PANKAJBHAI HATHIBHAI PATEL,AHMEDABAD vs. INCOME TAX OFFICER, WARD-6(3), , SURAT

Grounds of appeal raised by the assessee are as follows:

At the outset Learned Counsel for the assessee, informs the Bench that assessee does not wish to press Ground No.5 raised by him, therefore, we dismiss Ground No.5 as “not pressed” by the assessee.

We have heard both the parties and perused the materials available on record. We note that third proviso of section 50C of the Act states as follows: “[Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed[or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer: [Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed] on or before the date of the agreement for transfer:] [Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and [ten] per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.]”

Therefore we note that third proviso of section 50C(1) of the Act clearly states that where value adopted by the Stamp Valuation Authority does not exceed 110% of the consideration received, the consideration so received for the purpose of Section 48, will be deemed to be the full value of consideration. Therefore, we note that the difference between value adopted

Brief facts qua the issue are that assessee during the assessment proceedings, vide letter dated 10.03.2014, the assessee made fresh claim of deduction u/s 54 of the Act. Relevant part of his letter is reproduced hereunder: “During the year, the assessee has sold one house property for the sale consideration of Rs.3,11,00,000/- and capital gain of Rs.2,07,17,633/- arose as reflected in the computation of income. As against the said capital gain, the assessee has made investment of the sale proceeds in buying residential plot situated at Ahmedabad to the tune of Rs.1,43,01,825/- inclusive of stamp duty and registration charges and an amount of Rs.26,27,596/- towards construction of the residential house during the year. Accordingly, the assessee has claimed deduction u/s 54F to the tune of Rs.1,69,29,421/- It is worthwhile to mention that the assessee had carried out construction in the residential property in the subsequent year and till the filling of return of income on 26.03.2013 for A.Y 2012-13, the assessee has made further construction and incurred total expenditure of Rs.1,45,27,981/- which is allowable u/s 54 of the Act. The assessee has further invested in Infrastructure Bonds (NHAI) to the tune of Rs.50,00,000/- u/s 54EC as per provision of Act. The ledger copy of account alongwith copy of infrastructure bond was submitted vide Annexure-C”

Shri Rasesh Shah, Learned Counsel for the assessee argued that assessee is a partner in the firm of M/s Pancham Developers whereby deriving interest income from the said firm as well as earning rent income from UTI bank and HDFC bank on letting out the properties. The assessee has filed his return of income for A.Y. 2011-12 on 28.03.2012, declaring total income to the tune of Rs.1,12,360/-. The assessee is assessed to tax since last many years. The assessee during the course of assessment proceedings filed exhaustive details from time to time along with annexure. The assessee has sold one house property bearing R.S. No. 43/2, situated at Plot No. 17, Sai Enclave Bungalow, Vesu, Surat on 09.04.2020, for the sale consideration of Rs.3,11,00,000/- for which registered sale deed document was executed with the Sub-Registrar, Surat. The stamp duty valuation of the A.Y. 11-12 Pankajbhai H Patel property is Rs.3,32,34,124/-. The assessee had claimed indexed cost of acquisition of Rs.1,03,82,367/- and claimed deduction u/s 54 by making investment in residential plot situated at Ahmedabad amounting to Rs.1,43,01,825/- inclusive of stamp duty and registration charges. The assessee also claimed the deduction u/s 54 for construction expenses of Rs.26,27,596/- incurred till 31.03.2011 in the return of income. The assessee made deposit in NHA bond of Rs.50,00,000/-. However, in the return of income, the assessee claimed the deduction u/s 54EC of Rs. 37,88,212/- by restricting it to the amount of net capital gain after deduction u/s 54 in respect of the property at Sai Enclave Bungalow.

