Shri Kishorbhai Harjibhai Patel, Vadodara V. The Income Tax Officer, Ward-1(2)(4), Vadodara

ITA 587/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8080 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 08-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Capital asset; Gift
• Section: 143(3); 54B; 54F; 54; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI KISHORBHAI HARJIBHAI PATEL, GF - 24, KESAR GLASS, CLASSIC COMPLEX, AKOTA, VADODARA PAN: ACQPP7157F (APPELLANT) VS THE ITO, WARD - 1(2)(4), VADODARA (RESPONDENT) REVENUE BY : S H RI SAURABH SIN GH , SR. D . R. ASSESSEE BY: S H RI M.J. SHAH , A.R. DATE OF HEARING : 12 - 04 - 2 018 DATE OF PRONOUNCEMENT : 18 - 06 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMB ER : - THIS ASSESSEE S APPEAL FOR A.Y. 2013 - 14 , ARIS ES FROM ORDER OF THE CIT(A) - 1, VADODARA DATED 27 - 12 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TA X ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE C.I.T.(APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DENYING DEDUCTION U/S.54F OF RS.40,74,793/ - WITHOUT APPRECIATING THE LAW IN PROPER PERSPECTIVE. 3. THE C.I.T.(APPEALS) FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DENYING DEDUCTION U/S. 54B OF RS.26,74,283/ - . 3. THE BRIEF FACTS OF THE CASE IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 30 , 19 , 020 / - WAS FILED ON 8 TH MARCH, 2014. SUBSEQUENTLY , THE CA SE WAS SELECTED I T A NO . 587 / A HD/20 17 A SSESSMENT YEAR 2013 - 14 I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 2 UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 3 RD SEP, 2014. THE ASSESSEE WAS ENGAGED IN TRADING OF FLOAT GLASS, FIGURES GLASS AND LABOUR AND HAD ALSO SHOWN INCOME FROM CAPITAL GAIN AND INCOME FROM OTHER SOURCES. FURTHER , THE FACT S OF THE CASE ARE DISCUSSED UNDER RESPECTIVE GROUND OF APPEAL AS UNDER: - FIRST GROUND OF APPEAL DISALLOWANCE ON DEDUCTION U/S. 54F OF THE ACT OF RS. 40 , 74 , 793/ - . 4. ON SCRUTINY, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED EXEMPTION U/ S. 54F OF THE ACT OF RS. 40 , 74 , 793/ - OUT OF LONG TERM CAPITAL GAIN INVEST ED IN HOUSE AT AKSHAR CHOWK VADODARA . THE ASSESSING OFFICER NOTICED THAT AS PER PROVISION OF SECTION 54F EXEMPTION IS AVAILABLE IF THE ASSESSEE HAS PURCHASED WITHIN ONE YEAR BEFOR E THE DATE OF TRANSFER OR TWO YEARS AFTER THE DATE OF TRANSFER ( OR CONSTRUCTED WITHIN THREE YEARS AFTER THE DATE OF THE RECEIPT OF COMPENSATION IN THE CASE OF COMPULSORY ACQUISITION) ONE RESIDENTIAL HOUSE . THE ASSESSING OFFICER NOTICED THAT THE TRANSFE R OF THE LAND WAS TAKEN PLACE ON 3 RD JULY, 2012 , H OWEVER, THE ASSESSEE HA D PURCHASED THE RESIDENTIAL HOUSE ON 22ND APRIL, 2010 WHICH WAS BEYOND THE TIME ALLOWED AS PER THE PROVISION OF SECTION 54F OF THE ACT. THE R EFORE, THE ASSESSEE WAS ASKED T O EXPLAIN WHY THE EXEMPTION U/S. 54F SHOULD NOT BE DISALLOWED. THE ASSESSEE EXPLAINED THAT SECTION 54F IS A BENEFICIAL PROVISION FOR PROMOTING CONSTRUCTION OF RESIDENTIAL HOUSE AND REQUIRED TO BE CONSTRUCTED LIBERALLY FOR ACHIEVING THAT PURPOSE. HE HAS FURTHER S TA TED THAT MERELY BECAUSE THE SALE DEED HAS NOT BEEN EXECUTED OR EXECUTED EARLIER OR THAT CONSTRUCTION IS NOT COMPLETE AND IT IS NOT A FIT CONDITION TO BE OCCUPIED DO ES NOT DISENTITLE THE ASSESSEE TO CLAIM DEDUCTION U/S. 54F OF THE ACT. HE HAS FURTHER STAT ED THAT ASSESSEE HAD COME ACROSS A VERY BENEFICIAL DEAL OF PURCHASING THE HOUSE AT A VERY ATTRACTIVE PRICE AND WITH THE ASSURANCE FROM BUYER ABOUT THE PURCHASE OF AGRICULTURAL LAND HE HAS BORROWED RS. 32 LACS FROM HIS RELATIVES AND INCURRED RS. 32, 83,0 00/ - TOWARDS PURCHASE OF HOUSE . HE FURTHER SUBMITTED AS SOON AS HE HAS RECEIVED MONEY FROM BUYER , HE HAS RETURNED THE ENTIRE AMOUNT OF BORROWED MONEY O N 6 TH JAN, 2013. THE ASSESSING OFFICER HAS NOT ACCEPTED I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 3 THE REPLY OF T HE ASSESSEE. HE HAS STATED THAT FOR CLAIMING EXEMPTION U/S. 54F , THE ASSESSEE HAS TO P U R CHASE WITHIN ONE YEAR BEFORE T H E DATE OF TRANSFER OR TWO YEARS AFTER THE DATE OF TRANSFER OR CONSTRUCTED WITHIN THREE YEARS AFTER THE DATE OF TRANSFER (OR FROM THE DATE OF RECEIPT OF COMPENSATIO N IN THE CASE OF COMPULSORY ACQUISITION ), ONE RESIDENTIAL HOUSE. HOWEVER, IN THE CASE OF THE ASSESSEE , THE TRANSFER OF LAND WAS TAKEN PLACE ON 3 RD JULY, 2012 AND THE RESIDENTIAL HOUSE WAS PURCHASED ON 22 ND APRIL, 201 0 BEYOND THE TIME ALLOWED AS PER THE P ROVISION OF SECTION 54F OF THE ACT. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF EXEMPTION U/S. 54F OF THE ACT AND MADE ADDITION OF RS. 40, 7 4, 793/ - IN THE TOTAL INCOME OF THE ASESSEE SECOND GR OUND OF APPEAL DISALLOWANCE OF E XEMPTION U/S. 54B OF THE ACT OF RS. 26 , 74 , 283/ - 5. A T THE TIME OF SCRUTINY, THE ASSESSING OFFICER HAS ALSO NOTICED THA T ASSESSEE HAS CLAIMED EXE MPTION U/S. 54B OF THE ACT AT RS . 