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Issues involved:
1. Eligibility for deduction u/s 54F of the Act. 2. Assessment of agricultural income as income under the head "Income from other sources." Issue 1: Eligibility for deduction u/s 54F of the Act: The appeal questioned the denial of deduction u/s 54F of the Act by both the Assessing Officer and the Ld. CIT(A). The dispute arose from the construction of a residential building at "Kadavanthara" within three years from the date of transfer of the original asset. The proviso to section 54F imposes conditions on not purchasing or constructing another residential house within specified periods. The contention was whether the construction at Kadavanthara disqualified the assessee from claiming the deduction. The assessee argued that the construction at Kadavanthara was commenced before the transfer of the original asset and should be considered an existing residential asset. However, the revenue contended that the construction violated the conditions of sec. 54F. The Tribunal held that the construction at Kadavanthara did not qualify as an existing residential house on the date of transfer, and completion of construction was necessary for it to be considered as such. As the construction was completed within three years from the transfer, the deduction u/s 54F was disallowed. Issue 2: Assessment of agricultural income as income under the head "Income from other sources": The dispute involved the reduction of agricultural income declared by the assessee, leading to the assessment of the difference as income from undisclosed sources. The Assessing Officer estimated expenses at 60% of gross receipts, differing from the 40% claimed by the assessee. The contention was whether the assessing officer's estimation was arbitrary and lacked basis. The Tribunal noted that the AO did not provide the assessee with an opportunity to explain the claimed expenses, violating principles of natural justice. Consequently, the Tribunal set aside the Ld CIT(A)'s order and directed the assessing officer to re-examine the issue after affording the assessee a fair opportunity to present their case. In conclusion, the appeal was partly allowed for statistical purposes, with the Tribunal providing directions for a fresh examination of the agricultural income assessment issue.
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