAT WHAT IS RELEVAN T IS THE LAND SOLD MUST BE USED FOR AGRICULTURAL PURPOSE BEF ORE TWO YEARS PRIOR TO DATE OF SALE OF LAND AND IT IS IMMAT ERIAL WHAT IS THE PURCHASER OF LAND DOSE IT WITH. IT IS NOT NE CESSARY THAT LAND TRANSFERRED MUST BE AGRICULTURAL LAND AS SUCH. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. AS REGARDS, CLAIM UNDER SECTION 54B IS CONCERNED; W E ARE OF THE VIEW THAT EXEMPTION IS AVAILABLE TO THE SELL ER OF A CAPITAL ASSET BEING LAND . IT DOES NOT RESTRICT THE BENEFIT ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 12 OF 14 TO THE AGRICULTURAL LAND ONLY. IT IS SUFFICE THAT, IF THE ASSESSEE OR HIS PARENTS MUST HAVE USED THE LAND SOL D BY THE ASSESSEE FOR AGRICULTURAL PURPOSES IN THE TWO Y EARS IMMEDIATE PRECEDING THE DATE OF SALE OF LAND. WE F IND THAT THE CIT (A) HAS VERIFIED FORM P-II, COPY OF WHICH I S PLACED AT PAPER BOOK PAGE NO. 77 TO 82 AND FIND THAT LAND WAS BEING USED AS AGRICULTURAL PURPOSE. THESE DOCUMENTS WERE ALSO FILED BEFORE THE AO, AS SEEN FROM REFERENCE MA DE AT PAGE NO 17 OF THE ORDER OF CIT (A). THIS FACT IS AL SO EVIDENCED FROM PARA 2.2 OF LETTER DATED 06-09-2011 FILED BY THE ASSESSEE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE CLAIM OF THE REVENUE THAT THESE DOCUMENTS HAVE BEEN ADMITTED, AS ADDITIONAL EVIDENCE BY THE CIT (A) IN VIOLATION OF RULE 46A OF INCOME-TAX RULES, 1962, DOES NOT APPEARS TO BE C ORRECT. HENCE, THERE NO VIOLATION OF RULE 46A OF INCOME-TAX RULES, 1962. WE ALSO FIND THAT THOUGH THE LAND USE WAS DIV ERTED FOR NON-AGRICULTURAL PURPOSES ON 11-11-2013. HOWEVE R, THE ASSESSEE WAS STILL USING THE SAID LAND FOR AGRICULT URAL PURPOSES. THIS IS EVIDENCED FROM FORM P-II WHEREIN THE LAND USED IS CATEGORICALLY MENTIONED AS USED FOR TH E PURPOSE OF AGRICULTURE ACTIVITY DURING YEAR 2010-11 , 2001- 02 AND 2002-03 MEANING THEREBY THAT IT WAS BEING US ED FOR AGRICULTURAL PURPOSE DURING PERIOD OF TWO YEARS BEFORE THE DATE OF SALE OF LAND 05-06-2008. THIS IS ALSO ESTABLISH FROM THE FACT THAT THE ASSESSEE HAS SHOWN THE AGRIC ULTURAL INCOME IN HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. WE FIND THAT THE CIT (A) HAS VERIFIE D THIS ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 13 OF 14 DOCUMENTARY EVIDENCE AND OBSERVED THAT THE ASSESSEE WAS USING THE LAND IN QUESTION FOR AGRICULTURAL PURPOSE S IN THE IMMEDIATE PRECEDING TWO YEARS FROM THE DATE OF SALE OF LAND. THE PERUSAL OF FORM P-II SHOWS THAT THE REMAI NING PART OF THE SAID LAND WAS BEING USED EVEN AFTER SAL E I.E. IN THE YEAR 2010-11. (PB-77). THE LEARNED COUNSEL RELI ED IN THE CASE OF CIT V. SMT. SAVITA RANI (2003) 133 TAXM AN 712 (P&H) WHEREIN