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TMI Blog2022 (3) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. Beyond this, nothing else is required to get the deduction u/s 54B of the Act when the second condition is not at all disputed by the Department. Even in the case of CIT Vs. Smt. Savita Rani [ 2002 (5) TMI 6 - PUNJAB AND HARYANA HIGH COURT] has categorically held that the exemption u/s 54B is available to the seller of a capital asset being land, however, the said land against which the benefit is sought must have been used by the assessee for agricultural purposes for the two years immediately preceding the date of sale. Having satisfied this condition, we are of the considered view that the assessee is entitled to the deduction u/s 54B of the Act and accordingly we reverse the finding of the ld. CIT(A) and allow Ground No. 1 of the assessee. Capital gain computation - disallowing deduction towards indexed cost of improvement u/s 55 of the Act while computing the long term capital gain on sale of agricultural land - HELD THAT:- We are of the considered view that the ld. A.O should verify and re-adjudicate it as per law. Accordingly, the order of the ld. CIT(A) is set aside on this issue and the said issue is restored to the file of the ld. A.O. Needless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged in certain cases is mentioned as follows for ready reference. 54B[(1)] Subject to the provisions of sub-section (2), where the capital gain arise] from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee for agricultural purposes and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) If the amount of capital gain is greater than the cost of land so purchased, the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year, and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within period of three years of its purchase, the cost shall be nil, or (ii) If the amount of the capital gain is equal to or less than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities on the said land two years immediately preceding the date of transfer of the said land. At para 9 onwards, the ld. A.O observed that on verification of the sale and purchase deed of land and 7/12 extracts, it was found that the assessee has not carried out any agricultural operations since Financial year 2008-09 for the period of four years prior to the date of sale. The ld. A.O further mentions that as per 7/12 extracts the land is barren (Tayar padit) means not cultivated. He has also annexed 7/12 extracts which forms part of the assessment order and observed that no agricultural operations were carried out by the assessee on the said land immediately preceding four years from the date of transfer and therefore, the provisions of sec. 54B of the Act were not fulfilled. At para 12, the ld. A.O further observed that as per 7/12 extracts no crops were grown by the assessee. The assessee has also not submitted any evidences to show that there was any agricultural activity resulting into income. However, the assessee has shown agricultural income at ₹ 28,900/-. With these observations, the ld. A.O denied deduction u/s 54B of the Act and made the addition. 4. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards. This 7/12 extracts was duly attested by the concerned Talathi of Chunchale village which itself speaks that there were 350 Saagwan (Teak) trees, five Jackfruit trees, two coconut trees standing on the said land during the year F.Y. 2006-07 to 2011-12. It was further contended by the assessee that he had to spend human skill labour from time to time to keep the trees alive. The ld. A.R also submitted that though a small portion of the land was Tayar Padit, however, the assessee raised products i.e. vegetables from that portion and sold the same from which the assessee had derived agricultural income and the same was shown in the return filed for A.Y. 2012-13. It was also contended by the ld. A.R. that ld. A.O has never, in his assessment order, disputed that there were trees grown on the said agricultural land as per 7/12 extracts. The ld. A.O has also not given any comments whether for or against on the fact that these trees were growing from A.Y. 2006-07 to 2011-12. That, after all 7/12 extracts were issued from the Govt. authority and they were attested by the concerned Talathi of the village where the land was situated. The assessee further relied on the decision of Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared any agricultural income nor any evidence has been produced by the assessee either before the ld. A.O or before the ld. CITA(A). However, the fact is that for A.Y. 2012-13 in the return of income, the assessee has declared agricultural income of ₹ 28,900/- which not only finds place in the assessment order but also before us as the assessee has given copies of the return filed in the paper book, the relevant pages being 12 and 17. Further, at para 5.18 the ld. CIT(A) in his order observes that as per the self-declaration of the ld. A.R major portion of the land is fallow and in some portion sal trees etc. is planted. That also as per 7/12 extracts clearly depicts that major portion of the land is barren. On the contrary, we have observed that as per 7/12 extracts clearly it is mentioned that the land is ready for cultivation and on the land, there are 350 Saagwan (Teak) trees growing along with other trees right from F.Y. 2006-07 to 2011-12. The ld. A.R also submitted before us that they have never made such a statement before the ld. CIT(A) as alleged and in proof thereof, the ld. A.R brought to our notice a letter (page 56 of the paper book) dated 8-9-2016 to the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trees were grown on the land which has a substantial commercial value and from F.Y. 2006-07 to 2011-12, these plantations were there on the land along with other trees grown. Therefore, the assertion of the ld. A.O that no agricultural activities were conducted four years prior to the sale of the land is not a correct finding of fact. Further, we have also examined that in the CIT(A)‟s order at para 5.17 and 5.18 he has asserted wrong facts while denying deduction u/s 54B of the Act to the assessee. The claim of the Department that major portion of the land was barren is absolutely incorrect since major portion was occupied by teak wood plantation as is evident again from the 7/12 extracts. 9. The Pune Bench of the Tribunal in the case of Rajendra Bastimal Chordiya in ITA No. 1295/PUN/2017 for A.Y. 2013-14 dated 7-6-2019 has considered another decision of the same Co-ordinate Bench in the case of DCIT Vs. Shri Mahesh Danabhai Patil in ITA No. 1534/PUN/2015 dated 31-01- 2018 and observed that in order to claim benefit u/s 54B of the Act it is not necessary that the entire land should be cultivated. If any part of the land is under cultivation for two years immediately prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the ld. CIT(A) in not allowing deduction of ₹ 7,31,847/- towards indexed cost of improvement u/s 55 of the Act while computing the long term capital gain on sale of agricultural land at Gat No. 55/1B, Chunchale, Dist. Nasik. The ld. A.O has dealt with this issue at para 16 where he states that the assessee has claimed cost of improvement at ₹ 7,31,847/- which includes land levelling, compound, fencing, etc. Since no details have been filed for verification of the said expenditure, he has disallowed the same. The ld. A.R at the time of hearing mentioned at the outset that this issue was not adjudicated upon by the ld. CIT(A). Demonstrating the position, the ld. A.R brought to our notice page 14 of the paper book wherein at the column cost of improvement after indexation , it has been taken at ₹ 84,83,834/- and the break-up of the same has been furnished in the statement of facts which is part of Form No. 35 and therein the land measurement cost was ₹ 56,987/-, cost of Najarana ₹ 76,95,000/- and other improvement cost after indexation ₹ 7,31,847/-. Totalling these amounts would be ₹ 84,83,834/- and it is only the other improvement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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