5 , 29 , 550/ - AND RS. 21 , 44 , 733/ - OF INVESTMENT MADE IN AGRICULTURAL LAND SITUATED AT RANU (18 TH NOV, 2011) AND DUDHWADA (18 TH APRIL, 2013) RESPECTIVELY. AS PER PROVI SIONS OF SECTION 54B OF THE ACT, C APITAL GAIN ARISING FROM THE TRANSFER OF LAND BEING USED BY A INDIVIDUAL OR HIS PAR ENTS OR H INDU U NDIVIDED F AMILY FOR AGRICULTURAL PURPOSE F OR A PERIOD OF T WO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER ARE EXEMPT FROM TAX IF THE ASSESSEE HAS PURCHASED AN O THER LA N D FOR AGRICULTURAL PURPOSE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF SUCH TRANSFER. HOWEVER, THE ASSESSING OFFICER HAS NOT ICED THAT THE ASSESSEE HAS SOLD THE LAND WHICH WAS NON - AGRICULTURAL AND PURCHASED THE ABOVE CITED AGRICULTURAL LAND BEFORE THE TRANSFER OF THE SAID NON - AGRICULTURAL LAND. THEREFORE, THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN WHY EXEMPTION U/S. 54B OF THE ACT SHOULD NOT BE DISALLOWED. TH E ASSESSEE EXPLAINED THAT HE HAS PURCHASED THE AGRICULTURAL LAND ON 3 RD NOV, 1989 WHICH WAS SOLD TO SMT. NEETABEN MUKANDBHAI PATE L AND ON 13 TH AUGUST, 2008. H E HA D ENTERED INTO AGREEMENT TO SE LL AGRICULTURAL LAND TO T H E ABOV E PARTY. TH E BUYER OF THE LAND HAS REQUESTED HIM TO GET THE LAND CONVERTED INTO NON - I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 4 AGRICULTURAL. THE BU YER HAS ALSO AGREED TO BEAR ALL THE CONVERSION EXPENSES AND THE ENTI RE CONVERSION EXPENSES WERE RECOVERED FROM THE BUYER OF THE LAND. THE ASSESSIN G OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSSESSEE AND STATED THAT AS PER THE PROVISION OF SECTION 54B OF THE ACT CAPITAL GAIN ARISING FROM THE TRANSFER OF LAND BEIN G USED BY AN INDIVIDUAL OR HIS PARENTS OR H INDU U NDIVIDED F AMILY FOR AGRICULTURAL PURPOSE FOR A PERIOD OF TWO YEARS , IMMEDIATELY PRECEDING THE DATE OF TRANSFER ARE EXEMPT FROM TAX IF THE ASSESSEE HAS PURCHASED ANOTHER LAND FOR AGRICULTURAL PUR POSE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF SUCH TRANSFER. ON SCRUTINY IT WAS DISCERNED TO THE ASSESSING OFFICER THAT LAND SOLD BY THE ASSESSEE WAS A NON - AGRICULTURAL AFTER CONVERT ING THE AGRICULTURAL LAND INTO NON - AGRICULTURAL LAND. THE ASSESSING OFFICER HAS OBSERVED THAT AS PER SECTION 63 OF THE GUJARAT TENANCY AND AGRICULTURAL LAND A CT, 1948 A NON - AGRICULTURALIST CANNOT PURCHASE AN AGRICULTURAL LAND. HE HAS ALSO NOTICED THAT STAMP DUTY WAS PAID FOR THE SALE OF NON - AGRICULTURAL LAND . EXEMPTION U/S. 54B OF THE ACT IS AVAILABLE ONLY OUT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF LAND BE ING US ED BY AN INDIVIDUAL OR HIS PARENTS OR H INDU UNDIVIDED FAMILY FOR AGRICULTURAL PURPOSE FOR A PERIOD OF TWO YEARS IMMEDIATELY PRECEDING T HE DATE OF TRANSFER, IF T HE ASSESSEE HAS PURCHASED ANOTHER LAND FOR AGRICULTURAL PURPOSE WITHIN A PERIOD OF TWO YEA RS FROM THE DATE OF SUCH TRANSFER. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER HAS CONCLUDED THAT THE ASSESSEE IS NOT ENTITLED FOR CLAIM OF EXEMPTION U/S. 54B OF THE ACT. THEREFORE, HE HAS MADE ADDITION OF RS. 26 , 74 , 283/ - TO THE T OTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A)HAS SUSTAINED THE ADDITION ON BOTH THE ISSUES. THE RELEVANT PART OF THE FINDING S OF LD. CIT(A) ARE REPRODUCED AS UNDER: - DEDUCTION U/S. 54F OF THE ACT OF RS. 40,74,793/ - . 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE SUBMISSION OF THE APPELLANT AND THE AO'S OBSERVATIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE APPELLANT HAD NOT MADE ANY SUBMI SSION BEFORE THE AO THAT IT SHOULD BE ALLOWED EXEM PTION U/S 54F OF THE IT ACT ON ACCOUNT OF THE FACT THAT HE HAD ENTERED INTO SALE AGREEMENT WITH THE PURCHASER ON 13.08.2010 AND HENCE, THE HOUSE PURCHASED BY HIM ON 22.04.2010 WAS WITHIN ONE YEAR OF THE TRANSFER OF THE LAND. THIS IS A NEW ARGUMENT TAKEN BY THE APPELLANT DURING THE I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 5 COURSE OF THE CURRENT APPELLATE PROCEEDINGS ON THE BASIS OF THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF SANJEEVLAL (SUPRA). BUT, THE FACT INVOLVED IN THE DECISION IN THE CASE OF SANJEEVLAL (SUPRA) ARE ENTIREL Y DIFFERENT FROM THE FACTS INVOLVED IN THE APPELLANT'S CASE. IN THE CASE OF SANJEEVLAL, THE ASSESSEE HAD ENTERED INTO AN AGREEMENT TO SELL THE HOUSE ON DECEMBER 27, 2002. BUT THE SALE DEED COULD NOT BE EXECUTED BY HIM BECAUSE OF THE FACT THAT THE WILL, BY VIRTUE OF WHICH HE HAD INHERITED THE HOUSE, HAD BEEN CHALLENGED IN THE COURT BY ANOTHER PERSON AND ONLY AFTER THE