DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 5, PUNE vs. DNYANOBA SHIVRAM BHINTADE, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the Revenue is emanating out of the order of 1. Commissioner of Income Tax (A) – 4, Pune dated 12.02.2017 for the assessment year 2011-12.

Assessee is an individual having income from agriculture, income from partnership firms and other sources. Assessee filed original return of income for A.Y. 2011-12 on 30.12.2011 declaring total taxable income

of Rs.47,78,256/- and agricultural income of Rs.2,37,86,406/-. The

case was selected for scrutiny and thereafter assessment was framed

u/s 143(3) of the Act vide order dated 30.12.2013 and the total income

was determined at Rs.1,97,11,530/-. Aggrieved by the order of AO,

assessee carried the matter before Ld.CIT(A), who vide order dated

12.02.2017 (in appeal No.PN/CIT(A)-4/ACIT, Circle-2, Pune/634/2013-

14) granted substantial relief to the assessee. Aggrieved by the order of

Ld.CIT(A), Revenue is now in appeal before us and has raised the

following grounds :

“1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in allowing the claim of deduction u/s 54B of Rs. 1,48,37,673/- which has neither been claimed by the assessee in the return of income nor has filed the revised return. 2. On the facts and in the circumstances of the case and in law, the CIT(A) is not correct in ignoring the decision of the Hon'ble Supreme Court in the case of M/s Goetze India Pvt. Ltd., 284 ITR 323 (SC), wherein it has been held that such claim can only be allowed when the assessee filed a revised return. 3. For this and such other reasons as may be urged at the time of hearing, the order of the CIT(A) may be vacated and that of the Assessing Officer be restored.”

assessee has claimed profit on sale of agricultural land of

Rs.3,90,31,399/- as being exempt. On verification of the sale deed, AO

noticed that the land was situated at Saswad, Ekhatpur Village, near

Saswad and Kumbhoshi Village. AO wrote a letter to the Chief Officer,

Municipal Corporation, Saswad, requesting to provide the distance of

Ekhatpur from the Municipal limits of Saswad Village. AO has noted

that Chief Officer vide letter dated 28.11.2013 confirmed that the

distance between Saswad and Ekhatpur Village is 5 Kms. and 2 Kms.

from the limits of Municipal Corporation. To further re-confirm the

distance, AO deputed the Inspector to verify the facts who also

submitted a report stating that the distance of the locations was not

more than 2 to 3 Kms. from the limits of the Saswad Municipality.

Assessee was therefore show caused and asked to explain as to why the

income from sale of lands situated at Saswad and Ekhatpur not be

considered as capital gains and brought to tax. AO noted that vide

submission dated 23.12.2013 assessee accepted the discrepancy and

declared the capital gain on sale of lands situated at Saswad and

Ekhtapur Villages and it was also submitted by the assessee that he has

purchased agricultural land within the time limit prescribed and will be

entitled for exemption u/s 54B of the Act. AO noted that assessee had

not claimed the deduction in the return of income and he accepted the

taxability of capital gains only after the discrepancies were pointed out

during the scrutiny proceedings. He thereafter relying on the decision

of Hon’ble Supreme Court in the case of M/s. Goetze India Pvt. Ltd.,

held that any claim can be allowed only on the basis of a revised return.

Since the assessee had not claimed the deduction u/s 54B in the return

of income nor had claimed it in the revised return, the claim of

deduction u/s 54B cannot be allowed. He accordingly disallowed the

claim of capital gains and brought the amounts of Rs.42,73,364/- as

short term capital gains and Rs.1,05,64,309/- as long term capital

gains. Aggrieved by the order of AO, assessee carried the matter before

Ld.CIT(A), wherein the assessee also claimed deduction u/s 54B of the

Act by relying on the decision of Hon’ble Bombay High Court in the case

of CIT Vs. Pruthvi Brokers and Shareholders reported in 349 ITR 336

(Bom). Ld.CIT(A) noted that the claim of deduction u/s 54B of the Act

was not examined by the AO and therefore he restored the issue to the

file of AO.

Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal

before us.

other hand reiterated the submissions made before AO and Ld.CIT(A)

and further submitted that identical issue arose in the case of wife of

the assessee Smt. Uma Dnyanoba Bhintade before the Tribunal. Pune

Bench of the Tribunal vide order dt.09.07.2019 in ITA No.1485/PUN/

2017 had dismissed the grounds of the Revenue. He placed on record

the copy of the aforesaid decision. He therefore submitted that since the

facts of the case of assessee and the facts of the case of assessee’s wife

are identical, no interference to the order of Ld.CIT(A) is called for.

record. The issue in the present ground is with respect to the

allowability of claim of Sec.54B of the Act which was not claimed by the

assessee in the return of income but was claimed before Ld.CIT(A) and

Ld.CIT(A) held that the claim be allowed by the AO if the required

conditions are satisfied by the assessee. We find that identical issue

arose in assessee’s wife’s case Smt. Uma Dnyanoba Bhintade (supra),

wherein the Co-ordinate Bench of the Tribunal upheld the order of

Ld.CIT(A) by observing as under :

“9. We have heard the rival contentions and perused the record. The limited issue which arises in the present appeal filed by Revenue is against directions of CIT(A) in allowing the benefit claimed under section 54B of the Act by Assessing Officer, in case the assessee has fulfilled all the conditions laid down in the said section. Admittedly, the assessee had not offered any income from Long Term Capital Gains or Short Term Capital Gains on sale of agricultural land in its hands, in the return of income. However, it had shown exempt agricultural income on account of sale of agricultural land which was duly reflected in the return of income. The Assessing Officer sought information from the Municipal authority

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

in the facts of the present case and to the case of assessee’s wife Smt.

Uma Dnyanoba Bhintade that was decided by the Tribunal in ITA

No.1485/PUN/2017 (supra). Revenue has also not placed any material

on record to demonstrate that the decision of Pune Tribunal in the case

of assessee’s wife in A.Y. 2011-12 has been set aside / overturned or

stayed by the Higher Judicial Forum. In view of the aforesaid facts, we

find no reason to interfere with the order of Ld.CIT(A) and thus the

grounds of Revenue are dismissed.

Order pronounced on 12th day of September, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 12th September, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-4, Pune. 4. Pr. CIT-3, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.