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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI L.P. SAHU
Per L.P. Sahu, Accountant Member:
This is an appeal filed by the assessee against the order of ld. CIT(A), Karnal dated 13.03.2012 for the assessment year 2007-08 on the following grounds :
“1. That on the facts & in the circumstances of the case the A.O. wrongly refused to allow full exemption U/s 2(14) of the IT. Act in spite of the fact that certificate from the Tehsildar, Panipat, certifying the distance of land beyond 8 K.M. from the municipal limit, was furnished and the learned CIT (A) also erred in confirming the same.
2. That the A.O. without any basis rejected the certificate filed by the Tesildar justifying the distance of the land beyond 8 K.M. and wrongly made total addition of Rs. 4,18,79,866/- which is wrong and baseless.
3. That the return of Income was filed in extended limit of section 139(4) proviso to section 139(1) of the IT Act, 1961 as such full exemption U/s 54B of the IT Act for new land purchased for Rs. 4,92,92,700/- should have been allowed whereas the exemption for Rs. 3,85,70,800/- only has been allowed and exemption of remaining land for the value of Rs. 1,07,21,900/- has wrongly been refused and the learned C.I.T.(A) erred in confirming the same.
4. That house construction was made investing there on sum for Rs. 10,00,000/- in stipulated period for which sufficient necessary proofs were filed. The A.O. arbitrarily and without any justification refused to allow exemption U/s 54F (1) of the IT Act which is wrong & illegal.”
The brief facts of the case are that the assessee filed return of income on 01.11.2007 declaring income of Rs.31,74,010/-, which was processed and subsequently selected for scrutiny. The appellant had shown the interest income as income from other sources. In the assessment proceedings, the AO on examination of bank pass books of appellant, noticed that there was a deposit of 1.40 crore in PNB, New Delhi and Rs.6,13,81,250/- in PNB, Panipat.
The deposits so noticed by AO were stated to have been made out of the sale consideration of agricultural land sold by him. On being asked for the details of agricultural land sold by him, total sale consideration, date of sale, name of the persons to whom the land was sold and the area where the land was situated, the assessee filed sale deed which showed sale of total land measuring 11 acres to M/s. Sutluj Real Estate (P) Ltd. and M/s. Kanchanjunga Realtors (P) Ltd. on 24.04.2006 for Rs.8,61,50,000/-. The land in question was situated at Village Azizzullapur, Tehsil Panipat. Vide reply dated 23.12.2009, the assessee claimed that the land sold was situated beyond 8 Kms from the local limit of Municipality and as such it was not an asset in terms of section 2(14)(iii) of the IT Act. In support, the assessee furnished a copy of letter stated to have been issued by Tehsildar, Panipat. The AO noted in his order that his office collected information of land situated at same village Azizzullapur in the case of another assessee Smt. Krishna Chopra for A.Y. 2005-06, from the office of Distt. Town Planning Officer, Panipat who as per his office letter No. 2193 dated 31.12.2007 informed that the distance of the land is approximately 1.8 kms from the extended municipal boundary of Panipat. The AO, therefore, observed that the land sold by the assessee was a ‘capital asset’ within the meaning of section 2(14)(iii) of the Act holding the assessee liable for capital gain tax.
2.1 The assessee further explained that 11 acres of land was acquired from his father through court decree in the month of May, 1988 and was sold for a consideration of Rs.8,61,50,000/- on 24.04.2006 and submitted the computation of long term capital gain calculating the gain of Rs.8,04,49,866/-.
2.2. The assessee made investment in purchase of land worth Rs. 3,85,70,000/- between 21.08.2006 and 04.05.2007 and further purchased other land worth Rs.1,07,21,900/- on 15.11.2007 and 22.04.2008 so as to claim deduction u/s. 54B of the Act.
2.3. The appellant also invested a sum of Rs.10,00,000/- on reconstruction of its residential house at 590R, M.T. Panipat and the said amount was also withdrawn from PNB, Panipat so as to claim deduction u/s. 54F(1) of the Act.
