Land Re-purchased need not be 'Agricultural' on the Date of Re-Investment: ITAT allows Deduction u/s 54B [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench, while allowing a claim of deduction under section 54B of the Income Tax Act, 1961, has held that the provision does not mandate lands re-purchased have to be agricultural on the date of re-investment.

The assessee, Shri Adit Rathi challenged the orders of the lower authorities declining his sec. 54B deduction claim of Rs. 2,49,85,220/-, under section 54B of the Act by holding that the land was not “agricultural land” at the time of “re-investment.”

A bench comprising Shri S.S. Godara, JM and Dr. Dipak P. Ripote, AM observed that “Suffice to say, there is hardly any dispute between the parties that the CIT(A) has rejected the assessee’s impugned deduction claim for the sole reason that his reinvestment made in Wagholil land had not proved to have been made in purchasing agricultural land. This is in light of the fact that the Assessing Officer’s remand report filed before the CIT(A) had cleared all objections regarding the assessee’s land sold at Bavdhan. It has further come on record that although the CIT(A) accepts the assessee to have carried out agricultural activities on the land purchased in later years in light of form 7/12, he has however affirmed the assessment findings that the reinvestment in land was not agricultural at the time of purchase.”

“We find no substance in Revenue’s argument supporting the impugned disallowance for the foregoing reason(s). We deem it proper to reproduce the relevant reinvestment clause in section 54B of the Act that “the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes”. It is thus clear that the legislature has nowhere incorporated that the lands re-purchased in section 54B deduction claim have to be agricultural on the date of re-investment as is sought to be projected at the Revenue’s behest. We thus adopt stricter interpretation Commissioner Vs. Dilip Kumar & Co. (2018) 9 SCC 1 (FB)(SC) to hold that both the learned lower authorities have erred in law and on facts in disallowing the assessee’s section 54B deduction claim,” the Tribunal said.

To Read the full text of the Order CLICK HERE

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