No Deduction since Sale was made in Cash under Unregistered Deed: ITAT [Read Order]

The Jaipur bench of the Income Tax Appellate Tribunal ( ITAT) has held that the deduction under section 54B and 54F of the Income Tax Act is allowable when the sale in question is made under an unregistered deed where the payment was made in cash.

The assessee have purchased land on 23rd September, 2009 through an agreement to sale. The alleged agreement to sale is unregistered and the payment is also claimed to have been made in cash. The assessee has not produced any other document to show that the assessee has acquired the ownership title in land in question.

The Tribunal found that if agricultural land is purchased by the assessee from the sale proceeds of the existing land, then even if the said land is purchased in the name of the wife, the claim of deduction under section 54B is allowable.

The Tribunal further noted that despite the expiry of about 10 years from the alleged agreement to sale the assessee has admitted that no sale deed has been executed till date. Though the agreement to sale which has finally culminated in sale deed is relevant only for the purpose of the date of investment, but the alleged agreement to sale itself is not a title document transferring the ownership of land.

“Therefore, in the absence of subsequent sale deed, the claim of deduction under section 54B and 54F cannot be allowed based on such unregistered agreement to sale. The assessee has failed to prove that he has acquired the new asset within the prescribed period after the sale of the existing asset. Further the purchase of agricultural land through agreement to sale dated 23rd September, 2009The assessee claimed to have purchased land on 23rd September, 2009 through an agreement to sale. There is no dispute that the alleged agreement to sale is unregistered and the payment is also claimed to have been made in cash. The assessee has not produced any other document to show that the assessee has acquired the ownership title in land in question. We find that if an agricultural land is purchased by the assessee from the sale proceeds of the existing land, then even if the said land is purchased in the name of the wife, the claim of deduction under section 54B is allowable. However, in the case in hand, despite the expiry of about 10 years from the alleged agreement to sale the assessee has admitted that no sale deed has been executed till date. Though the agreement to sale which has finally culminated in sale deed is relevant only for the purpose of the date of investment, but the alleged agreement to sale itself is not a title document transferring the ownership of land. Therefore, in the absence of subsequent sale deed, the claim of deduction under section 54B and 54F cannot be allowed based on such unregistered agreement to sale,” the Tribunal said.