The Income Tax Appellate Tribunal (ITAT), Pune bench,comprising of Shri Inturi Rama Rao, AM and Shri S S Viswanethra Ravi, JM has allowed exemption u/s 54B of the Income Tax Act,1961 on the sale of agricultural land even if the land was cultivated for some days during two preceding years.
The assessee challenged the orders of the Commissioner of Income Tax (A) which confirmed the disallowance of exemption u/s 54B of the Income Tax Act,1961.
The appellant assessee engaged in the business of purchase and sale of lands. The appellant had filed a return of income declaring a total income of Rs.3,50,400/- and agricultural income of Rs.3,08,000/-. The Assessing Officer passed order u/s 143(3) of the Act at a total income of Rs.78,02,540/- by makingan addition of Rs.71,52,133/- and disallowed the claim for deduction of amount u/s 54B of the Act.
The appellant had sold the agricultural land situated at Gat No.276Ramshej, Nashikand offered capital gains after claiming deduction u/s 54B of the Act. The AO denied the claim on the ground that the land was not used for agricultural purposes in the two years immediately preceding the sale and that only part of the land was cultivated during the immediately preceding two previous years.The AO found that the land should be used for agricultural purposes for the whole of the two years and the CIT(A) confirmed the finding of the AO.
The Tribunal observed that the reference to the term “two years” has been interpreted to mean that not during the whole period of two years, even if the land is used for some days in the earlier yearwould be sufficient for compliance with the provisions of section 54B of the Act.
The Coram found infirmity in the reasoning of lower authorities cannot be appreciated and reversed the impugned order. The appeals filed by the assessee were allowed. Shri Sanket Milind Joshi appeared on behalf of the assessee and Shri Arvind Desai appeared on behalf of the revenue.
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