2015 (10) TMI 1459 - AT - Income Tax

Deduction u/s 54B - CIT(A) had accepted the Assessee s claim that the land sold was an agricultural land and had also allowed the Assessee s claim of deduction u/s 54B to the extent of ₹ 1 crore representing the amount paid by the Assessee to the seller of the agricultural land - Held that - A perusal of the land records, more specifically Form No. II, in Nagarcem Palolem shows that the land sold by the Assessee has been recorded in the Revenue records as an agricultural land. In these circumstances, as the Revenue records of the State clearly hold the land which has been sold as an agricultural land, we are of the view that the finding of the ld. CIT(A) in holding the land sold by the Assessee as an agricultural land does not call for any interference. The cost of the land in the Assessee s case being the figure as disclosed in the sale deed is only ₹ 27,14,288/-, the Assessee would be entitled to the deduction u/s 54B only to the extent of this amount and not ₹ 1 crore as allowed by the ld. CIT(A). The Assessee has relied upon the decision of Janardan Dass reported in 2007 (10) TMI 172 - ALLAHABAD HIGH COURT therein assessee had purchased a land alongwith tubewells and trees which were part of the agricultural land. This is not a case where the Assessee had paid separately for the land and separately for the plantation whereas in the Assessee s case the sale deed has been registered only for ₹ 27,14,288/-. Consequently, this decision of the Hon ble Allahabad High Court does not help the Assessee s case. In the circumstances, the order of the ld. CIT(A) on this issue stands modified and the AO is directed to grant the Assessee the benefit of deduction u/s 54B to the amount as disclosed by the Assessee in the sale deed being ₹ 27,14,288/-. In the result, the appeal of the Revenue is partly allowed.

Summary

Issues:
1. Appeal by Revenue against CIT(A) order for A.Y 2009-10.
2. Cross objection by Assessee in Revenue's appeal.
3. Disallowance of claim u/s 54B by AO.
4. Dispute over classification of land as agricultural.
5. Determination of deduction u/s 54B based on purchase cost.

Analysis:
1. The appeal before the Appellate Tribunal ITAT PANAJI involved the Revenue challenging the CIT(A) order for A.Y 2009-10. Additionally, a cross objection was filed by the Assessee in response to the Revenue's appeal.

2. The Assessee, during the hearing, decided not to press the cross objection, leading to its dismissal by the Tribunal.

3. The core issue revolved around the disallowance of the Assessee's claim under section 54B by the Assessing Officer (AO). The AO contended that the land sold by the Assessee was not agricultural, leading to the denial of the deduction claimed by the Assessee.

4. The Revenue argued that the land sold by the Assessee, located within municipal limits and sold to a hotel chain, was not agricultural. However, the Assessee produced evidence, including land records and affidavits, to establish that the land was classified as agricultural. The Tribunal upheld the CIT(A)'s decision based on the state's revenue records confirming the land as agricultural.

5. Regarding the determination of deduction under section 54B, the Tribunal analyzed the purchase cost of the land in question. Although the Assessee registered the land at a higher value, the sale deed reflected a lower amount, indicating additional payment for trees and crops. Citing the provisions of Sec. 54B, the Tribunal ruled that the Assessee was entitled to a deduction based on the actual cost mentioned in the sale deed, not the higher registered value. The Tribunal modified the CIT(A)'s decision, directing the AO to grant the deduction based on the sale deed amount.

In conclusion, the Tribunal partly allowed the Revenue's appeal, modifying the deduction amount under section 54B for the Assessee. The cross objection by the Assessee was dismissed as not pressed.