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TMI Blog2020 (5) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... Provisions of Section 54B of the Act, we allow this ground raised by the assessee and set aside the order passed by the revenue authorities and direct the A.O. to allow exemption u/s 54B . - Decided in favour of assessee. - ITA No. 290/Jodh/2019 - - - Dated:- 20-3-2020 - Shri R.C. Sharma, Accountant Member And Shri Sandeep Gosain, Judicial Member For the Assessee : Shri Avdhesh Singhvi (CA) For the Revenue : Shri Abhimanyu Singh Yadav (JCIT-DR) ORDER PER SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of the Ld. CIT(A), Ajmer dated 15/07/2019 for the assessment year 2016-17. Following grounds have been taken by the assessee: 1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the disallowance of claim of ₹ 1,04,59,000/- on account of deduction claimed us 54B of the IT Act, 1961. 2. On the facts and in the circumstances of the case, the Hon'ble CIT(A) erred in confirming the disallowance of claim of ₹ 15,71,918/- on account of indexed cost of improvement being interest paid on the borrowed money to purchase the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Land which has been sold was agricultural during preceding two year from the date of Sale, the assessee has claimed deduction u/s 54B of the Income Tax Act. c) While disallowing the claim of the assessee, the Ld. A.O. has pointed out in para no. 3.2 that the assessee has failed to submit any other documentary evidence which can prove the utilization of subjected capital asset for agriculture activity in last two years from the sale of said capital asset. Thus, the condition of utilization of capital asset being land for agriculture purpose by the assessee or his parent, HUF remain unproved. In para no. 3.3, the Ld. A.O has also pointed out that the assessee did not offer any agriculture income in the ROI for A.Y. 2014-15 and A.Y. 2015-16, which give strength to the view of the AO that no agricultural activity were performed by the assessee on the subjected piece of land. Strategically, the assessee has shown agriculture income for the period under consideration at ₹ 25,350 for which no supporting evidence was furnished. In addition to the above, the Ld. A.O has also pointed out that the subjected capital asset was sold on 27.06.2015 and the new asset being ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain. (2) The amount of the capital gain which is not utilised by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub6 section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are appearing as agricultural lands in Pattadar passbooks (Encumbrance Certificate downloaded online from the website). (Copy of same is enclosed for your kind perusal as per annexure 2.). Moreover it is also submitted that the assessee is not seeking mere exemption of the capital gains from the sale of exempted agricultural land. The assessee has instead sought exemption under section 54B of the Act as the sale proceeds of the agricultural land were invested in acquiring other agricultural lands, which were being to agricultural use. g) It is further submitted that, the assessee has cultivated the agriculture crops during the period of 2 years immediately preceding the date of transfer and incurred the loss after meeting of all the expenditure incurred during the agricultural activities and debit the loss directly to capital account. Hence agriculture income was not shown in the ROI of AY 2014-15 AY 2015-16.(Copy of Agriculture income and expenses for FY 2013-14 2014-15 is enclosed for your kind perusal as per annexure 3). h) Going further, Ld. A.O has mentioned that the subjected capital asset was sold on 27.06.2015 and the new asset being agriculture land was pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if any, already utilized by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset. Hence in view of the above facts of the case and provisions of section 54B (2) of the Income Tax Act, the Ld. A.O contention to disallow the claim of the assessee above is bad in law and liable to be deleted. 6. On the other hand, the ld DR has relied on the orders passed by the revenue authorities. 7. We have heard the ld. counsels for both the parties and have also considered the material placed on record, order passed by the Revenue Authorities as well as judgements relied upon by the parties. From the record, we notice that the assessee has sold the agricultural land on 27th June 2015 in the State of Telangana as detailed in the orders of the revenue authorities, against which the assessee had claimed deduction U/s 54B of the Act on the ground that the assessee had purchased agricultural land after the sale of the agricultural land. However, the claim of the assessee U/s 54B of the Act was disallowed by the A.O. on the ground that the assessee had failed to prove that the utilization of subjected capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate was issued on 04.03.2019 i.e. after the expiry of almost 4 to 5 years of the period under consideration. Further, the said certificate does not clarify the amount of agriculture income earned during the FY 2013-14, 2014-15, and 2015-16 (till the date of sale of the agricultural land) b) On date of issuance of certificate, the subjected land was not owned/possessed by the assessee. c) In the certificate, the assessee is shown to be resident of village Velmala which is not correct, the assessee resided at Bhilwara. d) At the Bottom of the certificate, there is a disclaimer that this certificate is not valid for any civil, criminal case and any other