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TMI Blog2018 (10) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The assessee has neither substantiated with any relevant material that that co-owner Sanjay K Pate has misused the power of attorney nor filed any evidence of any legal action taken against him for any unauthorized using of the power of attorney. Discrepancies were also noticed in the revenue records as evident from the letter dated 22nd March, 2016 of Mamlatdar affirming that the impugned land was a non-agricultural land and the Talati had inadvertently made entry of agricultural crop as jwar in the record. The assessee has been regularly filing income tax return but he has not reported any agricultural income in the return of income to prove that any agricultural income was earned by him. The aforesaid land was converted to non agricultural land on 26/05/2011 and the NA was cancelled only on 15/03/2013 just 11 days before its sale on 25/03/2013. In view of the above facts we observe that as per record the impugned land in question remained non agricultural land for the period 26/05/2011 to 15/03/2013. After considering the above facts, we are inclined with the findings of the Ld.CIT (A) that assessee has failed to fulfill the condition laid down in the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 54B,54D,54G and 54F and asked him to explain the same vide letter dated 28/12/2015. The assessee has stated vide letter dated 06.01.2016 that he has claimed exemtion under section 54B and 54 F of the act only. During the course of assessment proceedings the assessing officer has stated that exemption u/s 54 B of the act is available against the sale of land which was being used for agricultural purposes for two years immediately before sale by the assessee. On scrutiny of the detail filed the assessing officer has observed that thr land in question was sold on 25/03/2013 and the said land should have been used for agricultural purposes at least from 24/03/2011 to 25/03/2013 but the land was not used for the agricultural purposes as the same was converted in to non agricultural land and the NA order was cancelled only on 15/03/2013 just 11 days before the date of sale. The above points were brought to the notice of the assessee by the assessing officer. The assessee explained that 25% of undivided share of agricultural land was sold to Sanjay Keshavlal patel . By this Sanjay K Patel has become the co owner of the land. He was also given power of autonomy to act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,39,000/-. The appellant claimed indexed cost of acquisition of ₹ 12,64,539/- which is not disputed by AO. The appellant has claimed deduction u/s 54B and. 54F at ₹ 1,21,15,480/- and shown long term capital gain on sale of above land at ₹ 8,58,981/-. The AO has denied deduction u/s 54B of the ground that land sold on 25/03/2013 was not used for agriculture purpose before two years of sale as above land was converted into non agriculture land on 26/05/2011 and said NA order was cancelled only on 15/03/2013 i.e. just 11 days prior to sale. During the course of assessment proceedings, appellant vide letter dated 27/01/2016 argued that 25% of undivided share of agriculture land at survey No 1092 was sold to Sanjay K Patel others-03 on 27/01/2010 and he was given power of attorney (POA) in May 2010 and he at his own applied for conversion of entire land at survey no 1092 as NA without any approval of appellant and his two co-owners and when it was noticed, immediately application was made for cancelling such permission and as original NA permission was subsequently cancelled, land sold by appellant remained as agriculture land between 26/05/2011 to 25/03/2013, T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails submitted in assessment proceedings and argued that both plot purchase and building construction expenses are eligible for such deduction and argued that full deduction need to be allowed. On careful consideration of entire facts, details submitted by appellant in paper book, it is observed that appellant along with other two other co-owners having land at survey no 1092 admeasuring 117037 Sq meter in 2009 and out of which they sold land of 30621 Sq meter on 08/02/2010 to Sanjay K Patel others and balance land is sold in year under consideration on 25/03/2013 which deduction u/s 5OB is claimed. It is observed that appellant and other co-owners have given power of attorney to said Sanjay K Patel in May 2010 for entire land of 117037 Sq meter and on the basis of such POA, said Sanjay Patel applied for conversion of entire agriculture land into Non agriculture land and land become NA on 26/05/2011. It is also observed that said NA order was subsequently cancelled on 15/03/2013 i.e. 11 days prior to sale deed, it cannot be said that during the period 26/05/2011 to 15/03/2013, land was agriculture only. The appellant argued that said Sanjay K Patel has misused the POA and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as NA land during FY 2011-12 to 2013-14 and Talati has erred in mentioning the fact that Jawar was produced. These facts clearly suggest that there was no production of agriculture crops during the period and such facts are not rebutted by appellant. The appellant has not obtained any-independent evidences which can suggest that there was production of agriculture produce on such NA land. The appellant and his co-owners have not shown agriculture income in return of income of year under consideration or earlier assessment years which prove that in fact no agriculture income is earned by them. The agriculture bills submitted by appellant are without third party confirmation hence same cannot be held to be genuine bill. The appellant has argued that said land was used as agriculture purpose since 2009 but even this argument cannot be-accepted as form no 12 submitted by appellant on Paper Book Page no 77 clearly suggest that no agricultural produce was produced in FY 2008- 2009 to 2010-2011. Even letter issued by Mamlatda as discussed herein above, details of agriculture produce as mentioned by Talati during the period 2010-11 to 2012-13 is incorrect as land was NA. The appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out in FY 2010-11. The appellant has created such Affidavit to prove its contention that land was agricultural land when he was caught with the fact that said land was in fact converted into NA land as discussed herein above. Thus, considering the facts discussed herein above, it is observed that appellant has in fact not used land sold during the year for agricultural purpose for two years prior to sale, hence, AO was correct in denying deduction u/s 54B as claimed in Return of Income. To that extent addition made by AO is upheld. So far as deduction u/s 54F for ₹ 35,00,000/- is concerned, appellant has incurred total construction cost along with plot cost of ₹ 36,58,595/- whereas AO has considered only construction expenses of ₹ 33,73,495/- for the purpose of allowing deduction u/s 54F of the Act. As both plot cost and construction cost is eligible for deduction u/s 54F, AO is directed to re-compute deduction after considering actual cost of new house at ₹ 36,58,595/- and re-compute working as per provisions of law. Thus, both grounds of appeal are partly allowed. 5. During the course of appellate proceedings before us, the ld. counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords as evident from the letter dated 22nd March, 2016 of Mamlatdar affirming that the impugned land was a nonagricultural land and the Talati had inadvertently made entry of agricultural crop as jwar in the record. It is also noticed that the assessee has been regularly filing income tax return but he has not reported any agricultural income in the return of income to prove that any agricultural income was earned by him. The aforesaid land was converted to non agricultural land on 26/05/2011 and the NA was cancelled only on 15/03/2013 just 11 days before its sale on 25/03/2013. In view of the above facts we observe that as per record the impugned land in question remained non agricultural land for the period 26/05/2011 to 15/03/2013. After considering the above facts, we are inclined with the findings of the Ld.CIT (A) that assessee has failed to fulfill the condition laid down in the provision of section 54B of the act pertaining to capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. Therefore, we consider that Ld. CIT(A) has correctly disallowed the claim of exemption u/s 54 B of the act. Accordingly, the appeal of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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