DECISION IN THAT CASE, THE ASSESSEE COULD EXECUTE THE SALE DEED. DURING THE PENDENCY OF PROCEEDINGS RELATING TO CHALLENGE OF THE WILL, THE COU RT HAD RESTRAINED THE ASSESSEE FROM THE DEALING WITH THE HOUSE PROPERTY. MEANWHILE THE ASSESSEE HAD PURCHASED ANOTHER HOUSE ON 30.04.2003 WHEREAS THE SALE DEED OF THE ORIGINAL HOUSE COULD BE EXECUTED ONLY ON SEPTEMBER 24, 2004. UNDER SUCH PECULIAR CIRCUMST ANCES, THE HON'BLE SUPREME COURT HELD AS FOLLOWS: 'IN VIEW OF THE AFORESTATED PECULIAR FACTS OF THE CASE AND LOOKING AT THE DEFINITION OF THE TERM 'TRANSFER' AS DEFINED UNDER SECTION 2(47) OF THE ACT, WE ARE OF THE VIEW THAT THE APPELLANTS WERE ENTITLED TO RELIEF UNDER SECTION 54 OF THE ACT IN RESPECT OF THE LONG TERM CAPITAL GAIN WHICH THEY HAD EARNED IN PURSUANCE OF TRANSFER OF THEIR RESIDENTIAL PROPERTY BEING HOUSE NO. 267, SECTOR 9 - C, SITUATED IN CHANDIGARH AND USED FOR PURCHASE OF A NEW ASSET/RESIDENTI AL HOUSE.' 5.3.1. IN THE PRESENT CASE ALSO A PECULIAR FACT WAS INVOLVED, BUT IT WAS ENTIRELY DIFFERENT FROM THE FACTS OF THE DECISION IN THE CASE OF SANJEEV LAL (SUPRA). IN THE PRESENT APPEAL, THE AGRICULTURAL LAND OWNED BY THE APPELLANT, WAS BEING TRANSFE RRED FOR NON AGRICULTURAL PURPOSES. THE PURCHASER IN THIS CASE WAS NOT AN AGRICULTURIST WHICH IS EVIDENT FROM THE FACTS NARRATED IN THE AGREEMENT TO SALE EXECUTED ON 13.08.2010. IN THIS SALE AGREEMENT, IT HAS BEEN CLEARLY MENTIONED THAT THE SALE DEED WILL BE EXECUTED ONLY AFTER JHE SAID LANDJS CONVERTED TO NON AGRICULTURAL LAND. THE SALE AGREEMENT ALSO MENTIONS THAT ON THE DATE OF ITS EXECUTION, NO POSSESSION WAS GIVEN TO THE PURCHASER. BESIDES, IT HAS BEEN CLEARLY MENTIONED THAT POSSESSION WILL BE GIVEN A T THE TIME OF EXECUTING THE SALE SEED OF THE SAID PROPERTY. RELEVANT PARTS OF THE ENGLISH TRANSLATION OF THE SALE AGREEMENT AS PROVIDED BY THE APPELLANT HIMSELF ARE AS FOLLOWS: '3. SCHEDULE SELLING PROPERTY'S ABSOLUTE POSSESSION WILL BE GIVEN US THE EXECUT E TO YOU THE EXECUTE AT THE TIME OF EXECUTING REGISTERED SALE DEED OF SAID PROPERTY AT THAT TIME WE THE EXECUTOR HAVE TO GIVE TO YOU THE EXECUTE, SUCH IS DECIDED. 4. AFTER TRANSFERRING THE ABOVE SAID SCHEDULE PROPERTY INTO NON AGRICULTURAL AS MENTIONED ABO VE ON PAYING SAID SALE CONSIDERATION AMOUNT BY EXECUTING REGISTERED SALE DEED, YOU THE EXECUTOR ARE RIGHTFUL. BUT, YOU THE EXECUTEE, BY PAYING SALE CONSIDERATION AMOUNT AND READY TO EXECUTE SALE DEED AND THEN ALSO AT THAT TIME WE THE EXECUTORS DOES NOT EXE CUTE REGISTERED SALE DEED TO YOU THE EXECUTEE AND/OR FOR THAT DOES ANY EXCUSES THEN AT THAT TIME YOU THE EXECUTEES, TO GETS SPECIAL EXISTENCE OF THIS BANAKHAT AGREEMENT AND BY FILING SUIT AGAINST US IN COURT, AT COURT WAY ARE RIGHTFUL TO EXECUTE REGISTERED SALE DEED AND AT THAT TIME TO YOU GETTING ALL THE EXPENSES RESPONSIBILITY WILL BE OF THE EXECUTORS.' 5.3.2. THUS, THE SALE AGREEMENT MAKES IT VERY CLEAR THAT NEITHER ANY POSSESSION WAS GIVEN TO THE PURCHASER NOR ANY RIGHT WAS GIVEN TO THE PURCHASER FOR EN FORCING THE SALE AGREEMENT PRIOR TO CONVERSION OF THE LAND FROM AGRICULTURAL LAND TO NON AGRICULTURAL LAND AND PAYMENT OF THE SALE CONSIDERATION BY THE PURCHASER. THUS, NO RIGHT WAS CREATED BY VIRTUE OF SALE AGREEMENT WHICH CAN BE CONSIDERED AS TRANSFER WI TH THE MEANING OF SECTION 2(47) OF THE IT ACT, 1961. 5.3.3. THE NECESSITY TO CONVERT THIS AGRICULTURAL LAND TO NON AGRICULTURAL LAND AROSE DUE TO THE RESTRICTIONS ON SUCH TRANSFER OF AGRICULTURAL LAND FOR NON AGRICULTURAL PURPOSES PLACED BY THE PROVISIONS OF SECTION 43 OF THE BOMBAY TENANCY & AGRICULTURAL LANDS ACT, 1948, AS APPLICABLE TO THE STATE OF GUJARAT, NOW KNOWN IN THE STATE OF GUJARAT AS GUJARAT TENANCY AND AGRICULTURAL LANDS ACT, 1948 (TENANCY ACT FOR SHORT). SECTION 43 OF THE TENANCY ACT RELATED TO RESTRICTION ON TRANSFER OF AGRICULTURAL LAND PURCHASED OR SOLD UNDER I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 6 THE TENANCY ACT. IT WAS AMENDED FROM TIME TO TIME AND LASTLY BY VIRTUE OF THE GUJARAT (AMENDMENT) ACT NO. XXX OF 1977, SECTION 43 CAME TO BE FURTHER AMENDED BY SUBSTITUTING NEW SECTION 43, WHICH PRESENTLY HOLDS THE FIELD, AND READS AS FOLLOWS : '43. RESTRICTION ON TRANSFERS OF LAND PURCHASED OR SOLD UNDER THIS ACT. - (1) NO LAND OR ANY INTEREST THEREIN PURCHASED BY A TENANT UNDER SECTION 17B, 32, 32F, 32 - 1, 32 - 0, 320, 43 - ID OR 88E OR SOL D TO ANY PERSON UNDER SECTION 32P OR 64 SHALL BE TRANSFERRED OR SHALL BE AGREED BY AN INSTRUMENT IN WRITING TO BE TRANSFERRED, BY SALE, GIFT, EXCHANGE, MORTGAGE, LEASE OR ASSIGNMENT, WITHOUT THE PREVIOUS SANCTION OF THE COLLECTOR AND EXCEPT IN CONSIDERATIO N OF PAYMENT OF SUCH AMOUNT A THE, STATE GOVERNMENT MAY BY GENERAL OR SPECIAL