Learned Counsel further submitted that assessee incurred total expenses of Rs. 1,45,27,981/- towards construction of residential house up to the date of filing the return for A.Y. 2011-12 i.e. 28.03.2012. Therefore, the further construction expenses of Rs.1,19,00,385/- (Rs.1,45,27,981 - Rs. 26,27,596) were incurred till 31.03.2012. The assessee has claimed construction expenses of Rs.26,27,596/- in the original return of income. However, the construction expenses of Rs.1,19,00,385/- was claimed by way of a letter filed during the assessment proceedings before the Assessing Officer. The Assessing Officer denied deduction u/s 54 of the Act in respect of construction expenses of Rs.1,19,00,385/-, therefore assessee is in appeal before this Tribunal. Therefore assessee claimed deduction u/s 54 of the Act in respect of total construction expenses of Rs.1,45,27,981/-, This includes expenses Rs.26,27,596/- which was claimed by the assessee in the original return of income. These expenses are in addition to the cost of land of Rs.1,43,01,825/- in the revised computation of total income filed in the course of the assessment proceedings on the ground that assessee is not required to deposit the amount in capital gain scheme to the extent of construction expenses incurred till due date of the filing the return of income Page | 7

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee. We note that Assessing Officer did not allow the deduction u/s 54 of the Act, on the ground that the amount was not deposited in the capital gain scheme and the fresh claim could not be allowed by the Assessing Officer due to the decision of the Hon`ble Supreme Court in case of Goetze (India) Ltd. Vs. CIT - 157 Taxman 1 (SC). On appeal, ld CIT(A) also held that fresh claim cannot be allowed by the Assessing Officer as mentioned in the judgment of the Hon`ble Supreme Court in case of Goetze (India) Ltd (supra). However, we note that Judgment of Hon`ble Supreme Court in case of Goetze (India) Ltd (supra) is not applicable in case of appellate proceedings as held by Hon`ble Gujarat High Court in case of Principal Commissioner o Income Tax v/s. UTI Bank Ltd. - 99 taxmann.com 392(Guj.), wherein it was held as follows: “5. Having heard learned counsel for the parties and having perused the documents on record, we do not see any error in the view of the Tribunal. The question of disallowance under section 14A of the Act has been examined on the basis of materials on record. The Tribunal found that the assessee's interest-free funds far exceeded its interest-free investments. The Tribunal relied on the decisions of this court in the case of this very assessee concerning similar issues Page | 8 in the later assessment years, against which we are informed that the special leave petition has been dismissed.

Regarding a claim contrary to the disclosures in the return, the Tribunal relied on the decision of the Supreme Court in the case of National Thermal Power Co. Ltd. (supra) to observe that the purpose of assessment is to tax real income. This court taking note of the decisions of the Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1 and National Thermal Power Co. Ltd. (supra) in the case of Mitesh Impex (supra) had observed as under (page 103 of 367 ITR) : "It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. v. CIT (supra) is confined to the powers of the Assessing Officer and accepting a claim without revised return. This is what the Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. v. CIT (supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd. v. CIT (supra). When it comes to the power of the Appellate Commissioner or the Tribunal, the courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribunal to entertain a new claim for the first time though not made before the Assessing Officer. Income-tax proceedings are not strictly speaking adversarial in nature and the intention of the Revenue would be to tax real income. This is primarily on the premise that if a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the Assessing Officer. Therefore, any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. This is precisely what has happened in the present case. The Appellate Commissioner and the Tribunal did not need to nor did they travel beyond the materials already on record, in order to examine the claims of the assessees for deductions under sections 80-IB and 80HHC of the Act. In the result, no question of law arises. All tax appeals are dismissed.”

After going through the judgment of Hon`ble Gujarat High Court in the case of UTI Bank Ltd (supra), it is abundantly clear that even a fresh claim would be permissible to be raised for the first time before the appellate

