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2017 (1) TMI 1054 - AT - Income TaxClaim of development expenditure and claim of deduction u/s. 54B - Held that:- What is required to be considered is the ‘capital asset being land’ in the immediately two preceding years has been used for agricultural purposes. If assessee has transferred an agricultural land as such, there is no need of computation of capital gain as the same was exempt from taxation. Therefore, the provisions of Section 54B are applicable on a land which was used for agricultural purposes earlier but sold subsequently and became a capital asset, as per the provisions. In this case what assessee transferred is a land, even though converted to plots but was used for agricultural purposes on which there was no dispute. Therefore, the deduction u/s. 54B is allowable to assessee. However, the conditions for deduction U/s. 54B has to be examined, so we direct the AO to examine whether sale proceeds are invested in the agricultural land so purchased from the funds of assessee. In view of that, while accepting the legal claim, allowance of the same is directed to be verified. In the result, ground is considered allowed for statistical purposes. Reference to claim of development expenditure in this year - Held that:- We are of the opinion that the action of the AO in restricting the amount to 25% of the claim is excessive, therefore, we restrict the amount to 10% of the claim. However, there seems to be lot of confusion with reference to the amount claimed. Assessee in the grounds claimed developmental expenditure to the tune of ₹ 23,04,435/-. AO, however, in the assessment order has stated that the expenditure was ₹ 14,39,135/- and restricted to ₹ 11,28,839/-. Ld.CIT(A) confirmed the above amount but has noted in para 6 that assessee claimed ₹ 22,90,808/- against the sale proceeds of ₹ 37,10,250/-. Since there is no uniformity in the amount of expenditure, we direct the AO to verify the assessment records and restrict the amount on correct amount of claim made and work out the capital gains. With these directions, the ground is considered partly allowed, accordingly this appeal is partly allowed.
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