2019 (8) TMI 45

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....r by rejecting the deduction claimed to the tune of Rs. 39,53,490/- u/s. 54B of the I.T.Act.   3. It is therefore prayed that the additions made by Assessing Officer and confirmed by CIT(Appeals) may please be deleted." 3. Ground No.1: Brief facts of the case are that the assessee filed his Return of Income on 18.03.2013 declaring the total income of Rs. 2,87,380/- which was processed u/s.143(1) and case was selected under scrutiny through CASS. The Assessing Officer noticed that the assessee has sold immovable property bearing Block No.118 at R.S. No.189 Utran-Kosad of Rs. 4,87,00,000/- in which assessee's share was at Rs. 2,43,50,000/-. The assessee has claimed exemption of the capital gain u/s.54B and 54F of the Act. The assessee has also claimed that the entire capital gain of Rs. 2,42,91,150/- is exempted income on the basis of that the property is not a capital asset as being 8 kms away from the Surat Municipal Limits. However, the Assessing Officer has referred the matter to Surat Urban Development Authority(SUDA) and Taluk Development Officer Utran vide letter u/s.133(6) dated 05.01.2015 that whether the immovable property bearing Block No.118, R.S.No.189 U....

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....el submitted that the assessee was under bonafide belief that land was situated beyond 8 kms from SMC limits, hence, claim of exemption u/s.2(14) of the Act was genuine. However, we find that as per the certificate received from SUDA regarding the distance of land situated within the limit of the SMC, we find that impugned land situated within the limit of SMC, therefore it is chargeable to long term capital gain. Accordingly, this ground of appeal of the assessee is dismissed.   7. Ground No.2: As facts emerged from the Ground No.1 above that the assessee has claimed deduction 54B on the ground that he has purchased agricultural land from the sale proceeds. The deduction u/s.54B was not granted by Assessing Officer and there is no discussion regarding the same in the assessment order. However, this was referred to the Assessing Officer during appellate proceedings who rejected the claim of deduction with the single line by stating that "the amount of capital gains has neither been utilised through section 54B nor through section 54F of the Act". However, it was claimed before the ld.CIT(A) that the assessee has invested Rs. 39.53 lakhs for the purchase of new agricultural ....

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.... a well is located. It was further contended that the land was never converted into stock in trade or assessee never tried to get it converted into non-agricultural land. The ld.Counsel further submitted that in the revenue records, land is agricultural and never showed to be use for non-agricultural purposes by the assessee till it was sold by the assessee and hence the same is to be treated as agricultural land. Further Ghas/Grass should not be construed as non-cultivation of land. In considering the connotation of the term agricultural activity the cultivation of land is to be considered in the wider sense. It was submitted that the agricultural produce arising from agricultural activity may be grain or vegetable or fruit which are necessary for sustenance of human beings including plantation and grows Grass / Pasture for comparison. The ld.Counsel for the assessee further submitted the written submissions as under : e. A reference could be made to the case of CWT vs. Officer-in charge (Court of Wards) (105 ITR 138) (SC) wherein the  Constitution Bench Hon'ble Supreme Court stated that the term 'agriculture' and 'agriculture purpose' was not defined in the Indi....

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....ate Assistant Commissioner in his order in that case. It was further in evidence that neither the assessee nor the person to whom the assessee had sold different plots of land had, at any time, made any attempt to put the land to non-agriculture use" 11. In the present case also, it is to be noted that it is not the case where there were any high rise in near vicinity or the land was situated in industrial area. The location Utran-Kosad is in village area and in near vicinity also there were agriculture activities being carried out, In fact the Photo of land at the time of sale given in Sale deed at Paper Book - Pg No 100 clearly shows that there are parallel lanes of grass with water logging in between indicating irrigational activities being conducted. Even the 7/12 at Pg No 10 to 109 mentions that irrigation activities are carried out with the help of "well" and "other apparatus" and the Ld. CIT(A) has also accepted the same and hence no adverse view should be drawn and the ground of appeal may be please be allowed. 12. In view of the above, the appeal may please be allowed or additions may please be reduced as your Honour may deem fit. 9. Per contra, the ld....