1984 (8) TMI 194 - AT - Income Tax

Summary

Issues:
1. Contention regarding entitlement to relief under s. 54B(1) based on the date of transfer.
2. Dispute over whether the land sold was used for agricultural purposes for two years preceding the transfer.

Analysis:

1. The first issue revolves around the date of transfer of the land under s. 54B(1). The appeal challenges the CIT (A)'s decision that the assessee was not entitled to relief because the land was not used for agriculture until the date of transfer under the Land Acquisition Act. The ITAT Patna, following a Full Bench decision of the Patna High Court, held that title passes when possession is taken over, not when the award is given. The possession was taken on 27th May 1976, establishing the date of transfer.

2. The second issue concerns whether the land was used for agricultural purposes in the two years preceding the transfer. The CIT (A) initially found evidence that agricultural operations ceased after N.M.C.H. took possession in May 1976. However, the ITAT noted affidavits and a certificate confirming agricultural activities on the land until the possession was taken over. The unchallenged affidavits provided detailed accounts of ongoing agricultural operations, including planting trees, growing crops, and auctioning fruits. The ITAT criticized the Department for discriminatory treatment and emphasized that the evidence presented by the assessee sufficiently proved continuous agricultural use until the transfer date.

3. The ITAT highlighted the unjust treatment by the Department, pointing out the acceptance of a similar claim by the assessee's brother under s. 54B(1). The ITAT emphasized that the unchallenged evidence presented by the assessee, including affidavits and a certificate, established the continuous agricultural use of the land, meeting the conditions for exemption under s. 54B(1). The ITAT overturned the CIT (A)'s decision and allowed the appeal, granting the assessee the relief under the IT Act.

In conclusion, the ITAT Patna's judgment clarified the date of transfer under s. 54B(1) and upheld the continuous agricultural use of the land, providing relief to the assessee based on the evidence presented and criticizing the Department for discriminatory treatment.