purpose, except to obtain bank loan subject to rules and regulation of the bank . Therefore, the said certificate has been issued for the purpose of bank loan and has no legal sanctity or binding on the income tax proceedings. e) Moreover, the period of income derived is also not mention in the certificate. The period of use of subjected land is very vital element to be mentioned which could not be ascertained from the certificate. In view of the above, the said certificate failed to prove that the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, the said certificate does not clarify the amount of agriculture income earned during the FY 2013-14, 2014-15, and 2015-16 (till the date of sale of the agricultural land) (b) On date of issuance of certificate, the subjected land was not owned/possessed by the assessee. (c) In the certificate, the assessee is shown to be resident of village Velmala which is not correct, the assessee resided at Bhilwara. (d) At the Bottom of the certificate, there is a disclaimer that this certificate is not valid for any civil, criminal case and any other purpose, except to obtain bank loan subject to rules and regulation of the bank . Therefore, the said certificate has been issued for the purpose of bank loan and has no legal sanctity or binding on the income tax proceedings. (e) Moreover, the period of income derived is also not mention in the certificate. The period of use of subjected land is very vital element to be mentioned which could not be ascertained from the certificate. In view of the above, the said certificate failed to prove that the subjected land was used for agricultural purpose by the assessee or his parent in eligible time period referred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses and assessee is eligible for the claim u/s 54B of the IT Act 1961. 4. Moreover, in the case of Asstt. CIT v. N. Raghu Varma (Hyd-Trib) :(2013) 142 ITD 0421 has recognized the Agriculture income certificate issued by the MRO office (Tahsildar office of the Government of the Telangana) and dismissed the appeal of the revenue. In para 5 of the order, The Hon ble Tribunal observed that the sale deed land is referred as agricultural land. The lands are appearing as agricultural lands in Pattadar Passbooks and in the returns of income were filed earlier claiming agricultural income. Copy of Pahani from MRO office is submitted evidencing cultivation of subabul.MRO certificate is evidencing cultivation of subabul crop on the land . 5. Going Further, the Hon ble Tribunal had also considered the decision of the Hon ble Supreme Court in the case of CWT v. Officer-in-charge (Court of Wards) (1976) 105 ITR 133 wherein the Apex Court held that : The determination of the character of the land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case. What is really ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the amount of the capital gain exceeds the cost of acquisition of the fresh land, only the excess will be 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. 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 denied. 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. In the instant case, it is submitted that the assesse used for the land for agricultural purpose/agricultural activates and copy of Agriculture income Certificate received from MRO office- (Tahsildar office of the Government of the Telangana) is also submitted evidencing cultivation of crop in the subjected piece of agricultural land and the sale deed of land is referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. We have perused the copy of agricultural income certificate issued by the Department of Revenue, Govt. Of Telangana evidencing the only income derived from the agricultural land owned and possessed by the assessee. Although in his remand report, the A.O. had raised objections to the said certificate but no where the revenue authorities have challenged the authenticity or the veracity of the said certificate which has been issued by the Govt. Of Telangana, Department of Revenue. Thus, in our view, since the certificate issued in favour of the assessee was issued by the government department, therefore, the presumption of correctness is attached with the said document and on the contrary, the revenue authorities have not lead any evidence in order to controvert or rebut the said public document issued by the Govt. Of Telangana, Department of Revenue. The assessee had also filed a detailed rejoinder as reproduced in the above paras of this order wherein pointwise, the assessee has dealt with the objections so raised by the A.O.. Moreover, the Coordinate Bench of the ITAT Hyderabad in the case of ACIT Vs N. Raghu Varma (2013) 142 ITD 0421 has recognized the Agriculture income certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of New agriculture land 10.05.2016 Due date of filing of return U/s 139(1) being Tax Audit was applicable for the year under consideration 17.10.2016 Actual date of return filing 15.10.2016 From the above facts of the case, it is crystal clear that the assessee had purchased new agricultural land on 10.05.2016 i.e. before the due date of filing return under section 139 which is 17.10.2016 (5 months before the due date) and as per the provision of the section 54B(2) of the Income Tax Act if the amount of the capital gain which is not utilized by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account of any such bank or institution as may be specified in, an utilized in accordance with, any scheme which the central government may, by notification in the official gaz ..... 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