Section 54B deduction upheld for sale of agricultural land after remand verified prior farming use and replacement purchase.

Deduction under section 54B was allowed because remand verification confirmed that agricultural and farming activities were carried on the land in the years immediately before transfer, supported by the cultivator's affidavit and bills for seeds, fertilisers, pesticides and urea. The assessee also purchased another agricultural land after sale, satisfying the statutory conditions. With no contrary material to rebut the remand findings, the Tribunal deleted the disallowance sustained by the first appellate authority. The objection based on limited scrutiny was treated as academic because the claim succeeded on merits.

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Issues: Whether the assessee was entitled to deduction under section 54B of the Income-tax Act, 1961 on sale of agricultural land, in view of the additional evidence accepted in remand proceedings.

Analysis: The Assessing Officer, in remand proceedings under Rule 46A of the Income-tax Rules, 1962, verified the affidavit of the agriculturist cultivating the land and the bills for seeds, fertilizers, pesticides and urea. On that verification, the Assessing Officer recorded that agricultural and farming activities had been carried out on the land in the years immediately preceding the transfer and that the assessee had purchased another agricultural land after sale. The Tribunal found no contrary material to dislodge the remand findings and held that the conditions for deduction under section 54B stood satisfied. The contention regarding limited scrutiny was treated as academic in view of the decision on merits.

Conclusion: The assessee was entitled to deduction under section 54B, and the disallowance sustained by the first appellate authority was deleted.

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