ORDER DETERMINE; AND NO SUCH LAND OR ANY INTEREST, THERE SHALL BE PARTITIONED WITHOUT THE PREVIOUS SANCTION OF THE COLLECTOR. PROVIDED THAT NO PREVIOUS SANCTION OF THE COLLECTOR SHALL BE REQUIRED, IF THE PARTITION OF THE LAND IS AMONG THE MEMBERS OF THE FAMILY WHO HAVE DIRECT BLOOD RELATION OR AMONG THE LEGAL HEIRS OF THE TENANT: PROVIDED FURTHER THAT THE PARTITION OF THE LAND AS AFORESAID SHALL NOT BE VALID IF IT IS MADE IN CONTR AVENTION OF THE PROVISIONS OF ANY OTHER LAW FOR THE TIME BEING IN FORCE; PROVIDED ALSO THAT SUCH MEMBERS OF THE FAMILY OR THE LEGAL HEIRS SHALL HOLD THE LAND, AFTER THE PARTITION, ON THE SAME TERMS, CONDITIONS, RESTRICTIONS AS WERE APPLICABLE TO SUCH LAND OR INTEREST THEREAT THEREIN PURCHASED BY THE TENANT OR THE PERSON. (1A) THE SANCTION UNDER SUB - SECTION (1) SHALL BE GIVEN BY THE COLLECTOR IN SUCH CIRCUMSTANCES AND SUBJECT TO SUCH CONDITIONS, AS MAY BE PRESCRIBED BY THE STATE GOVERNMENT. (1AA) NOTWITHSTAN DING ANYTHING CONTAINED IN SUB - SECTION (1), IT SHALL BE LAWFUL FOR SUCH TENANT OR A PERSON TO MORTGAGE OR CREATE A CHARGE ON HIS INTERESTS IN THE LAND IN FAVOUR OF THE STATE GOVERNMENT IN CONSIDERATION OF A LOAN ADVANCED TO HIM BY THE STATE GOVERNMENT UNDE R THE LAND IMPROVEMENT LOANS ACT, 1884, THE AGRICULTURISTS' LOAN ACT, 1884, OR THE BOMBAY NON - AGRICULTURISTS' LOANS ACT, 1928, AS IN FORCE IN THE STATE OF GUJARAT, OR IN FAVOUR OF A BANK OR CO - OPERATIVE SOCIETY, AND WITHOUT PREJUDICE TO ANY OTHER REMEDY OP EN TO THE STATE GOVERNMENT, BANK OR CO - OPERATIVE SOCIETY, AS THE CASE MAY BE, IN THE EVENT OF HIS MAKING DEFAULT IN PAYMENT OF SUCH LOAN IN ACCORDANCE WITH THE TERMSON WHICH SUCH LOAN WAS GRANTED, IT SHALL BE LAWFUL FOR THE STATE GOVERNMENT, BANK OR CO - OPE RATIVE SOCIETY, AS THE CASE MAY BE, TO CAUSE HIS INTEREST IN THE LAND TO BE ATTACHED AND SOLD AND THE PROCEEDS TO BE APPLIED IN PAYMENT OF SUCH LOAN. EXPLANATION, - FOR THE PURPOSES OF THIS SUB - SECTION, 'BANK' MEANS (A) THE STATE BANK OF INDIA CONSTITUTED UNDER THE STATE BANK OF INDIA ACT, 1955; (B) ANY SUBSIDIARY BANK AS DEFINED IN CLAUSE (K) OF SECTION 2 OF THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959; (C) ANY CORRESPONDING NEW BANK AS DEFINED IN CLAUSE (D) OF SECTION 2 OF THE BANKING COMPANIES ( ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970; (D) THE AGRICULTURAL REFINANCE AND DEVELOPMENT CORPORATION, ESTABLISHED UNDER THE AGRICULTURAL REFINANCE AND DEVELOPMENT CORPORATION ACT, 1963. (IB) NOTHING IN SUB - SECTION (1) FOR (1AA) SHALL APPLY TO LA ND PURCHASED UNDER SECTION 32, 32F OR 64 BY A PERMANENT TENANT THEREOF, IF PRIOR TO THE PURCHASE, THE PERMANENT TENANT, BY USAGE, CUSTOM, AGREEMENT OR DECREE OR ORDER OF A COURT, HELD A TRANSFERABLE RIGHT IN THE TENANCY OF THE LAND. (2) ANY TRANSFER OR PAR TITION, OR ANY AGREEMENT OF TRANSFER, OR ANY LAND OR ANY INTEREST THEREIN IN CONTRAVENTION OF SUB - SECTION (1) SHALL BE INVALID.' 5.3. 3.1. THE PROVISIONS OF THE ABOVE MENTIONED SECTION 43 OF THE TENANCY ACT WERE CHALLENGED BEFORE THE HON'BLE HIGH COURT OF G UJARAT IN A WRIT PETITION. THE COURT IN ITS DECISION IN THE CASE OF PATEL KAMALBHAI SHARADBHAI - PETITIONER(S) VERSUS I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 7 STATE OF GUJARAT & 2 - RESPONDENT(S) DATED 03/05/2011 IN LETTER PATENT APPEALS BEARING NOS. 1127 OF 2008 AND OTHERS, HAS HELD AS FOLLOWS: '4 2. MANY OF THE PETITIONERS HAVE TAKEN A PLEA THAT THEY HAVE ALREADY MADE AGREEMENT FOR SALE LONG BACK, APPLIED FOR PERMISSION AND THERE WAS NO LATCHES ON THEIR PART, BUT THERE WAS LATCHES ON THE PART OF THE STATE AUTHORITIES OR THE DISTRICT LEVEL COMMITTEE OR THE STATE L EVEL COMMITTEE. IN SOME OF THE CASES, IT IS STATED THAT THE DISTRICT LEVEL COMMITTEE OR THE STATE LEVEL COMMITTEE HAS ALREADY DETERMINED THE PREMIUM, BUT THE COLLECTOR HAS NOT GRANTED PERMISSION. THEREFORE, ACCORDING TO THEM, THE CRUCIAL DA TE FOR DETERMINATION OF THE PREMIUM SHOULD BE THE DATE OF APPLICATION. IN THIS CONNECTION, WE MAY ONLY OBSERVE THAT UNDER SECTION 43, THERE IS A RESTRICTION ON TRANSFER OF LAND PURCHASED OR SOLD UNDER THE SAID ACT. NO LAND OR ANY INTEREST THEREIN PURCHASED BY A TENANT UNDER SECTIONS 17B, 32, 32F, 32 - 1, 32 - O, 32 - U, 43 - ID OR 88EE CAN BE TRANSFERRED BY ANY TENANT, OWNER, BY SALE, GIFT, MORTGAGE, LEASE OR ASSIGNMENT WITHOUT THE PREVIOUS SANCTION OF THE COLLECTOR. IN EACH CASE, IT IS TO BE SEEN AS TO THE PLACE W HERE SUCH LAND IS SITUATED I.E. IN THE URBAN AREA OR IN THE RURAL AREA. IF IT IS IN THE URBAN AREA, THEN IT IS TO BE ASCERTAINED WHETHER THE LAND FALLS WITHIN THE MUNICIPAL AREA OR THE AREA UNDER THE URBAN DEVELOPMENT AUTHORITY OR MAHANAGARPALIKA OR NOTIFI ED