TaxTMI 
TaxTMI 
2018 (1) TMI 1514
X X X X Extracts X X X X
X X X X Extracts X X X X
....1A situated at Mhasrul, with Municipal limits of Nashik. The assessee was having 1/4th share in the said land. The assessee along with other co-owners sold the said land vide registered Sale Deed dated 15.03.2012 for total consideration of Rs. 4,80,00,000/-. The assessee earned capital gain of Rs. 1,13,12,500/- on sale of agricultural land. Against the said capital gain, the assessee claimed deduction of Rs. 28,07,885/- u/s.54 and Rs. 57,12,974/- u/s.54B of the Act. During the course of scrutiny assessment proceedings, the Assessing Officer allowed assessee's claim of deduction u/s. 54, but rejected the claim of deduction u/s. 54B of the Act on the ground that assessee has not been able to show that the land was used for agricultural purpose in the past two years. 4. Aggrieved by the assessment order dated 11.03.2015, assessee filed appeal before the Commissioner of Income Tax (Appeal). The Commissioner of Income Tax (Appeal) vide impugned order allowed assessee's claim of deduction u/s.54B and reversed the findings of Assessing Officer. Now, the Department is in appeal before the Tribunal against the findings of Commissioner of Income Tax (Appeal), raising following grounds of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....03.2012. The assessee claimed deduction u/s.54B in respect of capital gain arising from sale of aforesaid land. The ld. DR submitted that for claiming benefit of deduction u/s. 54B, it is mandatory that the land is used for agricultural purpose in the two years immediately preceding the date on which transfer of such land took place. And agricultural activities should have been carried out either by the assessee or his parents. The assessee has not placed on record any documentary evidence to show that three pieces of land in question were used for agricultural purpose in the preceding two years. Therefore, the Assessing Officer rightly rejected assessee's claim of deduction u/s. 54B of the Act. The assessee never filed any return of income prior to the sale of land indicating income from agricultural activities. The assessee could not place on record any documentary evidence indicating purchase of seed, manure etc or invoice indicating sale of crop in the market. The assessee could not furnish any evidence either before the Assessing Officer or before the Commissioner of Income Tax (Appeal) to substantiate that agricultural activities were, in fact, carried out on the land in ques....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n comprising in Survey No.177, 178 and 188/1A was purchased by the father of assessee in the year 1976 vide registered Sale Deed dated 14.02.1976 which is at page 154 to 159 of the paper book. The assessee inherited 1/4th share in aforesaid agricultural land. The entire land was sold by the assessee and other co-owners vide Sale Deed dated 15.03.2012. The 'pictographic representation' mentioned by Commissioner of Income Tax (Appeal) in his order refers to the outlay of land at page 121 of the paper book. The said plan is part of Sale Deed dated 15.03.2012 and the same was furnished before the Assessing Officer. No new evidence was furnished before Commissioner of Income Tax (Appeal) in the form of photographs or any other 'pictographic representation'. Thus, there is no violation of Rule 46A of the Income Tax Rules, 1962 as alleged by the Department. The ld. AR submitted that Commissioner of Income Tax (Appeal) has referred to 'pictographic representation' to indicate that Survey No. 178, 177 and 188/1A are contiguous land. Merely for the reason that land is comprising in three Survey Nos., in actual would not divide the land in three pieces unless there is physical division or bre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght perspective and granted relief to the assessee. The assessee has filed copy of 7/12 extract to indicate that land was under cultivation. The 7/12 extracts filed by assessee have not been rejected by the Assessing Officer nor any suspicion has been raised over its authenticity. The assessee has discharged his onus. No contrary evidence has been placed on record by the Assessing Officer to show that no agricultural activities were carried out by assessee in the past two years on the land. 6.4 The ld. AR referred to the observation of Assessing Officer in para 3.3.4 wherein, the Assessing Officer has observed that the inquiries made u/s.133(6) indicate that there was no intent of the purchaser of land to do any agricultural activity. The ld. AR submitted that as per provision of section 42 of the Maharastra Land Revenue Code, agricultural land cannot be sold to non-agriculturist without obtaining change of land use permission from Competent Authority. A perusal of Sale Deed dated 15.03.2012 placed on record would show that assessee has sold agricultural land to the purchaser for agricultural purpose. It is not the case of Department that assessee has converted the land from agri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or (ii) if the amount of the capital gain is equal to or less than the cost of new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain]" A perusal of the above provisions of section 54B show that to be eligible for claiming benefit of deduction u/s. 54B of the Act, following conditions should be satisfied: i. The agricultural land is transferred by any individual or HUF. ii. The agricultural land has been used by the individual or his parents or HUF for agricultural purpose during two years immediately preceding the date of transfer. iii. The assessee had purchased another agricultural land (rural or urban) within a period of two years after the date of transfer of the original agricultural land to be used for agricultural purpose. iv. If the amount of Capital Gain is not utilized by the assessee for the purchase of another agricultural land before the date of furnishing return of income u/s.139 of the Act, the same should have been deposited b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that assessee has explained the reason for not cultivating the entire land. As per contentions of the assessee, the entire land could not be brought under cultivation due to water shortage and crop securities concern. Therefore, agricultural activities were carried out on different portion of land on rotation basis. We observe that the reason given by assessee for cultivating only part of land remained un-rebutted. The benefit of deduction u/s. 54B cannot be denied to the assessee if he is unable to use entire land for agricultural purpose for the reasons beyond his control. The Hyderabad Bench of Tribunal in the case of ACIT Vs. N. Raghu Verma reported as 142 ITD 421 (Hyd.) exemption u/s. 54B was held to be exigible on sale of land where the assessee was unable to use entire land for agricultural purpose due to vagaries of nature and non availability of resources. Similar view was taken by Chennai Bench of Tribunal in the case of M.A. Alagappan Vs. Income Tax Officer reported as 29 ITD 69(Mad.), wherein, assessee had cultivated part of his land and no further cultivation was possible because of lack of water. The Tribunal held that the assessee cannot be denied relief because ....