2023 (2) TMI 83 - AT - Income Tax

Exemption u/s 54B - case of the assessee is that the assessee has inherited a piece of land and the same was sold in which assessee s share of sale consideration and the assessee has claimed exemption u/s 54B on the ground that the land was used for agricultural purposes for many years - AO concluded that the property sold by the assessee was not an agricultural land and no agricultural activity was carried on the said land - HELD THAT - The piece of land sold by the assessee is within the purview of Coastal Regulation Zone CRZ adjoining to sea. The case of the assessee is that he has carried agricultural operation. Except adangal, there was no evidence bought on record that the assessee carried agricultural operations. The adangal filed by the assessee shows that there were few coconut trees. Simply because, there are coconut trees, it does not mean that the assessee carried agricultural operation, particularly, when the assessee has not reported any agricultural income. Apart from that, the said extent of land was just adjacent to the sea not useful for any agricultural purposes, whereas, the assessee s statement is that he has carried agricultural operation. To carry agricultural operation water is very much required and sea water is not useful for carrying any agricultural activities or to raise any agricultural crop - we are of the considered opinion that the assessee has not carried any agricultural activities and thus, we find no infirmity in the orders of authorities below and accordingly, the appellate order passed by the CIT(A) is confirmed. Various case law relied on by the assessee have no application to the facts of the case. Appeal filed by the assessee is dismissed.

Summary

Issues:
- Delay in filing the appeal
- Eligibility for claiming exemption under section 54B of the Income Tax Act

Delay in filing the appeal:
The appeal filed by the assessee was delayed by ten days, and a petition for condonation of the delay was submitted. The delay was condoned by the Tribunal as the assessee was prevented by sufficient cause, and the appeal was admitted for adjudication.

Eligibility for claiming exemption under section 54B of the Income Tax Act:
The case revolved around whether the piece of land sold by the assessee was eligible for claiming exemption under section 54B of the Act. The assessee claimed that the land was used for agricultural purposes for many years, supported by documents like adangal showing coconut trees. However, the Assessing Officer contended that there was no evidence of agricultural operations being carried out on the land, denying the claim of deduction under section 54B. The ITAT directed the Assessing Officer to re-examine the matter based on the material provided by the assessee. In the subsequent assessment, the Assessing Officer concluded that the land was not agricultural and disallowed the deduction. The Tribunal upheld this decision, stating that the land, located in the Coastal Regulation Zone adjacent to the sea, was not suitable for agricultural activities. Despite the presence of coconut trees, the absence of evidence of agricultural operations and the unsuitability of sea water for farming activities led to the dismissal of the appeal.

Conclusion:
The Tribunal confirmed the decision of the Assessing Officer and the CIT(A) that the assessee's land was not eligible for claiming exemption under section 54B of the Income Tax Act. The appeal filed by the assessee was dismissed on 31st January 2023 in Chennai.