We note that total construction expenses of Rs. 1,45,27,981/- was incurred/claimed by the assessee, and out of such total construction expenses of Rs.1,45,27,981/-, the assessing officer has allowed the deduction u/s 54 of the Act to the tune of Rs. 26,27,596/-, as claimed in the original return of income by the assessee. The assessee is in appeal before us and contended that deduction u/s 54 of the Act should be allowed for balance construction expenses of Rs.1,19,00,385/- (Rs. 1,45,27,981- Rs. 26,27,596). We have examined these balance construction expenses of Rs.1,19,00,385/-, being the actual disallowance of the claim of deduction u/s 54 made by Assessing Officer (1,45,24,981 – 26,27,596) and noted that assessee is eligible to claim deduction under section 54 of the Act. The Assessing Officer observed that in order to claim deduction u/s 54 of the Act, the assessee is required to make deposit in the capital gain scheme Rs.1,19,00,385/-. We do not accept the said observation made by the Assessing Officer, reason being the assessee is not required to make deposit in the capital gain scheme, if the amount is invested in property before due date of filing the return of income u/s 139(1) of the Act. This is very clear from the wordings of section 54(2) of the Act, where assessee has to utilize the amount for the purchase or construction of the new asset before the date of furnishing the return of Page | 10 income u/s 139 of the Act. In this regard, the reliance can be placed on the judgment of Hon`ble High Court of Punjab and Haryana, in the case of Jagtar Singh Chawla, [2013] 33 taxmann.com 38 (Punjab & Haryana), wherein it was held that where assessee paid substantial amount of sale consideration of a residential house for purchase of another residential property within extended period of limitation of filing of return under section 139, his claim for deduction under section 54F was to be allowed. The findings of the Hon`ble Court is reproduced below: “8. The provisions of Section 54F(4) of the Act are pari-materia with Section 54(2) of the Act. Section 54 deals with the profit on sale of a residential house, whereas Section 54F deals with the transfer of any long term capital assets not being a residential house.

A Division Bench of the Gauhati High Court in a case reported as CIT v. Rajesh Kumar Jalan [2006] 286 ITR 274/157 Taxman 398, held that only Section 139 of the Act is mentioned in Section 54(2) of the Act in the context that the unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income Tax under Section 139 of the Act and that it would include extended period to file return in terms of Sub Section 4 of Section 139 of the Act. It was held as under: "From a plain reading of sub-section (2) of Section 54 of the Income-tax Act, 1961, it is clear that only section 139 of the Income-tax Act, 1961, is mentioned in section 54(2) in the context that the unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income-tax under section 139 of the Income-tax Act. Section 139 of the Income-tax Act, 1961, cannot be meant only section 139(1), but it means all sub- sections of section 139 of the Income-tax Act, 1961. Under sub-section (4) of section 139 of the Income-tax Act any person who has not furnished a return within the time allowed to him under sub-section (1) of Section 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year whichever is earlier."

Our view is fortified by the another judgment of Hon`ble High Court of Punjab and Haryana, in the case of Ms. Jagriti Aggarwal, [2011] 15 taxmann.com 146 (Punjab & Haryana), wherein it was held that due date for Page | 12 furnishing the return of income as per section 139(1) of the Act is subject to the extended period provided under Sub-Section (4) of Section 139 of the Act. The findings of the Hon`ble Court is reproduced below: “10. Having heard learned counsel for the parties, we are of the opinion that Sub- Section (4) of Section 139 of the Act is, in fact, a proviso to Sub-Section (1) of Section 139 of the Act. Section 139 of the Act fixes the different dates for filing the returns for different assessees. In the case of assessee as the respondent, it is 31st day of July of the Assessment Year in terms of clause (c) of the Explanation 2 to Sub- Section 1 of Section 139 of the Act, whereas Sub-Section (4) of Section 139 provides for extension in period of due date in certain circumstances. It reads as under: "(4) Any person who has not furnished a return within the time allowed to him under Sub-Section (1), or within the time allowed under a notice issued under Sub-Section (1) of Section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier; Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year."

A reading of the aforesaid Sub-Section would show that if a person has not furnished the return of the previous year within the time allowed under Sub-Section (1) i.e. before 31st day of July of the Assessment Year, the assessee can file return before the expiry of one year from the end of the relevant Assessment Year.

The sale of the asset having been taken place on 13.1.2006, falling in the previous year 2006-2007, the return could be filed before the end of relevant assessment year 2007-2008 i.e. 31.3.2007. Thus, Sub-Section (4) of Section 139 provides extended period of limitation as an exception to Sub-Section (1) of Section 139 of the Act. Sub-Section (4) is in relation to the time allowed to an assessee under Sub-Section (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under Sub-Section (1) of Section 139. Therefore, such Sub-Section (4) has to be read along with Sub-Section (1). Similar is the view taken by the Division Bench of Karnataka and Gauhati High Courts in Fathima Bai's case (supra) and Rajesh Kumar Jalan's case (supra) respectively.

Hon`ble High Court of Gauhati in the case of Rajesh Kumar Jalan, [2006] 157 Taxman 398 (Gauhati) held that under sub-section (4) of section 139, the assessee could fulfil requirement under section 54 for exemption of Page | 13 capital gain from being charged to income-tax on sale of property used for residence. The detailed conclusion of the Hon`ble Court is reproduced below: “3. The facts which would suffice for deciding the present appeal are that the respondent/assessee sold his 1/4th share in a residential property known as "Jalal House" at Rehabari, Guwahati, for a consideration of Rs. 40,00,000 (rupees forty lakhs) only to the Government of Meghalaya for the sale deed No. 348, dated 21- 12-1995. Admittedly, the indexed cost of the property was worked out at Rs. 10,26,925 (rupees ten lakhs twenty- six thousand nine hundred and twenty-five) and, thus, there was a capital gain of Rs. 29,73,048 (rupees twenty-nine lakhs seventy-three thousand and forty eight) earned by the respondent/assessee and it was also not disputed. The respondent/assessee with the money for the sale of his residential property known as "Jalal House" decided to purchase a residential Flat No. 4B on the fourth floor of a multi-storied building situated at Bally High, 1, Ballygunge Park Road, Calcutta-19, from Shri Radha Krishna Jalan and Smt. Anguri Devi Jalan on 8-2-1996, each having one half share of ownership of the residential flat. The respondent/assessee negotiated with the above two owners to purchase their residential flat for a consideration of Rs. 30,00,000 (rupees thirty lakhs) and, accordingly, entered into two agreements dated 9-5-1996, and 17-5- 1996, and under the said two agreements, the respondent/assessee had taken physical possession of the said residential flat. From the two agreements of purchase, it is clear that each of the co-owners agreed to transfer and assign their respective shares or interest in the said flat together with a car park space for a consideration of Rs. 30,00,000 (rupees thirty lakhs) in total.

The Assessing Officer (for short the "AO") under his assessment order rejected the respondent/assessee's claim for exemption under section 54 of the Income-tax Act, 1961, for the reason that (a) the appellant/assessee has taken only a sub- lease of the property vide indenture of sub-lease dated 17-1-1998, in between him and M/s Agarwal Company Ltd. and the said indenture has been executed in pursuance of the letter dated 28-8-1961, written by Shri R. K. Jalan and Smt. Anguri Devi Jalan to the said lessee; (b) the sub-lease cannot be taken as a clear purchase as per the meaning of the provisions of section 54(1) of the Income-tax Act and also that there was no transfer of property as claimed and the same was merely a sub-lease; (c) the appellant/assessee had not complied with the provisions of section 54(2) of the Income-tax Act by not depositing the unappro- priated amount of capital gain in the Capital Gains Deposit Scheme, 1988, within the stipulated time of furnishing the return of income-tax under section 139(1) of the Income-tax Act. The respondent/assessee preferred the first appeal being Appeal No. GUWA-75/99/2000 against the assessment order of the Assessing Officer to the Commissioner of Income-tax (Appeals), Guwahati. The first appellate authority had partly allowed the appeal by passing the final order dated 24-9-1999, wherein the first appellate authority held that even a lease also amounts to a transfer within the meaning of the Transfer of Property Act, 1882, by referring to two decisions of the Supreme Court in R. K. Palshikar (HUF) v. CIT [1988] 172 ITR 3111 and A.R. Krishnamurthy v. CIT [1989] 176 ITR 4172, 421, and as such, the transfer in question between the respondent/assessee on the one side and Shri Radha Krishna Jalan and Smt. Anguri Devi Jalan on the other side is the transfer of capital asset within the provisions of section 2(47)( v) of the Income-tax Act but the first appellate authority held that the respondent/assessee could utilise only Rs. 14,43,254 (rupees fourteen lakhs forty-three thousand two hundred and fifty-four) up to 31-8-1996, towards the purchase of the property and balance amount of capital gain of Rs. 15,29,794 (rupees fifteen lakhs twenty nine thousand seven hundred and ninety-four) was not deposited in a separate capital gain account with the bank by construing sub-section (2) of section 54 of the Income-tax Act, 1961, in such a manner that the appellant/assessee did not deposit the unutilized portion of the capital gain before the date of furnishing the return of income-tax under section 139(1) of the Income-tax Act, 1961.

