Exemption under Section 54G is available to individuals investing through partnership firms if conditions of investment in rural areas are met.

ORDER

PER DR. A. L. SAINI, AM:

Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2016-17, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), vide order dated 23.01.2020, which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘assessing officer’) u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 20.12.2018.

2. The grounds of appeal raised by the assessee are as follows:

“1. That, the Ld. CIT(A) has wrongly confirmed the disallowance of the deduction u/s 54G amounting to Rs.88,24,035/- on account of shifting of undertaking in Rural area.

2. That, the Ld. CIT(A) has wrongly confirmed the interest u/s 234A, 234B, 234C and 234D of the I.T. Act, 1961.

3. That, the findings of the Ld. CIT(A) are not justified and are bad-in-law.

4. That, the assessee craves to add, amend, alter or delete any of the above grounds of appeals.”

3. The facts of the case may be briefly stated. The assessee, before us, is an Individual and has filed return of income on 16.10.2016, declaring total income at Rs.4,78,670/- and the same was processed u/s 143(1) of the Act. The assessee’s case was selected for LIMITED scrutiny under CASS (Computer Aided Scrutiny Selection). The notice u/s 143(2) of the Act, was issued on 13.07.2017, by the Assessing Officer, and served upon the assessee electronically. The reason for selection of case under Limited scrutiny is to verify the following items:

“(i)Whether sales turnover/receipt has been correctly offered for tax, (ii) Whether deduction from capital gains has been claimed correctly.”

The assessee is engaged in the business of manufacturing and job work of CI Casting, as a proprietor of Uttam Foundry at address: “Plot No.223/1- D, Road T, Aji GIDC, Rajkot-360002.” The assessee has furnished audit report u/s 44AB of the Act, alongwith Balance-sheet, Profit& Loss account, copy of bank statement and computation of total income which were examined by the assessing officer.

4. On verification of the details submitted by the assessee, it was noticed by the assessing officer that assessee has furnished detailed working of income as shown in Profit& Loss account and income as shown in return of income, and assessing officer also noted that the assessee has executed deed of assignment for the land and building situated at plot No.223/1/D at Aji GIDC, Rajkot for the land admeasuring 1344.72 Sq.Meter and the land was for industrial purpose and deed of assignment was registered vide No.RKT/2/MRR/2357/2016 dated 22.03.2016 with the Sub Registrar-2, Rajkot for consideration of Rs.1,22,41,000/-. The said land was registered in the name of the assessee, vide lease deed for 99 years, registered at book No.1/6844 dated 09.05.2007, with Sub Registrar-2, Rajkot. It was claimed by the assessee that the said consideration received of Rs.1,22,41,000/- was invested by him as a partner of the firm, in M/s Om Metal Cast, Rajkot. The assessee has furnished a copy of partnership deed of M/s Om Metal Cast, which was came into existence with effect from 02.04.2016. The assessee has also furnished copy of lease agreement No.RKT/8/RUL/203/2016 dated 26.05.2016 vide which the firm M/s Om Metal Cast (the Lessee) has been granted a lease in respect of the premises situated at Non- Agricultural land for industrial purpose of Plot No.1 situated in Village: Jiyana's survey No.280/1 paiki 3, area admeasuring 9054.84 Sq. Meters at Opp: Prince Villa: Kuvadava-Wakaner NH-8B, Village:Jiyana-360023. It was submitted by the assessee that the firm M/s Om Metal Cast has invested in Factory Building for Rs.70,63,913/- and invested in Plant & Machinery for Rs.4,63,14,396/- (totaling Rs.5,33,78,309/-) during the