Section 54B exemption denied where agricultural use of land was not proved and factual findings went against the assessee.

Section 54B exemption for gain on sale of agricultural land was denied because the assessee failed to prove that the land was actually used for agricultural purposes or that any agricultural income arose from it. The Tribunal treated the absence of proof of agricultural use as a finding of fact, and the explanation of adverse possession and intended agricultural use was not accepted. On that factual basis, the statutory benefit under section 54B could not be extended, and the exemption claim was rejected.

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Issues: Whether exemption under section 54B of the Income-tax Act, 1961 was available in respect of the sale of agricultural land when the land was not proved to have been used for agricultural purposes.

Analysis: The Tribunal recorded a factual finding that the assessee had not proved agricultural use of the land and had not shown agricultural income from it. The explanation of adverse possession and intended agricultural use was not accepted, and the finding was treated as one of fact. On that basis, the statutory benefit under section 54B could not be extended.

Conclusion: The claim for exemption under section 54B was rightly rejected and the issue was decided against the assessee.

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