AREA OR CANTONMENT AREA. COLLECTION OF ALL SUCH FACTS TAKES MUCH TIME AS THOROUGH INQUIRY IS TO BE MADE AND THEN TO GIVE FINDING. THEREFORE, THE PETITIONERS CANNOT CLAIM THAT ONCE THEY FILE THE APPLICATION, THE COLLECTOR IS BOUND TO GIVE PERMISSION. IN APPROPRIATE CASE, IT CAN BE REFUSED. THE PETITIONERS HAVE NO RIGHT TO TRANSFER THE LAND EXCEPT IN ACCORDANCE WITH SECTION 43 TO CLAIM TRANSFER OF LAND FROM AGRICULTURE TO NON - AGRICULTURE OR TO ALIENATE THE LAND. IF WITHOUT PERMISSION UNDER SECTION 43, THE LAND COULD NOT HAVE BEEN SOLD, THE AGREEMENT IF ANY REACHED BY THE PETITIONERS WITH ANY OTHER PERSON FOR TRANSFER OF LAND, SUCH AGREEMENT IS INVALID, HAVING EXECUTED IN VIOLATION OF SECTION 43 OF THE ACT AND HENCE TO BE IGNORED. (EMPHASIS SUPPLIED 43 . WHEN EVER THE TRANSFER WILL BE MADE FROM AGRICULTURE TO NON - AGRICULTURE OR PERMISSION WILL BE GRANTED TO TRANSFER THE LAND TO OTHERS, SUCH PERMISSION CAN BE GRANTED ONLY FROM THE PROSPECTIVE DATE THE COLLECTOR HAVING NOT EMPOWERED TO GRANT PERMISSION TO TRANSFE R FROM A RETROSPECTIVE DATE. IF SUCH PERMISSION CAN BE GRANTED TO TRANSFER THE LAND FROM PROSPECTIVE DATE AND THEREAFTER TRANSFER WILL BE MADE FROM PROSPECTIVE DATE, THE PETITIONERS CANNOT CLAIM TO ASCERTAIN THE VALUATION FROM A RETROSPECTIVE DATE. IF THE TRANSFER OF LAND IS TO BE MADE AFTER THE PERMISSION IS GRANTED BY THE COLLECTOR, THE VALUATION OF THE LAND WILL BE THAT OF THE DATE WHEN SUCH PERMISSION IS GRANTED I.E. THE PREVAILING VALUATION THEREFORE, THE PETITIONERS CANNOT CLAIM THAT THE VALUATION SHO ULD BE MADE ON THE BASIS OF THE VALUATION AS WAS EXISTING ON THE DATE THEY APPLIED I.E. ABOUT 5 TO 6 YEARS BACK OR MORE. 44. FURTHER, IF THE PETITIONERS WILL NOT TRANSFER THE LAND AS OF TODAY OR IN FUTURE TO ANOTHER PERSON AT THE COSTS AS WAS PREVAILING 5 TO 10 YEARS BACK AND FOR THE PURPOSE OF STAMP DUTY, THEY WILL PAY STAMP DUTY AS WAS PREVAILING AT THE TIME OF SALE, THEY CANNOT CLAIM DETERMINATION OF VALUATION AS WAS PREVAILING AT THE TIME OF SALE. FOR THE SAID REASON, THE PETITIONERS CANNOT TAKE ANY AD VANTAGE OF THE JUDGMENTS REFERRED BY THEM WHICH ARE NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASES IN HAND. WE, THEREFORE, HOLD THAT THE CRUCIAL DATE FOR DETERMINATION OF THE PREMIUM IS THE DATE ON WHICH THE COLLECTOR GRANTS SUCH PERMISSION, I. E. PROSPECTIVE DATE AND NOT RETROSPECTIVE DATE. FOR THE SAME VERY REASON, WE HOLD THAT THE RESOLUTION DATED 4.7.2008 IS PROSPECTIVE AND COVER ALL THE PENDING CASES, INCLUDING THE CASES WHERE ASSESSMENT WAS MADE BY STATE OR I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 8 DISTRICT LEVEL COMMITTEE OR ANY O THER AUTHORITY, IF THE MATTER IS PENDING FOR PERMISSION BY THE COLLECTOR. 5.3.3.2. THE ABOVE DECISION OF THE GUJARAT HIGH COURT HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT OF INDIA IN ITS DECISION DATED 25/02/2014 IN CIVIL APPEAL NO. 4123 OF 2012 GOHIL JESANGBHAI RAYSANGBHAI & ORS. APPELLANT(S) VS STATE OF GUJARAT & ANR. RESPONDENT (S). 5.3.3.3. THUS, PER THE RATIO LAID DOWN BY THESE DECISIONS, IN THE PRESENT APPEAL ALSO, ON ACCOUNT OF THE FACT THAT AT THE TIME OF EXECUTION OF THE SALE AGREEMENT, THE LAN D WAS AGRICULTURE IN NATURE, NO LEGAL TRANSFER OF THE SAME TO THE PURCHASER WAS POSSIBLE. HENCE, IT IS EVIDENT THAT NO LEGAL RIGHT OF THE PURCHASER WAS CREATED IN LAND BY SUCH AGREEMENT AS THIS AGREEMENT WAS INVALID AND HENCE IS REQUIRED TO BE IGNORED. CON SEQUENTLY, THERE WAS NO EXTINGUISHMENT OF ANY OF THE APPELLANT'S RIGHTS IN THIS LAND AT THE TIME OF THE EXECUTION OF THE AGREEMENT TO SALE AND HENCE, THE DECISION IN THE CASE OF SANJEEVLAL (SUPRA) IS INAPPLICABLE TO THE FACTS OF THE CURRENT APPEAL. 5.3.4. NOW, THE APPELLANT HAS ALSO CLAIMED THAT PART POSSESSION OF THE LAND WAS GIVEN TO THE PURCHASER VIDE POSSESSION RECEIPT DATED 15. 10. 2011. THIS, POSSESSION RECEIPT IS ALSO OF NO HELP TO THE APPELLANT. FIRSTLY, DUE TO THE FACT THAT AS ON THAT DATE ALSO, TH E LAND HAD NOT BEEN CONVERTED INTO NON AGRICULTURAL LAND AND HENCE, BY LAW THE APPELLANT WAS NOT ENTITLED TO HAND OVER THE POSSESSION OF THE AGRICULTURAL LAND TO THE PURCHASER. BESIDES, SAID PURCHASE RECEIPT IS ALSO OF 15.10.2011, WHEREAS, THE HOUSE PROPER TY HAD BEEN PURCHASED BY THE APPELLANT ON 22.04.2010 AND HENCE, THE SAME BEING BEYOND ONE YEAR FROM THE DATE OF HANDING OVER THE POSSESSION, THE APPELLANT WAS NOT ENTITLED FOR DEDUCTION U/S 5.4. FURTHER TO THIS, FROM THE REGISTERED SALE DEED EXECUTED ON 03 .07.2012, IT IS SEEN THAT THE DEED CLEARLY MENTIONS THAT IT IS IN RESPECT OF SALE OF NON AGRICULTURAL OPEN LAND. THIS FACT HAS BEEN CLEARLY MENTIONED IN SCHEDULE. THUS, ON THE DATE OF SALE, THE LAND WAS NOT IN THE NATURE