The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently held that section 54B of Income Tax Act 1961 provided income tax deduction and it was a beneficial provision hence it should be interpreted strictly.
Section 54B of Income Tax Act 1961 provides relief to taxpayers who sell their agricultural land and acquire another land for agricultural purposes.
Assessee Sunil Kisanrao Bagul filed his return electronically.Thereafter it was selected for scrutiny. While the proceedings assessee claimed deduction under section 54B of the Income Tax Act. The AO has denied the said deduction under section 54B of the Act. Aggrieved by the order of the AO, the assessee filed an appeal before the ITAT.
Pramod Shingte, counsel for the assessee submits that assessee sold his land for consideration of Rs.1, 71, 00,000/ also preceding two years of sale, assessee had grown Tomato and other vegetables on the impugned land which was sold .For prove this claim assesee produced the receipt issued by Nashik Agricultural Marketing Committee.
Therefore, assessee had cultivated the land and hence, the assessee is eligible for deduction under section 54B of the Income Tax Act 1961.
M.G.Jasnani, counsel for the revenue submits that receipts of the Nashik Agricultural Marketing Committee did not establish that the goods that is Tomato and other vegetables were grown in the impugned land by the assessee.
As per section 54B of the Income Tax Act 1961, the land should have been used for agricultural purposes either by the assessee or his family in preceding two years of sale.
Moreover AO has got the details from the Government of Maharashtra Website to establish that the impugned land was not used for agricultural purposes
After considering the contentions of the both parties the division bench of ITAT comprising Dr. Dipak P. Ripote, (Accountant Member) and S.S.Godara, (Judicial Member) dismissed appeal filed by the assessee.
Further, the bench observed that,
To be eligible for deduction under section 54B, the land should have been used for agricultural purpose in the preceding two years. But in case of assessee there were no agricultural activities has carried out on the impugned land in the preceding two years
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