The Income Tax Appellate Tribunal (ITAT), Rajkot bench has held that the advance payment to purchase agricultural land from the sale proceed of the land sold by him is eligible for benefit of deduction under Section 54B of the Income Tax Act, 1961.
The assessee, Shri Indranil Sanjaybhai, an individual, engaged in the business of construction of residential units/flats and transportation filed its return of income on 15.10.2010 showing income at Rs. 73,25,860/-. During the assessment proceedings, the Assessing Officer has rejected the claim of deduction under section 54B.
The Tribunal bench comprising Shri Waseem Ahmed, Accountant Member & Ms. Madhumita Roy, Judicial Member observed that when the initial payment of Rs. 12.15 crores has been made for purchase of the new asset that too more than the amount of capital gain to the tune of Rs. 2.90 crores before the due date of filing of the return of income under Section 139(1) of the Act.
Concluding the order in favour of the assessee, the Tribunal held that “Considering the CBDT’s Circular No. 471 dated 15.10.1986, Circular No. 672 dated 06.12.1993 the said to be treated as construction for the purpose of Section 54/54F. Further that considering the Circular No. 672 issued by the CBDT the said amount paid out of the net sale consideration in the original asset is required to be treated as purchase / construct. Further that though the above clarification is for Section 54F, the analogy in our considered opinion has been rightly applied by the CIT(A) in the case in hand considering the facts and circumstances therein. Hence, advance payment by the appellant to purchase agricultural land from the sale proceed of the land sold by him has been rightly found eligible for benefit under Section 54B of the Act by the Ld. CIT(A) without any ambiguity so as to warrant interference.”
Shri Vidyasagar S. Ubale appeared for the assessee.
Commentaires