Assessee cannot be said to carry out Agricultural Activities merely because there were a Few Coconut Trees on Land: ITAT [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the assessee could not be said to have carried out agricultural activities merely because the land had few coconut trees.

The assessee, Keshav Sunderam Rajam, is a Non-Resident sold a capital asset. After adjusting the indexed cost of acquisition and improvement, brokerage and expenses in connection with sale, the long term capital gain was computed.Theassessee had invested the long term capital gain relating to section 54B of the Act to the extent of 2.43 crores in capital gains account scheme and 1.20 crores was paid to his father  to acquire agricultural land . Accordingly, the taxable long term capital gain was brought to NIL.

The case was selected for scrutiny and the assessment was completed by disallowing the deduction claimed under section 54B of the Income Tax Act 1961, holding that the land was not ‘agricultural land’.

 S.V. Venkateshwaran, on behalf of the assessee submitted that   the assessee had used the land only for agricultural purposes based on the adangal and other documents produced. By strongly relying upon the decision of the Tribunal in I.T.A. he further prayed for deleting the addition made towards disallowance of the claim of deduction under section 54B of the Income Tax Act. 

 V Sreenivasan on behalf of the revenue submitted that the assessee had not satisfied the condition stipulated under sub-section (1) of section 54B of the Income Tax Act. He has further submitted that there was no scope for raising any agricultural crop in the land just adjacent to the sea and sea water was not useful for any agricultural purposes and strongly supported the orders of lower authorities. 

The Division Bench of G. Manjunatha (Accountant Member) and V. Durga Rao (Judicial Member) dismissed the appeal and observed thatassessee had not carried any agricultural activities as Except adangal, there was no evidence bought on record that the assessee had carried agricultural operations. The adangal filed by the assessee showed that there were few coconut trees. Simply because, there were coconut trees, it would not mean that the assessee had agricultural operation,

The Bench also observed that the said extent of land was just adjacent to the sea and was not useful for any agricultural purposes.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates