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08-02-2019, Murtuza Shabbir Section 2(14), 54B(1), Tribunal Pune

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1 week 1 day ago #8629 by amit
Section - 2(14), 54B(1)
Order Date - 08-02-2019
Favouring - Partly
Court - Tribunal Pune
Appellant - Murtuza Shabbir Jamnagarwala
Respondent - ITO
Justice - R.S. SYAL VP & VIKAS AWASTHY JM
Citation - 219Taxpundit119
Appeal No. - ITA No.1144/PUN/16
Asstt. Year - 2008-09

Order

PER : R.S.SYAL, VP

This appeal by the assessee arises out of the order passed by the CIT(A)-5, Pune on 26-02-2016 in relation to the assessment year 2008-09.

2. First issue raised in this appeal is against not allowing of exemption u/s.54B of the Income-tax Act, 1961 (hereinafter also called ‘the Act’).

3. Succinctly, the facts of the case are that the assessee, along with two others, transferred certain land admeasuring 81 Are equal to 8100 sq.mtr (equal to 2 Acres) on 08-12-2007 to one Mr. Dhanraj Malchand Rati, a Builder and Developer. The assessee computed its share of capital gain at Rs.27,79,450/-. The said amount of capital gain was claimed as exempt u/s.54B(1) of the Act on the ground that he had purchased two agricultural lands on 28-01-2008 and 22-04- 2008 for a total consideration of Rs.57,39,500/-. The Assessing Officer (AO) noticed that the assessee, along with other two co-owners, entered into a “Development
Agreement” with Mr. Dhanraj Malchand Rati for transfer of the land, which was situated within the Municipal Corporation limits of Pune. He held that the land ceased to be an agricultural land. On being called upon to explain as to why the exemption u/s.54B of the Act should not be denied because the property transferred was not an agricultural land, the assessee tendered his explanation which has been reproduced in the assessment order. The crux of the assessee’s submission was that the land was classified by the land Revenue authorities as “Jirayat” type of agricultural land and nowhere in the land records it was mentioned as “Non-agricultural land”. The assessee further submitted that agricultural income was earned from such land and as per the 7/12 extract, the agricultural land was subjected to cultivation and Jowar crop was grown. It was further submitted that all the rights in the land were transferred to Mr. Dhanraj Malchand Rati and the nomenclature of “Development Agreement” was misleading. Not convinced with the assessee’s submission, the AO held that the capital gain arising from the transaction was out of non-agricultural land and hence, no exemption u/s.54B could be allowed towards investment made by the assessee in two agricultural lands. The ld. CIT(A) echoed the action of the AO on this score.

4. We have heard both the sides and perused the relevant material on record. The assessee along with other two coowners transfer ed 2 acres of land to Mr. Dhanraj Malchand Rati vide agreement dated 08-12-2007. The case of the assessee is that the land transferred by him was an agricultural land and since he invested a sum of Rs.57,39,500/- in purchasing two other agricultural lands, he was entitled to exemption u/s.54B of the Act. On the other hand, the Revenue has canvassed a view that since the land transferred by the assessee was non-agricultural land, there can be no grant of exemption u/s.54B of the Act.

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