TMI Blog2017 (1) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural purpose. The said land was entered in the revenue records as an agricultural land. It is also not in dispute that no permission was ever obtained for non-agricultural use by the assessee. Since no evidence has been brought to show that it was used for nonagricultural purposes, nor there is any evidence to show that the assessee has ever taken permission for non-agricultural uses, the profit earned on sale of the impugned land was agricultural income of assessee liable to be exempt from tax. - Decided in favour of assessee Denial of the claim of deduction u/s. 54F - whether legal claim can be made before the First Appellate Authority also ? - Held that:- There is no dispute that the assessee has paid a sum of ₹ 42.25 lacs. It is also not in dispute that the assessee has entered into two Banakhata one pertaining to the land and the other pertaining to the construction. The assessee had purchased one constructed house for a total consideration of ₹ 42.25 lacs within the prescribed period mentioned in Section 54F of the Act. Merely, because the claim was made by a revised return which was not a valid return in the eyes of the law, the claim of exemption cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee was asked to justify its claim. The assessee replied that the capital gain on sale of agricultural land is arising out of the land which was used for agricultural purposes. Related documentary evidences were furnished. It was further claimed that since the land is agricultural in nature, the sale proceeds of the same is not subject to tax. The claim of the assessee was dismissed by the A.O. who was of the opinion that the said land was transferred to the firm M/s. Attune Inc., Ahmedabad wherein the assessee is one of the partners. The A.O. further observed that the said firm has shown the said agricultural land as its stock -in -trade for carrying on the business. The A.O. was of the firm belief that since the firm was in the business of construction, development of lands, club, renting consultancy service and maintenance contracts etc. Therefore, it is clear that for all practical purpose, the land has been held as a non-agricultural land, nor there was any intention of the firm to use the said land for agricultural purpose. The A.O. concluded by treating the income arising out of the sale of said agricultural land at ₹ 56,85,282/- as Long Term Capital Gain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is not responsible for the acts of the purchaser of the land. All that we are concerned about is whether the said agricultural land was used for agricultural purposes before the date of transfer and after going through the documentary evidences, the answer is YES . In our considered opinion, if an agricultural operation does not result in generation of surplus that cannot be a ground to say that the land was not used for the agricultural purpose. The said land was entered in the revenue records as an agricultural land. It is also not in dispute that no permission was ever obtained for non-agricultural use by the assessee. Since no evidence has been brought to show that it was used for nonagricultural purposes, nor there is any evidence to show that the assessee has ever taken permission for non-agricultural uses, the profit earned on sale of the impugned land was agricultural income of assessee liable to be exempt from tax. 10. We accordingly set aside the findings of the ld. CIT(A) and direct the A.O. to treat the sale proceeds arising from the sale of the impugned land exempt from tax. Ground no. 1 is accordingly allowed. 11. The next grievance relates to the denial of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into two Banakhata one pertaining to the land and the other pertaining to the construction. The assessee had purchased one constructed house for a total consideration of ₹ 42.25 lacs within the prescribed period mentioned in Section 54F of the Act. Merely, because the claim was made by a revised return which was not a valid return in the eyes of the law, the claim of exemption cannot be denied because a legal claim can be made before the First Appellate Authority also and the First Appellate Authority should have entertained the claim of the assessee. The Hon ble High Court of Bombay in the case of Pruthvi Brokers and Shareholders Pvt. Ltd. 349 ITR 336 held as under:- An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such additional claims to be raised. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words could n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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