1. SEC 54 B- Exemption – Return Filed u/s 139 (4) – Investment made before filing of belated return- Eligible


a) In AY 2011-12, the assessee sold agricultural land and earned capital gain of Rs. 2.66 crores. The same was invested in purchase of new agricultural land. The investment in three land parcels, amounting to Rs. 71.56 lacs was made in August 2012.

b) The return of income was filed on 30/03/2013 i.e. within the due date specified u/s 139(4) of the IT Act, 1961.

c) The assessee claimed exemption u/s 54B. The learned AO denied the benefit of exemption of Rs. 71.56 lacs, as the said land parcels were purchased after 30/09/2011 i.e. after the due date of filing of return as per section 139(1) of the IT Act, 1961. CIT(A) upheld the stand of the learned AO. On further appeal, ITAT allowed the appeal.


a) Provisions of 54, 54B, 54F are pari materia

b) In the decision of Humayun Suleman Merchant, Honorable Bombay High Court has not dissented with the other High Courts favourable views in the case of
i. Rajesh Kumar Jalan (Gauhati)
ii. Jagriti Agarwal (P & H), etc.

c) As such, if the investment in eligible asset is made before filing of belated return, assessee should be considered eligible for claim of exemption u/s. 54B.

Ramrao Dhondiba Pimple - ITA No. 473/PUN/2015 A.Y.2011-2012. Dt 30.10.2017 – BENCH : B (Pune ITAT)

Ramrao Dhondiba Pimple

2. Transfer Pricing – Associated Enterprise – unrelated party at time of signing the agreement –Subsequently became associated – No adjustment


a) A Royalty agreement was entered into between Lemmerz Werke GmbH and Bharat Forge Ltd. in 1992 in respect of technical know-how for production of wheel rims. The obligation of payment of royalty shifted to the assessee in 1996.

b) Assessee company, as a JV between Bharat Forge Ltd and Lemmerze Werke GmbH in the ratio of 75:25 equity holding, acquired the wheel rim division of Bharat Forge Ltd. and the manufacturing started in the year 1996. Later on, Lemmerz Werke increased their equity holding to 85%. As a result, the Indian company and Lemmerze Werke became AE parties of each other. Same Royalty agreement of year 1992 continued even thereafter.

c) Royalty expenditure was allowed in all earlier years before AY 2003-04.

d) But for AY 2003-04, TPO disallowed the Royalty for various reasons, and held that, ALP of Royalty expenditure as NIL.

e) CIT(A) allowed assessee’s appeal on principles of consistency, etc.

f) I-T department challenged the order of CIT(A).


a) At the time of signing the royalty agreement, the two parties were unrelated.

b) When the parties became associated subsequently, and the payment of royalty was made pursuant to the same agreement, then the transaction has to be considered as uncontrolled transaction, not requiring any adjustment.

Kalyani Hayes Lemmerz Ltd. - ITA No. 999 & 1000 /PUN/2013 A.Y 2003-2004 & 2005-2006 dt 11.12.2017- Bench-B (Pune ITAT)

Kalyani Hayes Lemmerz Ltd.

Note: The Whole decisions can be downloaded from the CTC website under Knowledge Centre.

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