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TMI Blog2014 (4) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no discussion - while agreeing that the assessees claim u/s 54B cannot be denied so long as the lands were used for agricultural purposes before sale, this aspect of usage for ‘agricultural purposes’ require verification by the AO – thus, the matter is remitted back to the AO for verification - Assesses are directed to furnish necessary evidence if not furnished already before the AO so as to substantiate that the lands were used for agricultural purposes before sale – Decided in favour of Assessee. - ITA. No. 777/Hyd/2013, 763/Hyd/2013, 757/Hyd/2013 - - - Dated:- 16-4-2014 - Shri B. Ramakotaiah, A. M. And V. Durga Rao, J.M.,JJ. For the Petitioner : Mr. A. V. Raghuram For the Respondent : Mr. B. Yadagiri ORDER Per Bench. The above three appeals by the respective assessees are directed against the orders of CIT(A)-IX, Mumbai, Camp at Hyderabad dated 13.03.2013 for A.Y. 2006-2007. Since the issue in the above appeals is common in nature, all the three appeals are clubbed together and heard and disposed off by this common order. 2. The common issue involved in these appeals is with regard to the allowability of deduction under section 54B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases cannot be followed and for the reasons adduced by the A.O. in the assessment order, he confirmed the action of the A.O. that the land sold was not agricultural land and not used for agricultural activities as prescribed in the Act. 4. Assessees are aggrieved. In the case of Smt. G. Bhagyavathi and Smt. Alluri Tirumala the assessee also contested the issue of reopening the assessment under section 147. The Ld. CIT(A) did not accept the contentions of the assessee and dismissed the ground stating as under : 5.3.1. Ground of appeal No.2 is related to the reopening of assessment under section 147 of the Act. It is not disputed that in this case, previous assessment was made under section 143(1) of the Act. Since the return for the relevant assessment year 2007-08 was accepted under section 143(1) of the Act in a routine manner, no opinion was formed by the LAO. Therefore, it cannot be said that there was change of opinion in issuing the notice under section 148 of the Act. Hon ble Allahabad High Court in the case of Desh Raj Udyog vs. ITO-2 mog 318 ITR 6 (All) has held that notice under section 148 of the Act can be issued beyond four years where the previous assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raghu Varma, Mr. S. Mani Raju and Smt. A. Padmavathi admitted the additional evidence and sent them for verification and then gave finding that land was agricultural land and used for agriculture. On the set of facts, the Hon ble ITAT upheld the contention and confirmed the order of the CIT(A) by stating as under : 6. We have heard both the parties and perused the material on record. U/s. 54B of the Act where a land was being used by the assessee or his parents for agricultural purposes in the two years preceding the date it was transferred and the assessee has within a period of two years after that date purchased another land for being used for agricultural purposes, then the amount of capital gain shall be reduced by the cost of the new asset. The question, therefore, is whether the land which was held by the assessee and transferred by the assessee had been utilised by the assessee or his parents for agricultural purpose. The Revenue cannot deny this fact since the land was continuously used by the assessee for agricultural purposes and the assessee has been declaring the agricultural income from the said property in his return of income and the Department accepted the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to indicate the intention of its owners or possessors so as to connect it with an agricultural purpose, the land could not be 'agricultural land' for the purposes of earning an exemption under the Act. Entries in revenue records are, however, good prima facie evidence. 7. Though the observations of the Supreme Court is with reference to the Wealth-tax Act, where agricultural land is not defined, it equally applies to Income-tax Act, where also agricultural land has not been denned. We must, therefore, determine the character of the land in question applying the tests given by the Supreme Court. The evidence available in the present case is that the land was entered in the revenue records as agricultural land. It is stated that the land was always treated as agricultural land and that only limited cultivation was possible on account of scarcity. 8. No doubt, the land has been sold for a high price and the purchaser has converted it into house sites. But we find on the facts on record that until the decision to sell the lands was taken by the assessee, the actual condition of the land was agricultural land intended to be used as agricultural land as it was used earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat date, purchased any other land (whether in the same area or elsewhere) for being used for agricultural purposes, then the capital gain will not be charged to tax to the extent that it has been utilised for acquiring the fresh land. Where the amount of the capital gain exceeds the cost of acquisition of the fresh land, only the excess will toe chargeable to tax. The concession will, however, be fortified if the assessee transfers the fresh land acquired by him within a period of three years from the date of its purchase.' 10. It was argued on behalf of the revenue that this section imposed a further condition that the land should be used by the assessee for agricultural purposes within a period of two years prior to the sale and it would not be sufficient that if the lands are found to be agricultural lands, though remaining fallow. We do not think that Parliament could have intended to impose such a restriction on the relief Under Section 54B. As pointed out by the Supreme Court, one of the objects of the exemption is to encourage cultivation. Therefore, it stands to reason that an assessee, who is unable to cultivate the land in his possession, should be encouraged to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Kodanda Rama Raju even though the land belongs to another revenue village, it was submitted that they are adjacent to each other and facts are similar. Therefore, prima facie, the facts in the cases already decided by the ITAT will equally apply to the facts of the case. 10. The A.O. relied on the fact that M/s. Aparna Infra Housing Pvt. Ltd. has purchased the land for non-agricultural purposes. However, this aspect was not material as rightly held by the Coordinate Bench in the above group of cases and also by Hon ble Punjab Haryana High Court in the case of CIT vs. Savita Rani Tax LR 713 wherein it was held that benefit under section 54B is available in respect of land used for agricultural purposes and the fact that it is located in commercial area or it was partially used for non-agricultural purposes or when it is purchased for non-agricultural purposes or irrelevant considerations for application of section 54B. Therefore, even if the land area is notified under Cyberabad Development Authority it cannot deny the claim of the assessee so long as the land was used for agricultural purposes. In fact, assessee has offered the capital gains, invested amounts in 54E bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land was used for agricultural purpose or not before sale so as to allow purchase of any other agricultural land under section 54B. 12. Even though prima facie the facts of these cases are similar to the facts as decided by other group of cases by the ITAT, both A.O. and Ld. CIT(A) gave findings that assessee has not furnished necessary evidences with reference to agricultural operations on the land. Assessees have placed a paper book with regard to pahanies, connection of power and also some photographs relevant for agricultural operations. Even though these were seems to have been placed before the A.O. we are unable to examine this aspect as there is no discussion. Ld CIT was of the opinion that facts are distinguishable. There was a remand report in the other cases relied on by assessees, where as Ld.CIT(A) did not call for the same in these cases. Therefore, while agreeing that the assessees claim under section 54B cannot be denied so long as the lands in question were used for agricultural purposes before sale, this aspect of usage for agricultural purposes require verification by the A.O. Assesses are directed to furnish necessary evidence if not furnished already be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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