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Before: Shri H.S. SidhuDr. B.R.R. Kumar
ORDER Per B.R.R. Kumar, A.M.: During the year, the assessee has sold land at Mohammadpur village, Ramzanpur, Burari, Delhi for Rs.1,67,24,000/- on 15.04.2013. The said land was purchased by the assessee on 16.01.1989. The ld. Assessing Officer and the CIT(A) have treated this land as non-agricultural land on the ground that the land was not put to use for the purpose of agriculture for two years preceeding to the date on which transfer took place. The ld. Assessing Officer and the ld. CIT(A) arrived at this conclusion based on Girdawari of the Patwari, wherein it was mentioned that the total agricultural land consists of five Khasras and no agricultural produce was recorded in two Khasras. The Revenue Authorities concluded that since no agricultural activity has been conducted on two Khasras, the entire plot could not be treated as an agricultural land. Further, the Revenue authorities held that in the absence of submissions of details pertaining to purchase of seeds, purchase of fertilizers and failure to submit the bills pertaining to agricultural labour, the assessee cannot be said to have undertaken agricultural operations on the said land. The Revenue authorities have also discarded two bills produced pertaining to sale of agricultural produce on the ground that the bill is un-dated and there is no signature of the recipient on the J-Form submitted by the assessee.
Before us, the ld. AR argued that, the land is a continuous plot and on two Khasras, agricultural activities could not be conducted owing to inundation of water during the year and the agricultural activities have been conducted on the remaining part of the cultivable land. It was argued that entire land has been agricultural land for number of years and only during the instant year, the land could not be cultivated partially. He has filed the Khasra, Girdawari of all the five Khasras No. 670, 671, 699, 700 & 701 in support of his contention that there has been agricultural operations in the earlier years.
The ld. DR, on the other hand, vehemently argued that the land can be considered as agricultural only if agricultural operations have been undertaken under the provisions of the Act. He argued that since the entire land has not been brought to cultivation nor any wheat or rice has been grown on the part of the land, the land cannot be treated as agricultural land as per section 54B of the Act.
We have heard the arguments of both the parties and have perused the material available on record. We find that in all the five Khasras during the season of Rabi, Barseem, Rice and wheat were cultivated in the year 2012-12 and three Khasras have been cultivated with Subzi and Rice. We also find that the entire land is continuous plot. The issue of inundation of two Khasras has not been disputed by the Revenue. The agricultural activities could not be undertaken in a part of the land which does not disentitle the entire land character of being agricultural land. Non- cultivation of land for a year owing to vagaries of nature will not essentially change the character of land from agriculture to non- agricultural land. Hence, the land has to be treated as agricultural land and consequently the sale proceeds so.
Further, the Revenue has declined to accord exemption from the capital gain on the amount invested in purchase of agricultural land at Kewda, Sonepat (on 13.02.2014) on the grounds that the assessee has not shown any income from agricultural land purchased out of the funds derived from the sale of agricultural land at Ramzanpur.
Before us, the ld. AR argued that owing to the intermittent period of taking over the new agricultural land, no profits from agriculture have been shown. He argued that section 54B does not stipulate that subsequent to purchase of agricultural land, the assessee has to invariably undertake agricultural operations on that land to make it eligible for deduction and such reading of the Act is not the legislative intention which will defeat the very purpose of reinvesting in the agricultural land.
On the other hand, the ld. DR has argued that it would not suffice that the assessee purchases agricultural land out of the capital gains, but he has to undertake the agricultural operations so as to make himself eligible for the deduction.
We have gone through the facts of the case. The provisions of the act are as under : Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; 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 nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the 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. (2) The amount of the capital gain which is not utilised by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then,— (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.
A plain reading of the act stipulates that the assessee has to , within a period of two years after that date, purchase any other land for being used for agricultural purposes. Hence the revenue’s contention that the assessee cannot be allowed exemption because he has not shown the earning of the agriculture income is devoid of any merit even though ,we find that the assessee has shown agricultural income of Rs.16861/- for the assessment year 2012-13, agricultural expenses of Rs.10,000/- in the assessment year 2013-14 and agricultural income Rs.2,19,267/- in the assessment year 2015-16. Hence, it cannot be said that the assessee has not been eligible for deduction 54B in the absence of any other material brought by the Revenue so as to prove that the said land was not agricultural land, but used for anyother non agricultural purpose or any business purpose or commercial use like warehouse, marriage hall etc. The appeal of the assessee on this ground is allowed.
