Capital Gain Tax payable in the absence of deposit in Capital Gain Account Scheme: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the income tax can be levied on the amount of capital gain on transfer of land used for agricultural purposes if new land is not purchased within a period of three years or the amount is deposited in a designated capital gain account scheme.

The assessee is an individual, claimed exemption under section 54B of the Income Tax Act for a sum of Rs.45.00 lakhs towards a property. The Commissioner of Income Tax, while exercising his revisional power under section 263 of the Act, observed that as against exemption of Rs.45.00 lakhs, a sum of Rs.35.00 lakhs was neither deposited in the Capital Gain Deposit Account scheme before the stipulated date nor another property was purchased before the prescribed date.

Upholding the orders of the lower authorities, the Tribunal held that “We have heard the rival submissions through virtual hearing and gone through the relevant material on record. The ld. AR fairly admitted that a sum of Rs.35.00 lakhs was neither deposited in the Capital Gain Account scheme nor was it used for the purchase of land before the prescribed date. Section 54B of the Act categorically states that the amount of capital gain on transfer of land used for agricultural purposes should not be charged to tax if new land is purchased within a period of three years or the amount is deposited in a designated capital gain account scheme. Since the assessee failed to satisfy none of these conditions, no exception can be taken to the view canvassed by the ld. CIT in this regard. We, therefore, uphold the impugned order.”