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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld.CIT (Appeals)-13, Pune dated 22.07.2015 for the assessment year 2011-12 as per following grounds of appeal on record:
“1.The learned CIT(A)-13, Pune and the learned ITO (IT)-I, Pune (hereinafter referred to as learned AO) erred in law and on facts in disallowing deduction claimed by the appellant u/s 54 B of the ITA, 1961 amounting to Rs.60,08,199/-.
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The learned CIT(A)-13, Pune erred in law and on facts in affirming the disallowance of deduction u/s. 54B of the ITA, 1961 made by learned AO without appreciating that no. of coconut & mango trees exist on the land and that the said land is agricultural land as per revenue records. 3. The learned CIT(A)-13, Pune erred in law and on facts in affirming the disallowance of deduction u/s.54B of the ITA, 1961 made by learned AO without appreciating that the case was discussed and heard on 04/02/2014 and thereafter, no any show cause notice/letter/ communique was issued by learned AO to the appellant for disallowing deduction u/s. 54B of the ITA, 1961. 4. The appellant craves leave to add /modify /delete /amend all /any of the grounds of appeal.”
The brief facts in this case are that the assessee is a non-resident
Indian. He filed his return of income for the assessment year 2011-12
declaring total income of Rs.18,15,114/-. He has declared income earned
from salary, house property and capital gain and other sources. During the
year under consideration, the assessee has declared income from capital
gains, on which he claimed the deduction u/s.54B of the Income Tax Act,
1961 (hereinafter referred to as ‘the Act’) by investing the amount of capital
gain by purchasing agricultural land. The Assessing Officer in the order
passed u/s.143(3) of the Act denied the deduction claimed u/s.54B of the Act
which resulted in to the addition of Rs.60,68,199/- to the assessee’s total
income. With the result, the Assessing Officer assessed the assessee’s total
income at Rs.78,23,313/- as against his returned total income of
Rs.18,15,114/-.
The Assessing Officer on perusal of the documents filed by the assessee
observed that the land sold by the assessee is urban land and was not an
agricultural land. According to the 7/12 extract, the transferred land was
barren land and was not used for any agricultural purposes. The Assessing
Officer stated that the assessee did not declare agricultural income in his
returns of income filed for AY 2007-08 to AY 2010-11. The assessee did not
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claim any expenditure on agricultural activities carried out by him. The
assessee also did not furnish any documents in support of its contention that
he carried out agricultural activities on the land sold by him.
The assessee’s contention was that the sale deed states the transferred
land was agricultural land. It was used for the agricultural purposes and the
agricultural produce, was used only for the household. However, the assessee
did not produce any evidence in support of its claim. The Assessing Officer
stated that 7/12 extract attached to sale deed furnished by the assessee
shows that land is a barren land and was not used for the agricultural
purposes. It is known that 7/12 extract records crops cultivated, water taxes,
land revenue etc. The assessee did not produce any material to contradict the
contents of 7/12 extract issued by Talathi.
That before the Ld.CIT(Appeals), the assessee had filed written
submissions which are on record.
The first limb of submissions of the assessee before the Ld.
CIT(Appeals) was that the principles of natural justice was not followed by the
Assessing Officer and that sufficient opportunity of hearing to substantiate
the claim of the assessee was not allowed to him.
The second limb of submissions of the assessee before the Ld.
CIT(Appeals) was that only relying on 7/12 extract issued by Talathi, the
Assessing Officer has come to the conclusion that land was not used for
agricultural purpose instead of making any physical verification.
Thereafter, the assessee relied on certain case laws and submitted that
even if a part of the land was actually not used for agricultural activities still
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such land holds the character of agricultural land even though the income
was not derived. To substantiate the land as agricultural land, the assessee
relied upon the following decisions:
i) CIT Vs. Smt. Debbie Alemao 331 ITR 59 ( Bom.)
ii) ACIT Vs. N Raghu Verma 142 ITD 421 ( ITAT HYD)
The Ld.CIT(Appeals) observed and held that in order to claim the
deduction u/s.54B of the Act, the land should have been used for agricultural
purposes for two years prior to the date of transfer. Whether the land was
used for agricultural purposes for two years prior to date of transfer or not is
a question of fact. The assessee has only raised legal arguments as to why the
deduction should not be denied to him. However, neither before the Assessing
Officer nor before the Ld. CIT(Appeals), the assessee has filed any evidence to
support that transferred land was used for agricultural purposes for two
years prior to the date of transfer. Thereafter, the Ld. CIT(Appeals) makes
detailed order and as per reasons recorded therein which is on record
confirmed disallowance of deduction u/s.54B of the Act.
At the time of hearing the Ld. AR of the assessee prayed for filing
additional evidences placed in paper book at page No. 87 and 216. Page
No.87 is the certificate obtained from Govt. Registered Agricultural Valuer
and Page 216 is the photograph of land sold at Bhugaon. The assessee wants
to submit the same to justify that there were mango & coconut trees and also
vegetable crops like brinjal, tomatoes etc. on the land sold.
7.1 The Ld. AR of the assessee further submitted that it was never a barren
land and only placing reliance on the 7/12 extract satisfaction should not be
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taken rather detailed physical verification has to be done. Hence, Ld. AR of
the assessee has prayed that in view of the additional evidences filed, the
matter may be restored to the file of Assessing Officer for verification and re-
adjudication of the same.
The Ld. DR did not object to the said prayer of the Ld. AR.
We have perused the case records, heard the rival contentions and also
analyzed the facts and circumstances in the case. In this case, the assessee
has claimed deduction u/s.54B of the Act. In order to claim such deduction,
legal ingredient is that the land should have been used for agricultural
purpose for two years prior to the date of transfer. The Revenue Authorities
have relied on the 7/12 extract and lack of evidence by the assessee and have
come to the conclusion that the land sold was not agricultural land and
thereby denied deduction u/s.54B of the Act to the assessee.
That on other hand, the assessee all throughout states that there have
been ongoing agricultural activities on the said land sold from very beginning.
In absence of physical verification of the land and without any specific report
obtained, it was not fair on the part of the Revenue Authority to deny the
deduction claimed u/s.54B of the Act.
Before us, additional evidences have been placed which needs to be
verified by the Revenue Authorities. Furthermore, in the totality of facts and
circumstances, the matter demands detailed factual verification and enquiry
regarding the nature of land and whether it was being used for agricultural
purpose throughout, most particularly with regard to specified conditions laid
down u/s.54B of the Act. The twin conditions of the Section 54B which
requires to be examined are:
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i) That the land which was sold was used for agricultural purpose in the two years immediately preceding the date on which the sale took place.
ii) That the assessee has, within a period of two years after that date i.e. when the sale was completed, purchased any other land for agricultural purpose.
With these above observations, we set aside the order of the Ld. CIT(Appeals) and remand the matter back to the file of the Assessing Officer to comply with our directions as herein above stated and thereafter, shall adjudicate the matter after providing reasonable opportunity of hearing to the assessee.
In the result, appeal of the assessee is allowed for statistical purposes. 11.
Order pronounced on 01st day of February, 2019.
Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 01st February, 2019. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-13, Pune. 4. The CIT (IT/TP), Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.
7 ITA No.1319/PUN/2015 A.Y.2011-12
Date 1 Draft dictated on 31.01.2019 Sr.PS/PS 2 Draft placed before author 01.02.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order