OF AGRICULTURAL LAND AND IT WAS ONL Y DUE TO THIS FACT THAT THE APPELLANT WAS ABLE TO SELL THE LAND TO A NON AGRICULTURIST. THUS, IT WAS ONLY BY VIRTUE OF THE REGISTERED SALE DEED, THE LEGAL RIGHT OF THE PURCHASER WAS CREATED IN THIS LAND AND HENCE, THE LEGAL TRANSFER WITHIN THE MEANING OF S ECTION 2(47) OF THE ACT TOOK PLACE. IT MAY BE MENTIONED HERE THAT THE SALE DEED ITSELF MENTIONS THAT THE PERMISSION OF CONVERTING THE LAND INTO NON AGRICULTURAL LAND WAS GIVEN BY THE APPROPRIATE AUTHORITY ON 16.05.2012. DUE TO THIS FACT, THE SALE AGREEMENT AND THE SUBSEQUENT POSSESSION RECEIPT WERE ILLEGAL AND HENCE DID NOT CONFER ANY RIGHT ON THE PURCHASER IN THIS LAND. EVEN THE CONVERSION OF THE AGRICULTURAL LAND TO THE NON AGRICULTURAL LAND HAD BEEN CARRIED ON BY THE APPELLANT. UNDER SUCH CIRCUMSTANCES O F THE PRESENT CASE, IT IS HELD THAT THE LAND WAS TRANSFERRED ONLY ON 03.07.2012 WHEN A REGISTERED SALE SEED WAS EXECUTED AND PRIOR TO THIS, THERE EXTINGUISHMENT OF ANY RIGHT OF THE APPELLANT IN THE SAID LAND AND THERE WAS NO CREATION OF ANY RIGHT OF THE PU RCHASER IN THE SAID LAND AS THE SAME WERE PROHIBITED BY THE LAW RELATING TO TRANSFER OF AGRICULTURAL LAND AS EXISTING IN THE STATE OF GUJARAT. THUS, THE APPELLANT HAS PURCHASED THE HOUSE PROPERTY PRIOR TO ONE YEAR FROM THE DATE OF TRANSFER OF THE LAND AND HENCE, HE IS NOT ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT AS HAS BEEN HELD BY THE AO. 5.4.1. IN THIS RESPECT, IT IS SEEN THAT THE HON'BLE HIGH COURT OF GUJARAT IN ITS DECISION IN THE CASE OF SMT. SANTABEN P GANDHI 1981, 6 TA XMAN365 (GUJ) HAD HELD THAT WHERE THE NEW HOUSE PROPERTY WAS CONSTRUCTED LONG BEFORE THE TRANSFER OF THE LAND AND NOT WITHIN THE PERIOD OF 2 YEARS AFTER THE DATE OF SAID TRANSFER, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 54 OF THE ACT. SIMILARLY, THE ITAT AHMEDABAD BENCH IN ITS DECISION IN THE CASE OF SMT. USHABEN JAYANTILAL SHAH 2914, 42 TAXMANN.COM 175 (AHD - TRIB.) HAS HELD THAT WHERE CONSTRUCTION OF RESIDENTIAL HOUSE TOOK PLACE PRIOR TO THE DATE OF TRANSFER FOR EARNING LONG TERM CAPITAL, ASSESSEE 'S CLAIM OF DEDUCTION U/S 54F OF THE ACT CANNOT BE ALLOWED. FURTHER TO THIS, THE ITAT AHMEDABAD BENCH IN THE DECISION IN THE CASE OF SMT. DAXABEN R PATEL 2012, 22 TAXMANN.COM 237 (AHD) HAS HELD THAT, WHERE THE ASSESSEE PURCHASED BONDS PRIOR TO SALE OF PROP ERTY, EXEMPTION U/S 54EC WAS I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 9 NOT AVAILABLE. IN THE PRESENT CASE ALSO, THE APPELLANT WAS ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT ON PURCHASE OF A RESIDENTIAL HOUSE PROPERTY WITHIN 1 YEAR B EFORE AND 2 YEARS AFTER THE EXECUTION OF REGISTERED SALE DEED ON 0 3.07.2012. BUT, THE APPELLANT HAS PURCHASED A HOUSE PROPERTY ON 22.04.2010 AND HENCE, THE AO HAS RIGHTLY DISALLOWED THE CLAIM OF DEDUCTION U/S 54F OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. EXEMPTION U/S. 54B OF THE ACT OF RS. 26,74,283 / - 6.3 HAVE CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPEILANT AND THE AO'S OBSERVATIONS. AS ALREADY DISCUSSED IN PARA 5.3, THE TRANSFER OF LAND TOOK PLACE ON 03.07.2012 WHEN A REGISTERED SALE DEED WAS EXECUTED. ON THE DATE OF TRANSFER THE LAND WAS NON AGRICULTURAL LAND AS THE APPROPRIATE AUTHORITY HAD GIVEN APPROVAL FOR TRANSFER OF THE LAND FROM THE AGRICULTURAL LAND - , TO NON AGRICULTURAL LAND ON 16.05.2012 ONLY. THE SALE DEED ALSO MENTIONS THAT IT IS IN RESPECT OF SALE OF NON AGRICULTU RAL LAND. UNDER SUCH CIRCUMSTANCES, THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 54B OF THE ACT. UNDER SIMILAR CIRCUMSTANCES, THE HON'BLE HIGH COURT OF BOMBAY IN ITS DECISION IN THE CASE OF V.A. TRIVEDI 1988, 38 TAXMAN 102(BOM) HAS HELD AS FOLLOWS: '31. THE INTENTION OF THE ASSESSEE WAS FIRST INDICATED WHEN HE APPLIED FOR PERMISSION TO CHANGE THE USER OF THE AJNI LAND TO NON - AGRICULTURAL PURPOSES. IF HE HAD DONE NO MORE AND HAD CONTINUED TO CULTIVATE THE AJNI LAND, THE POSITION THAT THE AJNI LAND WAS AGR ICULTURAL LAND MIGHT NOT HAVE CHANGED. 32. WHAT IS CRUCIAL, IN OUR VIEW, ARE THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE BRIHAN SOCIETY. THE ASSESSEE AGREED TO SELL THE AJNI LAND TO THE BRIHAN SOCIETY ADMITTEDLY FOR UTILISATION FOR NON - AGRICULTURA L PURPOSES. THE SALES WERE TO TAKE PLACE WITHIN ABOUT 4 MONTHS OF THE RESPECTIVE AGREEMENTS OF SALE. FROM THE POINT OF TIME THE AGREEMENTS FOR SALE WERE ENTERED INTO, AGRICULTURAL OPERATIONS UPON THE AJNI LAND WERE, PATENTLY, STOP - GAP ARRANGEMENTS TO COVER THE SPACE OF ABOUT 4 MONTHS TILL THE CONVEYANCES WERE ENTERED INTO. ON THE DATES ON WHICH THE AJNI LAND WAS CONVEYED BY THE ASSESSEE TO BRIHAN SOCIETY, ITS CHARACTER OR NATURE WAS, THEREFORE, NOT AGRICULTURAL. IT WAS NOT ENTITLED TO THE EXEMPTION GIVEN TO AGRICULTURAL LAND, AN EXEMPTION GIVEN, AS THE SUPREME COURT SAID IN THE CASE NOTED ABOVE, 'TO ENCOURAGE CULTIVATION OR ACTUAL UTILISATION OF LAND FOR AGRICULTURAL PURPOSES'.' 