IT WAS HELD THAT EXEMPTION IS AVAILAB LE TO SELLER OF A CAPITAL ASSET BEING LAND. IT DOES NOT RESTRICT THE BENEFIT TO THE AGRICULTURAL LAND ONLY. HOWEVER, THE LAND AGAINST WHICH BENEFIT IS SOUGHT MUST HAVE BEEN USED BY THE ASSESSEE OR HIS PARENTS FOR AGRICULTURAL PURPOS ES BEFORE TWO YEARS IMMEDIATE PRECEDING THE DATE OF SALE. THI S THIS VIEW IS ALSO SUPPORTED BY THE ABOVE DECISION. IN TH E CASE OF SMT. ASHA GEORGE V. ITO (2013) 30 TAXMANN.COM 334 (KERALA) / 351 ITR 123 (KER)/ 214 TAXMAN 236 (KER) HELD THAT THE EMPHASIS GIVEN IN SECTION 54B IS THE USE TO LAND IS PUT (IN FACT , THE TRIBUNAL HAS CORRECTLY HELD T HAT IT IS USER OF LAND AND NOT THE NATURE OF LAND THAT IS REL EVANT), IN OTHER WORD IT IS NOT NECESSARY THAT THE LAND WHICH IS TRANSFERRED MUST BE A AGRICULTURAL LAND AS SUCH. TH E FACT THAT THE LAND IS LOCATED IN URBAN AREA, CANNOT BY I TSELF BE RELEVANT TO DENY THE BENEFIT UNDER SECTION 54B. WHA T IS ESSENTIAL THAT IT MUST BE USED FOR AGRICULTURAL PUR POSES FOR A PERIOD OF TWO YEAR PRIOR TO DATE OF TRANSFER. THE CLAIM MADE BY THE REVENUE THAT LAND WAS BEING USED FOR AGRICULTURAL PURPOSE IN THE YEAR 2002-03 AND THERE IS NO EVIDENCE IF THE SAID LAND WAS BEING USED FOR AGRICU LTURAL ITO 2(2) INDORE V. SMT. MOHAN BAI POKHRANA/ I.T.A . NO.468/IND/2013/A.Y. 09-10 PAGE 14 OF 14 PURPOSE IN THE YEAR 2006-07 AND 2007-08 IS NOT TENA BLE IN VIEW OF THE FACTS AND EVIDENCE THAT THE SAID LAND W AS BEING USED FOR AGRICULTURAL PURPOSE IN YEAR 2010-11 THEN IT IS BUT NATURAL THAT THE SAID LAND MUST HAVE BEEN BEING USE D FOR AGRICULTURAL PURPOSE DURING A.Y. 2006-07 AND 2007-0 8 ALSO. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE H AS UTILIZED AN AMOUNT OF RS. 40,27,315/- FOR THE PURCHASE OF AGRICULTURAL LAND AFTER THE DATE OF SALE OF HER AGR ICULTURAL LAND AS AGAINST THE CLAIM OF RS. 4,35,467/- U/S. 54 B OF THE ACT. THEREFORE, WE FIND NO ERROR IN ALLOWING THE CL AIM UNDER SECTION 54B OF THE ACT BY THE LD. CIT (A). IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY, PERVERSITY AND ILLEGALITY IN THE ORDER O F CIT (A). ACCORDINGLY, THE ORDER OF LD. CIT (A) IS UPHELD. HO WEVER, AS DIRECTED BY THE CIT(A) THAT OVERALL EXEMPTION ALLOW ABLE UNDER SECTION 54EC AND 54B OF THE ACT REQUIRES, TO THE EXTENT OF NET CAPITAL GAINS AS OFFERED BY THE ASSES SEE IN HER COMPUTATION OF INCOME. IN VIEW OF THIS MATTER, THE GROUND NO. 3 AND 3.1 OF APPEAL OF REVENUE IS DISMISSED. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 14. THE ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY 2017. SD/- ( C.M. GARG) SD/- (O.P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: MAY 24, 2017/OPM