The respondent being aggrieved by the findings of the first appellate authority, i.e., the Commissioner of Income-tax (Appeals), that the respondent/assessee was eligible for exemption under section 54 of the Income-tax Act, 1961, to the extent of only Rs. 14,43,254 (rupees fourteen lakhs forty-three thousand two hundred and fifty-four) and direction to the Assessing Officer to levy the capital gains tax on the amount of Rs. 15,29,794 (rupees fifteen lakhs twenty nine thousand seven hundred and ninety-four) only in place of Rs. 29,73,048 (rupees twenty-nine lakhs seventy- three thousand and forty eight) under section 54 of the Income-tax Act also preferred an appeal against the order of the first appellate authority dated 24-9- 1999, before the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati. The department also preferred an appeal against the order of the learned first appellate authority, i.e., the learned Commissioner of Income-tax dated 24-9-1999, before the learned Income-tax Appellate Tribunal, Gauhati Bench, Gauhati. By a common order dated 18-4-2001, the Income-tax Appellate Tribunal had allowed the appeal preferred by the respondent/assessee and rejected the appeal preferred by the appellant/Commissioner of Income-tax, Gauhati Bench. The basis on which the Income-tax Appellate Tribunal, Gauhati Bench, allowed the appeal preferred by the respondent/assessee is that section 54 of the Income-tax Act being the beneficial provision, it should be construed liberally to advance the object of giving benefit to the assessee by exempting the capital gain on the sale of property used for residence from being charged to income-tax and also that sub-section (2) of section 54 of the Income-tax Act, 1961, simply mentions that the unutilized portion of the capital gain on the sale of the property used for residence could be deposited by the assessee before the date of furnishing return of income-tax under section 139 of the Income- tax Act and also that the sub-section (2) of section 54 of the Income-tax Act does not mention that the date of furnishing of return of income-tax should be construed within the meaning of section 139(1) of the Income-tax Act, 1961. The learned Income-tax Appellate Tribunal, Gauhati Bench was of the view that the date of furnishing of return of income-tax contemplated in sub-section (2) of section 54 should also include sub-section (4) of section 139 of the Income-tax Act inasmuch as sub-section (2) of section 54 of the Income-tax Act mentions only section 139 of the Income-tax Act without any further restriction or without confining to sub-section (1) of section 139 of the Income-tax Act, 1961. The operative portion of the order of the learned Income-tax Appellate Tribunal, Gauhati Bench, Gauhati, dated 18-4- 2001, reads as follows : "9. We have carefully considered the submissions of the learned representatives of the parties. We have also gone through the orders of the authorities below and the copies of the documents to which our attention was drawn by the learned representatives of the parties at the time of hearing of the appeals.

Therefore, we hold that the assessee is entitled to for the exemption under section 54 of the Act for the entire long-term capital gain of Rs. 29,73,048. Accordingly, we allow the ground of appeal

Thus, it is clear that section 54 of the Income-tax Act being the beneficial provision, it should be construed liberally to advance the object of giving benefit to the assessee by exempting the capital gain on the sale of property used for residence from being charged to income-tax and also that sub-section (2) of section 54 of the Income-tax Act, 1961, simply mentions that the unutilized portion of the capital gain on the sale of the property used for residence could be deposited by the assessee before the date of furnishing return of income-tax under section 139 of the Income-tax Act and also that the sub-section (2) of section 54 of the Income-tax Act does not mention that the date of furnishing of return of income-tax should be construed within the meaning of section 139(1) of the Act. We note that total construction expenses of Rs.1,45,27,981/- was incurred by the assessee, and out that the Assessing Officer has allowed the deduction u/s 54 of the Act to the tune of Rs.26,27,596/-, as claimed in the original return of income by the assessee, therefore, considering the above facts and legal position we allow balance construction expenses of Rs.1,19,00,385/- (Rs. 1,45,27,981- Rs. 26,27,596), u/s 54 of the Act, therefore ground No.2 raised by the assessee is allowed.

