In this case of appeal, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), presided over by Judicial Member S.S. Viswanethra Ravi and the Accountant Member Dr. Dipak P. Ripote decided that the assessee to be eligible for deduction under Section 54B of Income Tax Act, 1961 only for that part of the land used for agricultural purposes.
The assessee Tushar Jagmohan Kamthe filed an appeal before the Appellate Tribunal against the order of Commissioner of Income Tax (Appeals)[CIT(A)], Pune for the A.Y. 2013-14.
The compendious fact is that the assessee and his family sold the land for a total consideration of Rs. 9,60,00,000. His stake is ₹. 56,000,000. The assessee purchased another agricultural land for ₹58,30,000 which is higher than the value of land he sold.
In connection with the sale and purchase of agricultural land, the assessee claimed in the return of income that he is allowed for a deduction under Section 54B. The Assessing Officer (AO) arrived at the conclusion that the land sold is categorised as “R Zone Land” and there was no evidence to indicate such agricultural activity therein. AO denied the deduction.
Assessee appealed the order to CIT(A) after feeling wronged by it, but the commissioner affirmed the assessment order, leading him to bring an appeal with the tribunal.
The land is an ancestral property, according to Assessee’s representative Pramod Shingte, who also noted that “the impugned land is described as agricultural land and that the owners of the land were cultivating the land.”
He added that the assessee had bought agricultural land and the land he sold was engaged for cultivation. As a matter of fact, the assessee is eligible for a deduction.
On the contrary, M.G.Jasnani, the representative for the Department vehemently defended that “there are four pieces of land in which only one part has shown ‘Crops’ ‘Cereals’ and the rest is barren land.” It was submitted that assessee is not eligible for 54B of Income Tax Act, 1961 deduction.
The Appellate tribunal observed that, “to avail the deduction under section 54B of the Act, the assessee has to show that the land was used for agricultural purpose in the immediate two preceding years. In this case only land at Survey No.33, Hissa No.7C was used for cultivation in the two preceding years. Other three lands were not used for cultivation. Therefore, assessee will be eligible for deduction under section 54B only with respect to land cultivated.”
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