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2022 (3) TMI 1074 - AT - Income TaxDeduction u/s 54B - Claim denied on the ground that the first condition of the said provision is not fulfilled i.e. the assessee was not carrying on any agricultural activities on the said land two years immediately preceding the date of transfer of the said land - HELD THAT:- In terms of getting benefit u/s 54B of the Act, case of the assessee before us is on a better footing even compared to the decision of RAJENDRA BASTIMAL CHORDIYA [2019 (7) TMI 924 - ITAT PUNE]. We also find that in the narration by the ld. CIT(A), he has denied deduction u/s 54B of the Act on some imaginary ground that the land was sold by the assessee to a developer and ultimately the land would be used for non-agricultural purposes. This is not at all a subject matter for consideration while deciding the issue for giving benefit u/s 54B - A.O has disputed only one condition of sec. 54B of the Act while denying deduction to the assessee that the land was not used for agricultural purposes, two years prior to the sale transaction and we have already examined this requirement has been fulfilled in the case of the assessee. Beyond this, nothing else is required to get the deduction u/s 54B of the Act when the second condition is not at all disputed by the Department. Even in the case of CIT Vs. Smt. Savita Rani [2002 (5) TMI 6 - PUNJAB AND HARYANA HIGH COURT] has categorically held that the exemption u/s 54B is available to the seller of a capital asset being land, however, the said land against which the benefit is sought must have been used by the assessee for agricultural purposes for the two years immediately preceding the date of sale. Having satisfied this condition, we are of the considered view that the assessee is entitled to the deduction u/s 54B of the Act and accordingly we reverse the finding of the ld. CIT(A) and allow Ground No. 1 of the assessee. Capital gain computation - disallowing deduction towards indexed cost of improvement u/s 55 of the Act while computing the long term capital gain on sale of agricultural land - HELD THAT:- We are of the considered view that the ld. A.O should verify and re-adjudicate it as per law. Accordingly, the order of the ld. CIT(A) is set aside on this issue and the said issue is restored to the file of the ld. A.O. Needless to mention, the ld. A.O must comply with the principles of natural justice and provide reasonable opportunity of hearing to the assessee. Ground No. 2 is accordingly, allowed for statistical purposes.
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