2020 (5) TMI 204 - AT - Income Tax

Appeal partially allowed due to Section 54B deduction, directing exemption.

The Tribunal allowed the appeal in part, primarily on the ground of the deduction under Section 54B of the Income Tax Act, 1961. The other grounds were ... Disallowance u/s 54B - LTCG - Proof of agriculture activity on land transferred - onus to prove that the utilization of subjected capital asset for agriculture activity in last two years from the sale of said capital asset - in the event of, the condition of utilization of capital asset being land for agriculture purpose by the assessee or his parent, HUF remain unproved - HELD THAT:- Agriculture income certificate issued by the revenue department of the State of Telangana has been got issued in favour of the assessee by applying online and the format in which it is issued is as per the concerned state’s prescribed rules and regulations. We have so considered the submission of the assessee to the effect that the assessee had cultivated the agriculture crops during the period of 2 years immediately preceding the date of transfer and incurred the loss after meeting of all the expenditure incurred during the agricultural activities and debit the loss directly to capital account. Therefore, the agricultural income was not shown in the return of income for the A.Y. 2014-15 and 2015-16. Provisions of Section 54B of the Act, we allow this ground raised by the assessee and set aside the order passed by the revenue authorities and direct the A.O. to allow exemption u/s 54B . - Decided in favour of assessee. Issues Involved:1. Disallowance of the claim of Rs. 1,04,59,000/- on account of deduction claimed under Section 54B of the IT Act, 1961.2. Disallowance of the claim of Rs. 15,71,918/- on account of indexed cost of improvement.3. Addition of Rs. 25,350/- being agriculture income from unexplained sources.Detailed Analysis:Issue 1: Disallowance of Deduction under Section 54BThe assessee sold agricultural land on 27th June 2015 and claimed a deduction of Rs. 1,04,59,000/- under Section 54B of the Income Tax Act, 1961, for purchasing new agricultural land on 10th May 2016. The Assessing Officer (A.O.) disallowed the claim, stating the assessee failed to prove the land was used for agricultural purposes in the two years preceding the sale. The A.O. also noted that the sale proceeds were not deposited in a capital gains account scheme as required by Section 54B(2).The assessee argued that the land was used for agricultural purposes, supported by an agricultural income certificate from the Telangana Revenue Department. The assessee also contended that the new land was purchased within the stipulated period before the due date for filing the return under Section 139.The Tribunal observed that the agricultural income certificate issued by a government authority carries a presumption of correctness. The revenue authorities did not provide evidence to rebut the certificate's authenticity. The Tribunal also noted that the new land was purchased before the due date for filing the return under Section 139, satisfying the conditions of Section 54B(2). Consequently, the Tribunal allowed the assessee's claim for deduction under Section 54B.Issue 2: Disallowance of Indexed Cost of ImprovementThe Tribunal did not provide a separate analysis for this issue, as it was deemed consequential to the findings on the first issue. Since the primary ground regarding Section 54B was allowed, this ground became infructuous.Issue 3: Addition of Agricultural Income from Unexplained SourcesSimilar to the second issue, the Tribunal did not separately address this issue. It was also considered consequential and became infructuous following the decision on the first issue.Conclusion:The Tribunal allowed the appeal in part, primarily on the ground of the deduction under Section 54B. The other grounds were deemed consequential and became infructuous. The Tribunal directed the A.O. to allow the exemption under Section 54B of the Income Tax Act, 1961.