6.3.1. IN THE PRESENT CASE, THE FACT ARE EVEN MORE AGAINST THE APPELLANT AS IN T HE REVENUE RECORDS ALSO, ON THE DATE OF SALE OF LAND, IT HAD BECOME NON AGRICULTURAL IN NATURE. HENCE, THE AO HAS RIGHTLY HELD THAT THE APPELLANT WAS NOT ENTITLED TO ANY DEDUCTION U/S 54B OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL IS ALSO DISMISSED. 7. DURING THE COURSE OF APPELLATE PROCEEDINGS THE LD. COUNSEL HAS FURNISHED A PAPER BOOK CONTAINING WRITTEN SUBMISSION MADE BEFORE THE LD.CIT(A)ALONG WITH COPY OF SALE DEED AND CONVEYANCE DEED ETC. HE HAS ALSO PLACED RELIANCE ON THE JUDICIAL PRONOUNCEMENT IN THE CASE OF PERFECT EQUIPMENT V DY. CIT(2003)) 85 ITD 50 (AHD) ,SANJEEV LAL V. CIT AND ANOTHER(2014) 365 ITR 389 (SC),CIT V. SHIMBHU MEHRA (2016) 65 TAXMANN.COM 142(ALLAHABAD),(1999) 7 SUPREME COURT CASES 703,2014 SCC ONLINE BOM 599.HE HAS ALSO SUBMITTE D NOTE ON DENIAL OF I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 10 DEDUCTION . ON THE OTHER HAND THE LD. DR HAS SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSE HAS CLAIMED EX EMPTION U/S. 54 OF THE ACT OF RS . 40,74,7 93/ - . THE ASSESSING OFFICER HAS NOTICED THAT ACCORDING TO THE PROVISIONS OF SECTION 54F OF THE ACT, THE SAID EXEMPTION IS AVAILABLE IF THE AS S ESSEE HAS PURCHASED WITHIN ONE YEAR BEFORE THE DATE OF TRANSFER OR TWO YEARS AFTER THE DATE OF TRANSFER OR CONSTRU CTED WITHIN 3 YEARS AFTER THE DATE OF TRANSFER ( OR FROM THE DATE OF RECEIPT OF COMPENSATION IN THE CASE OF COMPULSORY ACQUISITION) ONE RESIDENTIAL HOUSE. IN THE LIGHT TO THE ABOVE PROVISION, THE ASSESSING OFFICER HAS OBSERVED THAT T H E TRANSFER OF THE LAN D WAS TAKEN PLACED ON 03/07/2012 , HOWEVER , THE ASSESSEE HAD PURCHASED THE RESIDENTIAL HOUSE ON 22/04/2010 BEYOND THE STI PULATED CONDITIONS LAID DOWN IN SECTION 54F OF THE ACT. THE ASSSESSEE CLAIMED THAT HE HAS EXECUTED AN A GREEMENT TO SELL THE AGRICULTUR AL LAND TO SMT. ANEETBEN M. PATEL ON 13 - 08 - 2010 AND THE CONVEYANCE DEED WAS EXECUTED ON 03 - 07 - 2012. THE ASSESSEE CONTENDED THAT HE HAS ENTERED INTO SALE AGREEMENT WITH THE B U YER ON 13 - 08 - 2010 AND THE NEW HOUSE WAS PURCHASED ON 22/04/2010 WHICH WAS WITHI N ONE YEAR OF THE TRANSFER OF THE LAND. THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMENT OF HON BLE SUPREME COU RT OF INDIA IN THE CASE OF SANJEE V LAL VS. CIT 365 ITR 38 9. IN THE CASE OF SANJEEV LAL, THE ASSESSE HAD RECEIVED EARNEST MONEY OF 15 LACS WHEN ENTERED INTO AGREEMENT ON 27 TH DEC, 2002. IT IS HELD THAT A RIGHT IN RESPECT OF THE CAPITAL ASSET, VIZ. THE PROPERTY IN QUESTION HAD BEEN TRANSFERRED BY THE A PPELLANTS IN FAVOUR OF THE VEND O R/TRANSFEREE ON DEC 27, 2002. THE SALE DEED COULD NOT BE EXECUT ED FOR THE REASON THAT THE APPELLANTS HAD BEEN PREVENTED FROM DEALING WITH THE RESIDENTIAL HOUSE BY AN ORDER OF A COMPETENT COURT, WHICH THEY COULD NOT HAVE VIOLATED. WE HAVE PERUSED THE DECISION IN THE CASE OF SANJEEV LAL CASE OF THE HON BLE SUPREME COURT WHEREIN THE ASSESSEE HAS ENTERED INTO AN AGREEMENT TO SELL THE HOUSE ON 27 TH DEC, 2002 AND THE SALE DEED COULD NOT BE EXECUTED FOR THE REASON THAT THE ASSESSEE HAD BEEN PREVENTED FROM I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 11 DEALING WITH THE RESIDENTIAL HOUSE BY THE ORDER OF THE COURT DUE TO PEN DING LITIGATION. THE RELEVANT PART OF THE JUDGMENT OF HON BLE SUPREME COURT OF INDIA IN THE CASE OF SANJIV LAL VS. CIT 365 ITR 389 IS REPRODUCED AS UNDER: - 23. CONSEQUENCES OF EXECUTION OF THE AGREEMENT TO SELL ARE ALSO VERY CLEAR AND THEY ARE TO THE EFF ECT THAT THE APPELLANTS COULD NOT HAVE SOLD THE PROPERTY TO SOMEONE ELSE. IN PRACTICAL LIFE, THERE ARE EVENTS WHEN A PERSON, EVEN AFTER EXECUTING AN AGREEMENT TO SELL AN IMMOVEABLE PROPERTY IN FAVOUR OF ONE PERSON, TRIES TO SELL THE PROPERTY TO ANOTHER. IN OUR OPINION, SUCH AN ACT WOULD NOT BE IN ACCORDANCE WITH LAW BECAUSE ONCE AN AGREEMENT TO SELL IS EXECUTED IN FAVOUR OF ONE PERSON, THE SAID PERSON GETS A RIGHT TO GET THE PROPERTY TRANSFERRED IN HIS FAVOUR BY FILING A SUIT FOR SPECIFIC PERFORMANCE AND TH EREFORE, WITHOUT HESITATION WE CAN SAY THAT SOME RIGHT, IN RESPECT OF THE SAID PROPERTY, BELONGING TO THE APPELLANTS HAD BEEN EXTINGUISHED AND SOME RIGHT HAD BEEN CREATED IN FAVOUR OF THE VENDEE/TRANSFEREE, WHEN THE AGREEMENT TO SELL HAD BEEN EXECUTED. 