Tax Appeal Success: Exemption Granted for Sale of Agricultural Land Near Urban Area

Pankaj Kumar Agrawal Versus The Income Tax Officer, Ward 1 (1), Bilaspur (CG)

Pankaj Kumar Agrawal Versus The Income Tax Officer, Ward 1 (1), Bilaspur (CG) - TMI Issues:
Claim of exemption u/s.54B for sale of agricultural land within 8 km of municipal limits area.

Analysis:
The appeal pertains to the assessment year 2009-10, where the Assessing Officer denied exemption claimed by the assessee on the sale of agricultural land situated within 8 km from the local limit of the municipality. The Assessing Officer treated the land as a capital asset under section 2(14)(iii) of the Income Tax Act, 1961, and added the long term capital gain to the total income of the assessee. The Ld. AR argued that the assessee had purchased another agricultural land after selling the impugned land and invested the sales consideration in the new land, making the assessee eligible for exemption u/s.54B of the Act.

The Ld. CIT(Appeals) upheld the addition made by the Assessing Officer, leading the assessee to appeal before the ITAT. During the hearing, the Ld. AR presented various pieces of evidence to support the claim of exemption u/s.54B, including sale agreements, purchase deeds, agricultural income disclosures, and documents proving the agricultural nature of the lands involved. The Ld. AR also cited judicial precedents and emphasized the need for a purposive interpretation of section 54B to encourage cultivation.

The ITAT analyzed the facts, referring to the evidence provided, and noted that the assessee had sold agricultural land and purchased another agricultural land for continuing agricultural activities. The ITAT highlighted the importance of the sale agreement date for calculating the 2-year period under section 54B, as per the decision of the Hon’ble Supreme Court. The ITAT also stressed the duty of the Assessing Officer to guide the assessee and allow deductions where applicable, ensuring fairness and justice in tax assessments.

In conclusion, the ITAT set aside the order of the Ld. CIT(Appeals) and allowed the appeal of the assessee, emphasizing the need for the Assessing Officer to consider all relevant facts and documents provided by the taxpayer. The ITAT's decision was based on the principles of natural justice and fairness in tax assessments.

Judgment:
The ITAT, in its judgment delivered on January 15, 2019, allowed the appeal of the assessee, overturning the decision of the Ld. CIT(Appeals) and granting the claim of exemption u/s.54B for the sale of agricultural land within 8 km of the municipal limits area.