Agricultural use of transferred land supported Section 54B capital gains deduction for land sold after qualifying cultivation.

Section 54B deduction for capital gains is available where transferred land was used for agricultural purposes during the two years immediately preceding its sale. Sale and purchase documents, a land-caretaker arrangement, a Gram Panchayat certificate, valuation material and wetlands records substantiated agricultural operations during the required period. Fruit-bearing trees and the local-body description of the land as a nursery further supported agricultural use. The material was sufficient to counter the view that no agricultural activity had been established, supporting allowance of the deduction.

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Issues: Whether deduction for capital gains under Section 54B was available where the transferred land had been used for agricultural purposes during the two years immediately preceding its sale.

Analysis: The documentary material, including sale and purchase documents, the land-caretaker arrangement, the Gram Panchayat certificate, valuation report and wetlands material, substantiated agricultural operations on the land during the prescribed preceding period. The presence of fruit-bearing trees and the nursery description in the local-body certificate supported the claimed agricultural use. The evidence on record was sufficient to displace the contrary view that agricultural activity had not been established.

Conclusion: The deduction under Section 54B was allowable to the assessee because the land was used for agricultural operations during the two years preceding the sale.

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