Statement of salesman would trigger block assessment when assessee failed to rebut such statement

Facts:

a) The assessee was a partnership firm, engaged in the business of furniture.Survey was conducted at the premises of the assessee and an assessment was made under section 153C.

b) Assessee challenged such assessment as he was of the view that such assessment was based on statements of salesmen recorded under Section 133A. The CIT(A) and Tribunal dismissed the appeal of assessee.

c) Aggrieved-assessee filed the instant appeal.

The High Court held as under:

Even on sale of land held jointly with son Sec. 54B relief to be allowed to father on purchase of land in son's name

Where son of assessee was also joint owner of land, which was sold and subsequently new land was purchased only in name of son because of assessee's old age and other technical reason, assessee was entitled to deduction under section 54B

Facts:

a) During assessment proceedings the Assessing Officer (‘AO’) noticed that proceedings under section 153C were initiated against assessee when documents regarding sale of land was unearthed during search. Ultimately capital gain was computed and the assessee had claimed deduction under section 54B of the Act.

b) The AO denied the deduction on the ground that new land was purchased by the assessee in the name of his son. The CIT(A) upheld the action of AO. The assessee contended that he was an old person and had only one son, who was going to be the legal heir, there was no purpose for purchasing the new land in the name of the assessee himself and that is why land was purchased in the name of his son.

c) The aggrieved assessee filed the instant appeal before ITAT.

The ITAT held in favour of assessee as under:

1) The land which was sold by the assessee was in the joint name of the assessee along with his son, which means the son was also part owner of the land, therefore the issue would stand covered by the decision of the hon'ble Punjab and Haryana High Court in the case of CIT v. Gurnam Singh [2008] 170 Taxman 160 (Punj. & Har.) wherein it was held as under :

"The Tribunal had recorded a pure finding of fact that the land in question was purchased out of the sale proceeds of the agricultural land which was used only for agricultural purposes and merely because the assessee's son was shown in the sale deed as co-owner, it did not make any difference. It was not the case of the Revenue that the land in question was exclusively used by his son. Therefore, the assessee was entitled to deduction under section 54B."

2) If the land was purchased in the name of the son of the assessee because of old age and other technical reasons, the assessee would still be entitled to deduction under section 54B. Accordingly, the order of the CIT(A) was to be set-aside and AO was to be directed to allow deduction under section 54B. - Bant Singh v. ITO [2014] 52 taxmann.com 364 (Chandigarh - Trib.)

Agricultural land won't lose its privileges even if sold in violation of State laws; not taxable as capital asset

Merely because agricultural land was sold in favour of non-agriculturist in breach of law prevailing in State, said land would not lose its character as agricultural land and, hence, could not be treated as capital asset.

Facts:

a)  The assessee had filed return of income and disclosed income from sale of agricultural land in response to notice issued under section 153C.

b)  The Assessing Officer made addition on account of capital gain by holding that the land, which was sold by assessee, was a capital asset as it was sold in violation of laws prevailing in the State.

c)  On appeal, the CIT(A) deleted the addition. Further, the Tribunal confirmed order of the CIT(A). The aggrieved-revenue filed the instant appeal.

The High Court held in favour of assessee as under:

1)  It was not in dispute that what was sold by the assessee was an agricultural land which was situated beyond 8 Kms. of local limits of the Municipality and at the relevant time, the land was held by the assessee as agricultural land;

2)  The character of land would not change merely because it was sold to a non-agriculturist in breach of law prevailing in the State and the land still would continue as an agricultural land;

3)  Even though the sale in favour of non-agriculturist could be declared as illegal, yet the land would not lose its character as agricultural land;

4)  When the land was an agricultural land, which was situated beyond 8 Kms. from the municipal limits, no error had been committed by the Tribunal in not considering the land as 'capital asset';

5)  Thus, the land was to be treated as agricultural land and it was outside the purview of capital asset. – CIT v. Rajshibhai Meramanbhai Odedra [2014] 42 taxmann.com 497 (Gujarat)