Actual agricultural use is essential for section 54B exemption; revenue records alone do not prove eligibility.

Exemption under section 54B depends on proof that the land was actually used for agricultural purposes during the two years immediately before transfer, not merely on its classification in revenue records. Revised 7/12 extracts or corrected revenue entries may support a presumption, but they are not conclusive without corroborating evidence such as crop sale bills, seed or fertiliser invoices, labour records, or similar material showing cultivation. On the facts, the assessee failed to rebut the remand report or produce credible evidence of agricultural operations, so reliance on corrected revenue records alone was insufficient and the exemption claim remained denied.

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Issues: Whether exemption under section 54B of the Income-tax Act, 1961 was allowable on the basis of revised revenue records showing the land as agricultural, and whether the assessee had proved actual agricultural use of the land for the requisite period.

Analysis: Exemption under section 54B depends not merely on the classification of land in revenue records, but on proof that the land was actually used for agricultural purposes during the two years immediately preceding transfer. Revised 7/12 extracts and a corrected revenue entry may create a presumption, but they are not conclusive proof in the absence of supporting material such as sale bills of agricultural produce, purchase invoices for seeds or fertilizers, labour records, or comparable evidence of cultivation. The assessee did not rebut the remand report and failed to produce any convincing evidence to establish actual agricultural operations. Mere reliance on corrected revenue records was therefore insufficient to dislodge the concurrent findings of the lower authorities.

Conclusion: The claim of exemption under section 54B was rightly denied, and the addition was sustained.

Final Conclusion: The appeal failed because the statutory condition of actual agricultural use was not proved by credible evidence, and the disallowance of the exemption remained undisturbed.

Ratio Decidendi: For exemption under section 54B, the assessee must prove actual agricultural use of the land by cogent evidence; revenue records alone do not establish eligibility.

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