TaxTMI 
TaxTMI 
2026 (7) TMI 941
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.... 3. The Learned First Appellate Authority failed to appreciate the fact that the land sold by the appellant is agricultural in nature evidenced by the relevant documents filed and the investment made is in agricultural land supported by evidences and hence the appellant's claim for deduction u/s. 54B is proper and disallowance of the same is unjustified. 4. The Learned First Appellate Authority and assessing officer failed to appreciate the fact that the assessee was in receipt of Rythu Bandhu Scheme subsidy from the State Government and the basic requirement for getting such subsidy on land is agricultural operations on the lands in question. 5. a) The Learned First Appellate Authority and assessing officer failed to appreciate the fact that the assessee is consistently admitting agricultural income in his returns from the very same land for several years and hence us eligible for exemption u/s. 54B of the Income-tax Act. b) The Learned First Appellate Authority and assessing officer are not justified in disregarding the certificates issued by the Government authority filed by the appellant in support of his claim that the lands sold and purc....
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....ed agricultural income from the past several years from the said agricultural land, but failed to file any documentary evidence to prove carrying out of agricultural activities like showing seeds, purchases of seeds, irrigation expenses, harvesting expenses, purchase of fertilizers, water, nutrients, etc. Therefore, the A.O. observed that, since the assessee has failed to prove agricultural activities, it has not satisfied the conditions for claiming exemption under Section 54B of the Act, because in order to claim exemption under Section 54B of the Act, it is necessary for the assessee to carry out agricultural operations at least two years before the date of transfer of the said agricultural land and also purchase another agricultural land within the specified limit. Further, it was also noticed that, the assessee has sold his land to M. Srinivas Reddy (Krishna Karthikeya Reddy properties) and from the above, it is noticed that, the assessee has sold the agricultural land to a person, who is in the business of real estate activities and the motive for sale is for real estate activities and not for agricultural activities. Therefore, the A.O. rejected the explanation of the assess....
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.... in the two years immediately preceding the date of transfer. In the present case, although the assessee has consistently claimed that, the land was used for agricultural activities and even submitted photographs of mango trees, but no corroborative documentary evidence was provided to substantiate its claim. The explanation of the assessee that, the land was given to local villagers on oral lease and hence, no formal lease agreements or records were maintained is also not acceptable in the absence of the affidavits or statements from the villagers. Further, the assessee did not provide any evidence of actual receipt of agricultural proceeds so as to support agricultural income declared in the return of income filed for the earlier assessment years. In the absence of supporting record relating to expenditure incurred for agricultural operations, such as purchase bills for seeds, fertilizers and other harvesting expenses, the claim of the assessee that, the land was used for agricultural operations two years before the date of transfer on the basis of agricultural income declared in the Return of Income cannot be accepted. Since the assessee has failed to prove the burden of proof a....
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....n disclosed in the return of income filed for earlier assessment years. The A.O., without appreciating the relevant facts, simply disallowed the deduction only on the ground that, no evidence has been furnished to prove the carrying out of agricultural operations, even though, the land in question was 'agricultural land' and in fact continued to be agricultural land even today. 9. The learned counsel for the assessee, further referring to the assessment order passed by the A.O. in the case of Pankaj Manshuklal Doshi, the brother of the assessee, submitted that, the said assessee sold the very same agricultural land situated in the same survey numbers and the A.O. had accepted the claim of the assessee towards deduction claimed under Section 54B of the Act, after satisfying the fact that the land sold by the assessee was agricultural land and the assessee had purchased agricultural land within the period of two years from the date of transfer of the original asset. Although the assessee had furnished all evidences, but the A.O. and the Ld. CIT(A), without appreciating the relevant facts, simply disallowed the deduction claimed under Section 54B of the Act. Therefore, he submitted....
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....ed counsel for the assessee in support of his contentions. There is no dispute with regard to the fact that, the assessee has sold agricultural land situated at Bhulkapur Village, Shankarpally Mandal, Rangareddy District and also purchased agricultural land situated at Chinna Shivnoor Village, Chegunta Mandal, Medak District and claimed deduction under Section 54B of the Income-tax Act, 1961. It is also not in dispute that the assessee has furnished relevant evidences, including pattadar passbook, details of Dharani Portal of Government of Telangana, receipt of Rythu Bandhu amount from Government of Telangana and proved that, the impugned land sold by the assessee was an 'agricultural land' as per the revenue records. In fact, the A.O. never disputed the fact that the land sold by the assessee is classified as 'agricultural land' as per the revenue records, however, disallowed deduction claimed under Section 54B of the Income-tax Act, 1961 only on the ground that, the land sold by the assessee was not used for agricultural purpose in the two years immediately preceding the date on which the transfer took place and therefore, the gain received from transfer of said land cannot be cl....
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.... instead of capital gain being charged to income tax as income of the previous year in which the transfer took place, it shall be allowed as deduction in total. In other words, for claiming deduction under Section 54B of the Act, the land sold by the assessee should be used for agricultural purposes in the two years immediately preceding the date of transfer. The case of the A.O. was that, the land sold by the assessee was not used for agricultural purpose and the A.O. reached the above conclusion on the basis of evidences filed by the assessee and the arguments made during the course of assessment proceedings where the assessee claims that it had not directly carried out agricultural operations in the land and instead carried out agricultural operations through local villagers and used the land for agricultural purpose. According to the A.O., the evidence filed by the assessee does not prove carrying out agricultural operations in the land. The A.O. disbelieved the claim of the assessee on the ground that, no evidence of any kind of bills or vouchers for sale of agricultural produce or bills and vouchers for purchase of expenses or implements has been furnished by the assessee. ....
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....ssessee was agricultural land and the assessee had purchased agricultural land within the period of two years from the date of transfer of the original asset. The assessee and his brothers carried out agricultural operations in the above land through local villagers and also sold lands to one buyer, who is in to real estate business. Since the AO of the brother of assessee accepted the claim, in our considered view, there is no reason for the AO to disallow claim of exemption u/s. 54B without any change in facts. Therefore, in our considered view, the land sold by the assessee for the year under consideration is an 'agricultural land' and was used for agricultural purpose in the two years immediately preceding the date of transfer, and the assessee has also purchased another land being used for agricultural purpose and therefore, entitled for deduction under Section 54B of the Act. Therefore, in our considered view, the A.O. ought not to have disallowed deduction claimed under Section 54B of the Act as held by the Hon'ble High Court of Gujarat in the case of CIT Vs. Siddharth J. Desai (supra) and CIT Vs. Madhabhai H. Patel (supra). A similar view has been taken by ITAT, Hyderab....