2025 (11) TMI 1835 - AT - Income Tax

Taxpayer's agricultural income accepted based on proven ownership of personal and jointly held ancestral land under cultivation

ITAT upheld the assessee's claim that income disclosed as agricultural income could not be fully treated as 'income from other sources' merely because the ... Characterization of income - agricultural income as shown by the assessee in his return of income as income from other sources - HELD THAT:- It is an admitted fact that the assessee was continuously filing the return of income showing agricultural income in the return of income. It is also an admitted fact that some of the agricultural lands of the assessee are not in his name, but it is not in dispute that the assessee is having agricultural land and doing cultivation. From the record, it is seen that the assessee has agricultural lands as per revenue records in his name 19.80 Bighas 36 Katthas and 19 Dhur, which comes to 13.401 acres of land and the remaining land out of 14 Acres, which is 1/3rd proportionately joint ownership with his mother, father and brother, which comes to 5 Bighas 21.75 Katthas i.ē. (0.272 Acres) in his side. So, as per revenue deed of record, 14 Acres of land is in the name of assessee. Only contention of AO is that the entire 14 acres of agricultural land was not recorded in the name of the assessee - Considering the totality of the facts and circumstances of the case, set aside the orders passed by the revenue authorities. The assessee is entitled to claim the agricultural income in his personal capacity owned by him as well as proportionately with his family members as per revenue records, i.e. [2.8 Bighas + 4 Bighas 4 Kattha + 7 Bighas 13 Kattha 3 Dhur (personal land)] i.e. 13.401 acres plus 1/3rd proportionate land with his father, mother and brother, which comes to 5 Bighas 21.75 Katthas i.e. (0.272 acres) in his favour (proportionately inherited ancestral land)], which is more of less 14 acres of land. Therefore, direct the AO to examine the revenue records and proportionately allow the claim to assessee. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the amount declared as agricultural income was correctly treated by the Assessing Officer as 'income from other sources' for failure to file complete supporting evidence. 1.2 Whether agricultural income can be claimed in the hands of an individual assessee in respect of agricultural lands partly standing in his own name and partly in joint/ancestral ownership with family members, based on revenue records. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Treatment of declared agricultural income as 'income from other sources' Interpretation and reasoning: 2.1 The Tribunal noted that the assessee had consistently been filing returns of income showing agricultural income. It was also noted as an admitted fact that the assessee was in possession of agricultural land and was engaged in cultivation. 2.2 The Assessing Officer's sole objection was that the entire 14 acres of agricultural land was not recorded exclusively in the name of the assessee in the revenue records, leading to the treatment of the claimed agricultural income as unexplained and taxable as 'income from other sources'. 2.3 On examination of the material on record, the Tribunal found that as per the revenue records, the assessee held agricultural lands in his own name measuring 19.80 Bighas 36 Katthas and 19 Dhur, equivalent to 13.401 acres, and further held proportionate rights in jointly owned ancestral land with his parents and brother. Conclusions: 2.4 The Tribunal held that the treatment of the entire agricultural income as 'income from other sources' solely on the ground that part of the land was not exclusively in the assessee's name was not justified in the facts and circumstances. 2.5 The orders of the lower authorities were set aside, and the Assessing Officer was directed to allow agricultural income to the extent attributable to the assessee on the basis of verified revenue records. Issue 2: Entitlement to claim agricultural income from personally owned and jointly/ancestrally owned agricultural land Interpretation and reasoning: 2.6 The Tribunal accepted that some of the agricultural lands were ancestral, inherited from the assessee's parents, and some were purchased, and that these lands had been used for agricultural purposes over a long period. 2.7 The Tribunal recorded a finding from the revenue records that: (a) Personal agricultural land held in the assessee's own name comprised 2.8 Bighas + 4 Bighas 4 Kattha + 7 Bighas 13 Kattha 3 Dhur, aggregating to 13.401 acres; and (b) The remaining land, out of the total of about 14 acres, represented proportionate 1/3rd joint ownership with his father, mother and brother, equivalent on the assessee's side to 5 Bighas 21.75 Katthas, i.e., approximately 0.272 acres, constituting inherited ancestral land. 2.8 The Tribunal held that, in such circumstances, the assessee is entitled in his individual assessment to claim agricultural income derived from: (i) Agricultural land standing exclusively in his name; and (ii) His proportionate share in agricultural land held jointly with family members, as reflected in the revenue records. Conclusions: 2.9 The Tribunal concluded that the assessee is entitled to claim agricultural income in his personal capacity from approximately 14 acres of agricultural land, consisting of 13.401 acres of personal land plus 0.272 acres being his proportionate share in ancestral/jointly owned land, as per revenue records. 2.10 The Assessing Officer was directed to examine the relevant revenue records and proportionately allow the assessee's claim of agricultural income to the extent of his ownership/share as so established.