24 . THUS, A RIGHT IN RESPECT OF THE CAPITAL ASSET, VIZ. THE PROPERTY IN QUESTION HAD BEEN TRANSFERRED BY THE APPELLANTS IN FAVOUR OF THE VENDEE/TRANSFEREE ON 27TH DECEMBER, 2002. THE SALE DEED COULD NOT BE EXECUTED FOR THE REASON THAT THE APPELLANTS HAD BEEN PREVENTED FROM DEALING WITH THE RESIDENTIAL HOUSE BY AN ORDER OF A COMPETENT COURT, WHICH THEY COULD NOT HAVE VIOLATED. 25. IN VIEW OF THE AFORESTATED PECULIAR FACTS OF THE CASE AND LOOKING AT THE DEFINITION OF THE TERM TRANSFER AS DEFINED UNDER SECTION 2(47) OF THE ACT, WE ARE OF THE VIEW THAT THE APPELLANTS WERE ENTITLED TO RELIEF UNDER SECTION 54 OF THE ACT IN RESPECT OF THE LONG TERM CAPITAL GAI N WHICH THEY HAD EARNED IN PURSUANCE OF TRANSFER OF THEIR RESIDENTIAL PROPERTY BEING HOUSE NO. 267, SECTOR 9 - C, SITUATED IN CHANDIGARH AND USED FOR PURCHASE OF A NEW ASSET/RESIDENTIAL HOUSE. 26. THE APPEALS ARE, THEREFORE, ALLOWED WITH NO ORDER AS TO COST S. THE IMPUGNED JUDGMENTS ARE QUASHED AND SET ASIDE AND THE AUTHORITIES ARE DIRECTED TO RE - ASSESS THE INCOME OF THE APPELLANTS FOR THE ASSESSMENT YEAR 2005 - 2006, AFTER TAKING INTO ACCOUNT THE FACT THAT THE APPELLANTS WERE ENTITLED TO THE RELIEF, SUBJECT TO FULFILMENT OF OTHER CONDITIONS. IT IS CRYSTAL CLEAR THAT THE DECISION IN THE CASE OF SANJEEVLAL WAS DELIVERED AFTER TAKING INTO ACCOUNT THE PECUL I AR FACTS OF T HE CASE THAT T H E SALE DEED COULD NOT BE EXECUTED BE CAUSE OF THE PENDING LITIGATION AND THE COM P ETENT COURT HAS P ROH I BI TED THE ASSESSEE TO EXECUTE THE SALE DEED THEREFORE IT IS HELD THAT THE AS SESSEE WAS ENTITLED FOR RELIEF U NDER SECTION 54 OF THE ACT. HOWEVER , IN T H E CASE OF THE ASSESSEE, WE DID NOT FIND ANY SUCH PECULIAR CIRCUMSTANCES WHICH HAVE P ROHIB ITED THE ASSESSEE TO EXECUTE THE SALE DEED. WE HAVE ALSO CONSIDERED ALL THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE ASSESSEE AND WE FIND FACTS OF THE CASE OF THE ASSESSEE ARE DISTINGUISHABLE , THEREFORE , THE SAME ARE NOT APPLICABLE I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 12 TO THE CASE OF THE ASSESSEE. FURTHER W HEN THE ASSESSEE HAS EXECUTED AGREEMENT TO SALE ON 13.08.2010 THE LAND WAS AGRICULTURAL LAND AND AGREEMENT TO SALE WAS MADE WITH NON - AGRICULTURAL PERSON. HOWEVER , TRANSFER OF AGRICULTURAL LAND TO NON - AGRICULTURA L IS PROHIBITED IN T HE STATE OF GUJARAT AS PER THE PROVISION OF SECTION 43 OF THE BOMBAY TENANCY& AGRICULTURAL LANDS ACT 1948 AS APPLICABLE TO THE STATE OF GUJARAT. THEREFORE, NO RIGHT CAN BE ENFORCED BY THE BUYER AS THE LAND WAS AGRICULTURAL LAND BY VIRTUE OF SALE AGREEM ENT. AFTER CONSIDERING THE ABOVE FACTS AND FINDINGS, WE UPHOLD THE DECISION OF THE LD. CIT(A) THAT THE LAND WAS TRANSFERRED ONLY ON 03 - 07 - 2012 WHEN A REGISTERED SALE DEED WAS EXECUTED AND IT WAS ABSOLUTELY CORRECT THAT THERE WAS NO CREATION OF ANY RIGHT OF THE PURCHASER IN THE SAID LAND AS THE SAME WERE PROHIBITED BY THE LAW RELATING TO TRANSFER OF AGRICULTURAL LAND AS EXISTING IN THE STATE OF GUJARAT. 2 ND GROUND OF APPEAL: 9 . THE ASSESSEE HAS ALSO CLAIMED EXEMPTION U/S 54B OF THE ACT ON THE SALE OF AGR ICULTURAL LAND. THE ASSESSEE HAS CLAIMED EXEMPTION U/S. 54B FOR MAKING INVESTMENT IN AGRICULTURAL LAND AT RANU (18 - 11 - 2011) AND DUDHWADA (18 - 04 - 2013) RESPECTIVELY. ON PERUSAL OF THE SALE DEED DATED 03 - 07 - 2012 IT WAS NOTICED THAT THE ASSESSEE HAD SOLD NO N - AGRICULTURAL LAND WHEREAS AS PER THE PROVISIONS OF SECTION 54 B OF THE ACT THE EXEMPTION IS AVAILABLE ON THE SALE OF AGRICULTURAL LAND AND FURTHER INVESTMENT OUT OF THE SUCH SALE PROCEEDS IN THE AGRICULTURAL LAND AS PER THE CONDITIONS STIPULATED IN THE SA ID SECTION. FURTHER AS ELABORATED ABOVE IN THIS ORDER THE DE CISION OF HON BLE SUPREME COURT IN THE CASE OF SANJEEVLAL (SUPRA) IS DISTINGUISHABLE FROM THE FACTS OF THE CASE OF THE ASSESSEE AS DELAY IN SALE OF LAND WAS OCCURRED BECAUSE OF PROHIBITION IMPOS ED BY THE ORDER OF THE COURT. THE LD. CIT(A) HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HON BLE HIGH COURT OF BOMBAY IN THE CASE OF V.A. TRIVEDIA 1998, 38 TAXMAN 102 (BOM) AS ELABORATED SUPRA IN THE FINDINGS OF THE LD.CIT(A)WHEREIN IT IS HELD THAT W HEN THE LAND WAS CO N VEYED TO THE BUYER IN THE CHARACTER OF NON AGRICULTURAL IT WAS NOT ENTITLED FOR EXEMPTION GIVEN TO AGRICULTURAL LAND. AFTER CONSIDERING THE ABOVE I.T.A NO. 587 /AHD/20 17 A.Y. 2013 - 14 PAGE NO SHRI KISHORBHAI HARJIBHAI PA TEL VS. ITO 13 FACTS AND FINDINGS, WE UPHOLD THE DECISION OF LD. CIT(A) THAT THE ASSESSEE IS NOT ENTITL ED FOR DEDUCTION U/S. 54B OF THE ACT. THEREFORE THE APPEAL OF THE ASSESSEE IS DISMISSED. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 18 - 06 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 18 /06 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITA T, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,