So far ground No.4 raised by the assessee is concerned, we note that it is connected with ground No. 2 raised by the assessee, which we have adjudicated in above para of this order. Basically, ground No.4 raised by the A.Y. 11-12 Pankajbhai H Patel assessee relates to the action of Assessing Officer in not allowing deduction of Sec 54EC of Rs.50,00,000 against Long term Capital Gain arising from sale of plot. The ld Counsel for the assessee submitted that if assessee’s ground no 2 is allowed then assessee would be benefitted if deduction u/s 54EC of Rs.50,00,000 is allowed against sale of land. On the other hand, ld DR for the Revenue relied on the findings of the assessing officer.

We have heard both the parties. We have allowed ground No.2 raised by the assessee. The ground No. 4 raised by the assessee relates to deduction under section 54EC of the Act. Section 54EC states that capital gain should not be charged in the hands of the assessee, provided assessee makes investment in certain bonds. Where the capital gain arises from the transfer of a long term capital asset, being land or building or both and the assessee has, at any time within a period of six months, after the date of such transfer, invested the whole or any part of capital gains in the long term specified asset, the assessee would be entitled to get the deduction u/s 54EC of the Act. The ld Counsel states that Assessing Officer allowed the deduction u/s 54EC at Rs. 50,00,000/- against the capital gain derived in respect of property situated at Sai Enclave Bungalow. However, as the deduction u/s 54 is clearly allowable at Rs.2,88,29,806/- as per revised computation of total income, the net capital gain would result in Nil and therefore this deduction u/s 54EC will be still eligible for deduction against the capital gain derived in respect of property situated at Kajli Farm. Even the Id. CIT(A) held that it is allowable if the assessee had succeeded in his ground for allowing additional deduction u/s 54 of the Act against the capital gain on sale of residence at Surat as per his finding at para no. 7.3.3 of the appellate order. Therefore, we direct the assessing officer to allow the deduction under section 54EC of the Act.

Coming to ground No.3 raised by the assessee, which relates to action of Assessing Officer in taking the share of the assessee as 50% instead of 20% in respect of capital gain arising from sale of land.

Succinct facts qua the issue are that assessee along with the one another co-owner viz. Randhirbhai Dharmendrasingh Mahida had purchased one agricultural land situated at Kajli in the year 2005-2006 having equal share. It is worthwhile to mention that during the F.Y.2005-06 three other co-owners (i) llyasbhai Taherbhai Railwaywala, (ii) Balwantbhai Devjibhai Umrighar and (iii) Sarvaprit Jitendrasingh Chawla contributed an amount of Rs.1,50,000/- each for their share in the said agricultural land and accordingly all the five persons became co- owners having 20% equal share on the basis of MoU executed by these persons. Since these three persons were non-agriculturist and could not purchase agriculture land in their name, they entered into MoU with the purchasers (assessee and co-owner) for their 60% share (20% each) in the said agricultural land. Accordingly, the assessee is having 20% share only in the said property. However, A.O. has rejected the claim of the assessee, on the ground that the assessee has not shown the capital gain in the original return of income filed by him and further stated to have fabricated the story of co-owners in said sale of land. Further, the A.O. has rejected the MoU executed amongst the co-owners.

On appeal, ld CIT(A) confirmed the action of the Assessing Officer, therefore assessee is in appeal before us. The ld Counsel for the assessee submitted that during the year under consideration i.e. A.Y.2011-12, the assessee sold the said agricultural land situated at Kajli for which the sale deed document was executed. The assessee as per his 50% share received an Page | 20

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

We have heard both the parties. We note that assessee has not filed valid evidentiary document or proof to assume assessee`s share 20% only. The share of assessee at 20% cannot be decided based on MoU, as it is not registered, therefore we dismiss ground No.3 raised by the assessee. The ground No.3 raised by the assessee is dismissed. 31. In the result, the appeal of the assessee is partly allowed. Order is pronounced on 26/06/2023 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 26/06/2023 Dkp Outsourcing Sr.P.S.