Deduction u/s 54B cannot be denied if the correlation between investment and receipt of sale proceeds has been demonstrated

IN THE INCOME TAX APPELLATE TRIBUNAL
“B” BENCH, AHMEDABAD
(through web-based video conferencing platform)

BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT
AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER
ITA No. 657/Ahd/2019
Assessment Years : 2012-13

Shri Bhadresh Suryakant Patel,
A-73, Mathura Nagari,
Behind Nand Society,
Old Padra Road, Vadodara
Pan : AKLPP 1848 G

vs

Income Tax Officer,
Ward-1(2)(3),
Vadodara

Date of Hearing : 10/11/2021

Date of Pronouncement: 01/12/2021

O R D E R

The assessee is in appeal before the Tribunal against the order of learned Commissioner of Income-tax (Appeals-5), Vadodara [“CIT(A) in short] dated 25.02.2019 passed for Assessment Year 2012-13.
2. The solitary grievance of the assessee is that learned CIT(A) has erred in confirming the disallowance of deduction of Rs.11,41,430/- claimed under Section 54B of the Income-Tax Act, 1961 (“the Act” in short).
3. In response to the notice of hearing, no one has come present on behalf of the assessee. Therefore, with the assistance of learned Departmental Representative, we have gone through the record carefully and proceed to dispose of the appeal ex-parte qua the assessee.

4. Perusal of the findings of learned First Appellate Authority would indicate that deduction under Section 54B of the Act has been disallowed by the Assessing Officer by holding that the assessee did not file return under Section 139(1) of the Act and he has not deposited the sale proceeds in the capital account. The major emphasis of the learned First Appellate Authority is that the assessee should have deposited capital gain in a bank account meant for this purpose; only then he can claim deduction under Section 54B of the Act. In these submissions it would reveal that the assessee has specifically shown the receipt as well as investment for purchase of agricultural land. Both these things have been made almost simultaneously. Section 54B of the Act authorizes an assessee to claim deduction under this section on an investment made for purchase of agricultural land two years prior to sale of an agricultural land. Similarly, it also authorizes to make investment two years after the sale of agricultural land. The investments of the assessee duly fall in this period. Hence, even if he has not deposited in the capital account, but he has already made investment; therefore, he is entitled for the deduction. We, respectfully following the decision of Hon’ble Punjab & Haryana High Court in the case of CIT Vs Ms Jagriti Aggarwal, reported in (2011) 339 ITR 610 (P&H), allow this appeal of the assessee and delete the disallowance, because the objection of the learned CIT(A) is without any basis. The correlation between the investment and receipt of sale proceeds within the time stipulated in Section 54B of the Act duly been demonstrated by the assessee. In view of the above, the appeal of the assessee is allowed and the Assessing Officer is directed to grant deduction under Section 54B of the Act amounting to Rs.11,41,430/-.

5. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 1st December 2021 at Ahmedabad.

Please find attached the enclosed file for the full judgement.