Ground No. 2 pertains to addition of Rs.64,50,000/- u/s. 68. The assessee has sold land for Rs.1,67,24,000/- on 18.04.2013 and purchased another Chunk of agricultural land for Rs.2,44,54,800/-. The investment made over and above the sale of agricultural land was Rs.77,30,800/-. During the assessment proceedings, the assessee was asked about the source of these amounts for which the assessee submitted that he has received the amount from his family members as under : Sri Shyam Sunder Maheshwari 57,50,000/- Sri Sunil Maheshwari 55,000/- Radhika Maheshwari 1,00,000/- Vinay Kumari Maheshwari 2,00,000/- Raghav Maheshwari 4,00,000/- Neeta Maheshwari 1,00,000/- The Revenue has added the amount of Rs.64,50,000/- u/s. 68 on the grounds that the returned income of the loan parties is very much less compared to the loans extended.
Before us, the ld. AR has taken to the arguments taken before the lower authorities. The ld. DR argued that it is incomprehensible how the persons with meager returned income have extended loan, which does not commensurate with their financial position and hence the addition ought to be confirmed .
We have heard the arguments of both the parties and have perused the material available on record. We find that (i) in the case of Shyam Sunder Maheshwari (the assessee), the loan amount was Rs.57,50,000/-. It has been explained that the amount has been receivedthe amount out of the fixed deposits of the HUF made by the assessee. The FDR interest has already been reflected in the returns and the fact that the FDRs have been in existence can be co-related from the bank accounts. (ii) Raghav Maheshwari is grandson of the assessee and is staying abroad and working as a professional and has Indian taxable income of 17,020. (iii) Vinay Kumari Maheshwari, wife of the assessee, extended loan of Rs.2,00,000/- whose returned income is Rs.1,57,130/-. (iv) Ms.Radhika Maheswari grand-daughter has given loan of Rs.1,00,000/- and is having returned income of Rs.92,540/-.
Further the details of the movement of FDRs is as under : S. No. Date Particulars Rs. Rs. Sold Ramjanpur Mohammadpur Land Received two cheques 15.04.2013 82,24,000 15.04.2013 82,24,000 1,64.48.000 1,67,24,000 Cheque deposited with State Bank of Hyderabad In Shyam Sunder Maheshwari (HUF A/c) 2) 20.04.2013 1,67,24,000 Transfer the sale poceed to Karur Vysys Bank (to Shyam Sunder Maheshwari HUF) 3) 24.08.2013 1,70,00,000 FDR for Rs. 1,70,00,0007- amount received from HUF made into FDR directly (FDR of Karur Vysya Bank Ltd.) 4) 17.01.2014 Amounts received from a) Shri Shyam Sunder 10,00,000 Maheshwari HUF b) Sri Sunil Maheshwari 55,000 1,00,000 c) Smt. Radhika Maheshwari d) Smt. Vinay Kumari 2,00,000 Maheshwari e) Sri Raghav Maheshwari 3,00,000 f) Smt. Neeta Maheshwari 1.00.000 loan 17.55.000
5) 13.02.20f/ 1,76,88,919 FDR of' Rs. 1,70,00,0007- matured nd credited in SBH with interest 6) 12.02.2014 11,00,000 Amount received from Shyam Sunder Maheshwari (HUF) Sri Raghav Maheshwari 1,00,000 Sri Shyam Sunder Maheshwari 36,50,000 (HUF)
All the parties are related to the assessee and it cannot be said that the identity, genuineness and creditworthiness of the parties has not been proved. The decision of the ld. CIT(A) that the black money generated from the sale transaction has been routed as loan to the assessee (page 19) cannot be accepted in the absence of iota of proof or evidence and in the presence of overwhelming evidences regarding the source by the lender parties Viz. clear financial position and the proof of the source brought before the Revenue. The contention of the revenue that the returned income of the loan paries is meager is also found to be incorrect based on the facts on record. Hence, keeping in view the entire facts and circumstances, the addition confirmed by the ld. CIT (A) cannot be upheld. This ground is accordingly allowed.