2.4 The AO accepted the claim u/s. 54B with respect to the investment of Rs.3,85,70,800/- made in purchase of land before 31.07.2007, i.e., before the due date of filing of return of income. The claim of exemption of remaining investment in land purchase of Rs.1,07,21,900/- was disallowed for the reason that the said land was purchased subsequent to the due date of filing of return of income and the appellant did not deposit the amount in the Bank under the capital gain account scheme. The exemption of Rs.10,00,000/- claimed u/s. 54F(1) was also disallowed since the assessee had claimed to have reconstructed a house on the plot of existing house before one year from the date of transfer of the original assets and not after the three years from the date of transfer of the original asset in terms of section 54F(1). It was also observed that the assessee has not purchased any house which is pre- condition to claim exemption u/s. 54F but has reconstructed on the existing house.
Aggrieved, the appellant challenged the order of the AO in appeal before the first appellate authority, who affirmed the action of the Assessing Officer vide impugned order. The assessee was not satisfied by the order of the ld. CIT(A), hence, this appeal before the Tribunal.
We have heard the submissions of both the parties and have gone through the entire material available on record.
The first limb of assessee’s arguments is based on the planks that the impugned agricultural land sold was situated beyond 8 kms from the municipal limit of Panipat as per alleged certificate of Tehsildar furnished by the assessee before the authorities below and hence, the authorities below were not justified in treating the said land as sale of capital asset. Per contra, the contention of the ld. DR has been that the AO while discarding the contention of the assessee, has referred to the certificate of District Town Planning Officer (DTPO), Panipat obtained in the case of Smt. Krishna Chopra in similar case for A.Y. 2005-06. It was also submitted that in the remand proceedings, the AO had also enquired into the distance of assessee’s land from the said competent authority, and the District Town Planner Enforcement, Panipat, vide letter dated 15.12.2011 and vide further clarification letter dated 27.02.2012 clearly informed that the impugned land sold by assessee was situated within 8 kms from the Municipal Limits of Panipat as on 24.04.2006 and the assessee failed to rebut this authentic certificate of the competent authority.
Having considered the rival submissions, we do not find any justification to interfere with the impugned order on this count. It is notable that the assessee itself vide its reply furnished the computation of capital gains and investments in purchase of various properties and in reconstruction of residential house so as to claim exemption u/s. 54B and 54F of the Act, which itself alludes that the property sold by the assessee was nothing else but a capital asset. On this premise only, there is sharp contradiction between the initial claim of land being beyond 8 kms from Municipal limit and the claim of exemption u/s. 54B and 54F on long term capital gain. Moreover, the certificates obtained by the AO in remand proceedings with respect to the impugned land of assessee unequivocally speak against the assessee and the same have not been rebutted by the assessee. Accordingly, the conclusion of capital asset sold by assessee, as observed by the ld. Authorities below, deserves to be sustained.
Now adverting to the issue whether the deduction u/s. 54B and 54F claimed by the assessee is available with reference to the capital gain invested in purchase of agriculture land subsequent to the due date of filing of return of income without keeping the same deposited in capital gain account, we are of the opinion that there is no ambiguity in the relevant provisions of the Act that the assessee was legally obliged to appropriate the amount towards purchase of new asset before due date of filing the return, in absence of which the assessee would not be entitled to claim exemption under the provisions of the Act. The appellant has claimed to have invested Rs.1,07,21,900/- in purchase of agricultural land on 15.11.2007 and on 22.04.2008, i.e., after the due date of filing the return of income without keeping the same deposited in Capital Gain Account. Therefore, the ld. Authorities below are justified in disallowing the exemption on the investment made beyond the due date of filing the return as the said amount was not appropriated by depositing the same in the capital gain accounts scheme as per provisions of the Act.
Similarly, as per provisions of section 54F(1) of the Act, the case of construction of a house, deduction available with reference to the amount invested in 3 years subsequent to the date of sale of the asset. In the instant case, since the amount claimed to be invested in the reconstruction of the house was prior to one year from the date of sale, deduction u/s. 54F of the Act was not available to the assessee, as no amount was claimed to have been invested in reconstruction of house subsequent to the date of sale before the Assessing Officer. The ld. CIT(A) while affirming the action of the AO has relied on various decisions in the impugned order, which are applicable to the present case. The ld. CIT(A) has made an elaborate discussion on the issue under consideration and has come to an appropriate conclusion as per law, which for want of any contrary material available on record, deserves to be sustained. We accordingly, do not find any justification to interfere with the impugned order. As a result, the appeal of the assessee deserves to be dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 10.04.2017.