20. Kishorbhai
Harjibhai Patel vs. ITO; [2019]
417 ITR 547 (Guj.) Date
of order: 8th July, 2019
A.Y.:
2013-14
Capital
gains – Exemption u/s 54F of ITA, 1961 – Agreement to sell land in August, 2010
and earnest money received – Sale deed executed in July, 2012 – Purchase of
residential house in April, 2010 – Assessee entitled to benefit u/s 54F
The
assessee entered into an agreement to sell agricultural land at Rs. 4 crores on
13th August, 2010. An amount of Rs. 10 lakhs towards the earnest
money was received by the assessee as part of the agreement. On 15th
October, 2011, possession of the land was handed over by the assessee to the
purchasers of the land. On 3rd July, 2012 the sale deed came to be
executed by the assessee in favour of the purchaser of the land. The assessee
had purchased a new residential house in April, 2010 and claimed exemption u/s
54F of the Income-tax Act, 1961. The AO denied the exemption on the ground that
the transfer of the land took place on 3rd July, 2012 and the
purchase of the residential house on 22nd April, 2010, thus it was beyond
the period of one year as required u/s 54F.
The
Tribunal upheld the decision of the AO.
The
Gujarat High Court allowed the appeal filed by the assessee and held as under:
‘(i) The Act gives a precise definition to the
term “transfer”. Section 2(47)(ii) of the Act talks about extinguishment of
rights. The Supreme Court, in Sanjeev Lal vs. CIT (2014) 365 ITYR 389
(SC) is very clear that an agreement to sell would extinguish the
rights and this would amount to transfer within the meaning of section 2(47) of
the Act. This definition of transfer given in the Act is only for the purpose
of the income-tax.
(ii) The assessee had purchased the new
residential house in April, 2010. The agreement to sell which had been executed
on 13th April, 2010 (and) could be considered as the date on
which the property, i.e., the agricultural land had been transferred. Hence,
the assessee was entitled to the benefit u/s 54F.’
