PR COMMISSIONER OF I T CENTRAL JAIPUR vs. SHRI MANOJ BAHAL

PDF · subscribers
ITA/152/2016HC RajasthanRJHC02082161201608 September 20163 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal was devoid of merits. The Tribunal had previously allowed deductions in earlier tax appeals involving construction on agricultural land, and this decision was accepted by the Department. The Court noted that the Tribunal had followed its own consistent decisions on similar matters. Furthermore, the Court referred to a Supreme Court decision, implying it supported the Tribunal's view. Consequently, the Court found that no substantial question of law arose from the ITAT's order. The appeal was dismissed, upholding the ITAT's decision to allow the deduction under Section 54F on the investment made for constructing a house on agricultural land.

What were the facts?

The Department (Pr. Commissioner of Income Tax Central, Jaipur) appealed against the Income Tax Appellate Tribunal's (ITAT) decision. The ITAT had dismissed the Department's appeal, upholding the CIT(Appeals) order. The assessee, Shri Manoj Bahal, sold a plot of land for Rs. 2,52,76,000, with his share being Rs. 1.10 crores. The stamp duty valuation under Section 50C was Rs. 1,14,35,750. The assessee purchased an agricultural plot for Rs. 45,00,000 and deposited Rs. 75 lacs in a capital gains account. This amount was withdrawn and used for constructing a house on the purchased plot. The assessee claimed a deduction of Rs. 1.20 crores under Section 54F.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the ITAT is justified in allowing the deduction u/s 54F on the investment made in Agricultural Land which was not a Capital Asset u/s 2(14)? (Question of law) 2. Whether the Tribunal was legally justified in allowing deduction u/s 54F by holding that the Agricultural Land purchased and construction thereon would qualify for exemption of Capital Gain? (Question of law) Assessee's Contention: The assessee contended that they had invested in agricultural land and constructed a house thereon, and claimed deduction under Section 54F. The CIT(A) and ITAT allowed the deduction, holding that there was no specific condition in the Act that a residential house constructed on agricultural land would not be eligible for deduction. The ITAT relied on its own decisions in ACIT Vs Om Prakash Goyal and Shyam Sunder Makhija Vs. ITO. Revenue's Contention: The Department contended that construction was made on agricultural land, and therefore, the assessee was not entitled to exemption under Section 54F. They argued that the ITAT committed a serious error in not granting the deduction.

Which sections of the Income-tax Act were involved?

Section 54F,Section 2(14),Section 50C

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. D.B. Income Tax Appeal No.152/2016 DATE OF JUDGMENT ::: 8th September, 2016 HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE BANWARI LAL SHARMA Mr. Anil Mehta, for the appellant. *****

1.

By way of this appeal, the Department has challenged the judgment & order of the Income Tax Appellate Tribunal dismissing the appeal preferred by the Department, confirming the order of the CIT (Appeals).

2.

Learned counsel for the appellant has framed the following substantial questions of law:- “1. Whether on the facts and circumstances of the case and in law, the ITAT is justified in allowing the deduction u/s 54F on the investment made in Agricultural Land which was not a Capital Asset u/s 2(14)?

2.

Whether the Tribunal was legally justified in allowing deduction u/s 54F by holding that the Agricultural Land purchased and construction thereon would qualify for exemption of Capital Gain.”

3.

Learned counsel for the appellant contended that the construction was made on the Agricultural Land

2

therefore he is entitled for exemption u/s 54F. He further contented that the Tribunal has committed serious error in not granting deduction u/s 54F.

4.

We have heard the learned counsel.

5.

The Tribunal in para no.3 observed as under:- “Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ID CIT(A), who had allowed the appeal by observing that the appellant had sold one plot of land for total consideration of Rs. 2,52,76,000/- along with other co-owners and the share of the appellant in this plot was for 1.10 crores. The registration authority valued the cost of the land (share of the appellant) as per provisions of Sec. 50C for Rs. 1,14,35,750/-. The appellant subsequently purchased one agricultural plot on 12/7/2007 measuring two Bighas one Biswa at village Jaisinghpura Khor, district jaipur for Rs. 45,00,000/-. The area is otherwise stated to be in municipal limits. However, there is no dispute that such plot is of agricultural land. The appellant also deposited Rs. 75 lacs in capital gain account in Bank of Baroda within the stipulated and the amount was withdrawn/utilized for construction of house on the plot purchased earlier. The appellant

accordingly claimed to have invested Rs. 1.20 crores U/s 54F of the Act. The Id CIT(A) further analysed Section 54F of the Act on page 5 and 6 of his order. He has further held that the assessee had constructed a residential house within stipulated period from the date of transfer of original assets and there was no specific condition in the Act that residential house constructed on the agricultural land will not be eligible for such deduction. He further relied on the decision of Hon'ble ITAT, Jaipur Goyal in ITA No. 647/JP/2011 wherein it has been held that house constructed on agricultural land is qualified for deduction U/s 54F of the Act. He further relied on the the Hon'ble Bench. Therefore, he allowed the deduction U/s 54 of the Act on investment of Rs. 1.20 crores.”

6.

Considering the paragraph no.5, where, in earlier tax appeals on the agricultural land, construction was made and the Tribunal has followed the same decision. The said decision is accepted by the department and in view of decision of Supreme Court. This appeal also devoid of merits.

7.

Since no substantial question of law arises in the appeal, the appeal has no merit and the same is dismissed. (Banwari Lal Sharma), J. (K.S. Jhaveri), J. Brijesh29.

More judgments on Section 54F

All 2,628 judgments and leading authorities on Section 54F →

Recent GST High Court judgments

Search GST case law →