ITAT Pune: Registration of Sale Deed Not Mandatory for Section 54B Exemption if Possession and Payment Verified

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has delivered a significant ruling in favor of an assessee, holding that the exemption under Section 54B of the Income Tax Act 1961 cannot be denied merely due to a delay in the registration of the sale deed, provided the consideration has been paid and possession obtained within the stipulated timeframe.

The Tribunal deleted an addition of Rs. 1,14,25,000 made under Section 69A, emphasizing that the term "purchase" for the purpose of exemption must be interpreted in alignment with the definition of "transfer" under Section 2(47).

Factual Background

The case, titled Ranajit Suresh Rajamane Vs ITO, pertains to the Assessment Year 2014-15. The dispute arose from an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)], NFAC, Delhi, which confirmed an addition based on unexplained money.

The Transaction

The assessee sold a parcel of urban agricultural land on 26.03.2014 for a total consideration of Rs. 2,28,50,000. The assessee’s 50% share in this consideration amounted to Rs. 1,14,25,000. The land in question had been utilized for agricultural purposes for at least two years preceding the transfer.

Reassessment Proceedings

The Assessing Officer (AO) noted that the assessee had not filed a return of income for the relevant year. Consequently, proceedings were initiated under Section 147 read with Section 144 after the issuance of a notice under Section 148.