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Facts
The assessee, engaged in civil construction, filed a return of income declaring Rs. 5,56,300/-. The case was selected for scrutiny and the Assessing Officer framed an assessment considering Rs. 17,92,747/- as long-term capital gains based on a Development Agreement for agricultural land.
Held
The Tribunal held that the capital gains were duly invested and eligible for deduction under Section 54EC. Consequently, no tax liability arises on this addition for the assessee.
Key Issues
Whether the entire consideration from the Development Agreement was taxable in the AY 2013-14, and whether the assessee was eligible for deduction under Section 54EC.
Sections Cited
250, 143(3), 54EC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER Atulbhai Balubhai Patel, Income Tax Officer, Vs. 401, Shyamal Flat, Gujarat Ward 5(3)(1), Brahman Society, Paldi, Ahmedabad Ahmedabad-38007 [PAN :AASPP 1880 F] (Appellant) .. (Respondent) Appellant by : Shri Pritesh Shah, CA Respondent by: Shri B.P Srivastava, Sr. DR Date of Hearing 15.07.2025 Date of Pronouncement 29.07.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
The captioned appeal has been filed by the assessee against the order dated 13.02.2025 passed by the Ld. ADDL/JCIT(A), Panchkula (hereinafter referred to as "CIT(A)" for short), passed u/s 250 of the Income-tax Act, 1961, (hereinafter referred to as "the Act" for short) for the Assessment Year (AY) 2013-14. 2. The assessee has raised the following grounds of appeal:
The Learned CIT(A), NFAC erred in law and on facts in confirming the addition of Long Term Capital Gain of Rs.17,92,747/- made by the AO, such addition is requested to be deleted.
The learned CIT(A), NFAC erred in law and on facts in confirming the disallowance of Section 54EC of the Income Tax Act, 1961, made by the AO, such deduction is requested to be allowed.
The assessee is an individual and doing the business in Civil Construction work. He filed his return of income for the year under consideration on 17.12.2013 declaring taxable income of Rs.5,56,300/-. The case of the assessee Atulbhai Balubhai Patel Vs. ITO Asst. Year : 2013-14 - 2– was selected for scrutiny assessment and thereafter the assessment was framed by the Assessing Officer u/s 143(3) of the Act, making Rs.17,92,747/- towards long-term capital gains by adopting a higher sale consideration based on a 30% share in land.
3.1 The brief facts relating to this issue are that the assessee, a co-owner of agricultural land, entered into a Development Agreement with M/s. Sahjanand Land Corporation for a total consideration of Rs.3,25,00,000/-, with his 30% share being Rs.97,50,000/-, and while he declared Long Term Capital Gain (LTCG) of Rs.77,00,000/- in AY 2013–14 and the remaining Rs.28,00,000/- in the subsequent year based on actual receipts, the Assessing Officer, relying on the Development Agreement and purchase deed executed during the relevant financial year indicating transfer of possession, treated the entire Rs.97,50,000/- as consideration received in AY 2013–14, resulting in an addition of Rs.17,92,747/- as LTCG.
3.2 Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who confirmed the addition made by the Assessing Officer.
3.3 Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
Before us, Ld. AR submitted that the declaration of LTCG was made on an actual receipt basis, duly supported by ledger copies and builder confirmations. The Ld. AR submitted that although the Development Agreement was entered in FY 2012–13, the full consideration was not received in that year. The consideration of Rs.28,00,000/- was received and offered to tax in AY 2014–15, and exemption under Section 54EC was also claimed for investment made on 13.10.2013, within the permissible time limit. Atulbhai Balubhai Patel Vs. ITO Asst. Year : 2013-14 - 3–
We have heard the rival contentions and perused the material available on record. It is an undisputable fact that the capital gains have been duly invested and is eligible for deduction u/s 54EC. Hence, no liability of tax arises in the case of the assessee.
In the result, appeal of the assessee is allowed.