2018 (2) TMI 739 - AT - Income Tax

Claim of deduction u/s. 54B - whether agricultural activities were carried out by the assessee on his share of land? - Held that - AO has raised doubt that the land was not used for agricultural purpose either by assessee or his parents. The revenue record in the form of 7/12 extracts clearly indicate that Sugarcane was grown in Gut No. 239, Village Gahunje wherein, the assessee is one of the owner. A close reading of 7/12 extracts for financial year 2007-08, 2008-09 and 2009-10 in respect of Survey No. 239 show that land was under self cultivation. During the course of scrutiny assessment proceedings, the Assessing Officer has not raised any doubt over the authenticity of 7/12 extracts furnished by assessee. The 7/12 extracts is revenue record maintained by Land Revenue Department of State Govt. Therefore, it carries some sanctity with respect of its contents. The assessee has also furnished a copy of bank statement indicating that Sugarcane cultivated by assessee was sold to sugar factories. The assessee received payment from sugar factories in his bank account bearing No.4016 with Pune District Central Co Operative Bank Ltd, Dehuroad Branch, Pune. A perusal of bank statement shows that the assessee has received payment in respect of Sugarcane bill on various dates starting from 18.07.2008 to 05.02.2010. The entries in the passbook further supports the claim of assessee that sugarcane was cultivated during the financial year 2008-09 and 2009-10. The land revenue entries in 7/12 extract indicating the crop grown coincides with the payments received by assessee in his Bank account for sale of sugarcane. No infirmity in the order of Commissioner of Income Tax (Appeals) in accepting assessee s claim of deduction u/s. 54B on the basis of 7/12 extracts, the genuineness of which was never in question. Accordingly, Ground No. 1 raised in the appeal by the Department is dismissed. Claim of deduction u/s.54F - benefit of deduction u/s.54F is with respect to capital gains arising in the hands of wife of assessee which was suo-moto clubbed in the hands of assessee u/s. 64 - Held that - One of the conditions for claiming deduction u/s. 54F is that claim should have been made in the return of income. Since no such claim was made by assessee in the return of income u/s.139(1) or 139(5) of the Act, therefore, the claim of the assessee cannot be entertained. The claim made by assessee u/s. 54F was in respect of capital gain arising in the hands of wife of the assessee, Smt. Sangita Ramakant Bodke, therefore, the same should have been claimed in the return of income filed by the wife of assessee. The claim of assessee u/s. 54F is liable to be rejected on this ground, as well. We observe that in the written submissions, the assessee has admitted that the claim was made mistakenly. Thus, in view of our above observations and the admission by assessee, the Ground No. 2 raised in the appeal by Department is allowed. Addition on account of interest on housing loan - claim is not made in the return of income or revised return of income - since the assessee has not shown any income under the head Income from House Property thus claim of deduction of interest on house loan cannot be allowed - Held that - We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in accepting the claim of assessee made during assessment proceedings by following revised computation of income. No material has been placed on record by Revenue to show that the house in respect of which claim is made, is not self occupied. The provisions of section 24 permit such deduction in respect of self occupied house up to ₹ 30,000/-. Thus, Ground No. 3 raised in appeal by Revenue is dismissed. Allowance of agricultural income of the assessee - Held that - In this case as per 7/12 extract the appellant is undisputedly owner of agricultural land depicting cultivation of various crops. Ideally, the appellant should have substantiated the income with further details like sales bill of agricultural produce but considering the smallness of amount, the contention of the appellant can be accepted. Accordingly, the Assessing Officer is correctly directed to delete the addition under the head Other Sources and treat the same as agricultural income. Thus Ground No. 4 raised in appeal by the Revenue is dismissed.

Summary

Issues Involved:
1. Deduction claim under Section 54B of the Income Tax Act.
2. Deduction claim under Section 54F of the Income Tax Act.
3. Deduction of interest on housing loan.
4. Agricultural income claim.

Detailed Analysis:

1. Deduction Claim Under Section 54B:
The primary issue was whether the assessee was eligible for a deduction of ?38,11,000 under Section 54B of the Income Tax Act. The Assessing Officer (AO) rejected the claim, citing a lack of evidence that the land was used for agricultural purposes by the assessee or his parents in the two years preceding the sale. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction based on 7/12 extracts, which indicated that the land was under cultivation and sugarcane was grown from 2000-01 to 2009-10. The Tribunal upheld the CIT(A)'s decision, noting that the 7/12 extracts and bank statements showing payments for sugarcane sales were sufficient evidence of agricultural use.

2. Deduction Claim Under Section 54F:
The AO rejected the assessee's claim for a deduction under Section 54F, as it was not made in the original or revised return of income. The CIT(A) allowed the claim based on a revised computation submitted during the assessment proceedings. However, the Tribunal overturned this decision, stating that a claim under Section 54F must be made in the return of income and that the deduction was related to capital gains in the hands of the assessee's wife, which should have been claimed in her return. The Tribunal also noted the assessee admitted the claim was made mistakenly.

3. Deduction of Interest on Housing Loan:
The AO rejected the claim for ?27,646 as interest on a housing loan, arguing that it was not made in the return of income and that the assessee did not declare income from house property. The CIT(A) allowed the claim, referencing the case of Pruthvi Brokers & Shareholders Pvt. Ltd., which permits claims made through revised computation during assessment proceedings. The Tribunal upheld the CIT(A)'s decision, noting that the house was self-occupied and the provisions of Section 24 allow such deductions up to ?30,000.

4. Agricultural Income Claim:
The AO rejected the claim of ?14,262 as agricultural income due to a lack of supporting evidence. The CIT(A) accepted the claim, citing the 7/12 extracts that showed continuous cultivation of various crops on the land. The Tribunal upheld the CIT(A)'s decision, considering the small amount involved and the evidence provided.

Conclusion:
The Tribunal dismissed the Revenue's appeal on the issues of the deduction under Section 54B, interest on housing loan, and agricultural income, but allowed the appeal regarding the deduction under Section 54F. The order was pronounced on February 7, 2018.