TMI Blog2020 (1) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... al land nor was used for agricultural purposes. The land has been admittedly declared as fallow land on which no agricultural produce is plausible. Thus, as per the certificate of Talati as produced by the assessee himself, the viability of carrying out agricultural activity was quite dismal. We also find that the assessee has not declared any worthwhile agricultural income in the earlier years from such a large track of land (9286 sq.mtr.). Some expenses voucher produced for expenditure incurred on Tractor does not inspire any confidence. Such material was not produced before the lower authorities as well. The assessee has failed to adduce any satisfactory evidence that the land was subjected to any systematic agricultural operation in last two years immediately preceding the date of transfer as required in law indeed. The reply of the assessee and evidence relied thereupon appears to be cosmetic. AO has failed to make any inquiry on this vital aspect while admitting the claim of the assessee and allowed the claim summarily. Pr.CIT in our view correctly appreciated the facts and applied the law in perspective to draw an adverse conclusion on eligibility of deduction. We se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ik Vora, A.R. For the Respondent : Shri O. P. Sharma, CIT. D.R. ORDER PER PRADIP KUMAR KEDIA - AM: These captioned appeals have been filed at the instance of the assessee against the respective orders of the Commissioner of Income Tax-3, Ahmedabad ( CIT in short) Commissioner of Income Tax (Appeals)-5, Ahmedabad ( CIT(A) in short), dated 14.03.2013 26.10.2015 arising in the assessment order dated 10.03.2014 passed by the Assessing Officer (AO) under s. 143(3) under s. 143(3) r.w.s. 263, respectively of the Income Tax Act, 1961 (the Act) concerning AY 2008-09. 2. As pointed out at bar, the ITA No. 1226/Ahd/2013 of assessee concerns challenge of jurisdiction 263 of the Act relevant to AY 2008 09 whereas ITA No. 651/Ahd/2016 concerns challenge to additions/disallowances in the second round of quantum proceedings by the AO pursuant to revisional directions of the Pr.CIT challenged in ITA No. 1226/Ahd/2013(supra). Thus, there exists discernable common thread on factual aspects in both the appeals. Consequently, both the matters were heard together and disposed of by this common order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural purposes which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his, for agricultural purposes. However, from the last para of page-3 of Sale Deed relating to your asset, it was noticed that you got non-agricultural permission on 14/05/2007 for the said land. Thus, the land was a non-agricultural land before the date of transfer, which took place on 08/06/2007. As the benefit of Section 54B is admissible only in the case where the land had been used for agriculture purpose for the two years immediately preceding the date on which the transfer took place, you were not entitled for exemption u/s.54B. Thus, the amount of ₹ 31,00,000/- claimed as exemption u/s. 54B was required to be disallowed and required to be added to your income. This being not done, resulted in underassessment of Capital Gain of ₹ 31,00,000/-, with consequent short levy of tax of ₹ 9,13,198/-. 3. Further, you deposited ₹ 31,00,000/- (upto 07/12/2007) in a Capital Gain savings account of Oriental Bank of Commerce and claimed exemption u/s. 54B for the amount so deposited. It was noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alleged by the Revisional Commission that the AO has not made any pertinent inquiry on the issue and perfunctorily allowed deduction under s.54B of the Act. The Pr.CIT accordingly directed the AO to disallow the claim of ₹ 31 Lakhs made under s.54B of the Act and recompute the chargeable income of the assessee. 3.4 On the second issue, the Pr.CIT noted the defense of the assessee that there was no withdrawal of money from the capital gain deposits scheme when seen in perspective. The assessee claimed before the Pr.CIT that he had deposited ₹ 31 Lakhs in the capital gains saving accounts of the Oriental Bank of Commerce and claimed exemption under s.54B of the Act for the amount so deposited. A sum of ₹ 30,95,000/- however was withdrawn from designated account capital gains saving scheme to capital gain deposit scheme . A certificate was placed before the Pr.CIT to vouch for such assertions. On these facts, the Pr.CIT set aside this aspect to the file of the AO for relevant inquiry in this regard. The assessment order was accordingly modified to the aforesaid extent. 3.5 Aggrieved by the revisional action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers could not be invoked by the Pr.CIT. 4. The learned DR, on the other hand, referred to para 5 of the revisional order and submitted that no inquiry whatsoever was made by the AO in the course of scrutiny assessment on the correctness of the claim made under s.54B of the Act and exemption claimed thereon, in complete defiance of the statutory responsibility. It was observed that the department has no right to file an appeal against the order of the AO and thus the Pr.CIT was left with no recourse except to invoke supervisory jurisdiction conferred on him by Section 263 of the Act. 4.1 Adverting to the issues involved, the learned DR vehemently supported the conclusion drawn by the Pr.CIT and submitted that admittedly, the land sold was not an agricultural land at the time of transfer. It was further pointed out that the land in question was a fallow land which means nothing could be produced on such land. The learned DR referred to the certificate issued by the Talati dated 28.02.2014 from the paper book filed on behalf of the assessee to confirm such observation of land being fallow. The learned DR further pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inges around availability of deduction under s.54B of the Act against long term capital gain earned on sale of land. On a perusal of 54B of the Act, it is noticed that Section 54B of the Act is divided into two parts. First part deals with exemption of capital gains from transfer of land (original asset) used for agricultural purpose in the two years immediately preceding the date on which the transfer took place. The second part deals with the manner of utilization of gains arising from transfer of such land used for agricultural purposes. The Pr.CIT has impugned the eligibility of deduction under s.54B of the Act in both the parts. It is an admitted fact that on the date of transfer of land (which is broadly the legislative expression used in Section 54B of the Act), the land in question was neither agricultural land nor was used for agricultural purposes. The land has been admittedly declared as fallow land on which no agricultural produce is plausible. Thus, as per the certificate of Talati as produced by the assessee himself, the viability of carrying out agricultural activity was quite dismal. We also find that the assessee has not declared any worthwhile agricultural incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has challenged the quantum order passed by the AO under s.143(3) of the Act pursuant to revisional order passed under s.263 of the Act which is subject matter of appeal in ITA No.1226/Ahd/2013. 8. As per the grounds of appeal, the assessee has challenged the action of the CIT(A) in confirming the disallowance of ₹ 31 Lakhs claimed under s.54B of the Act as well as disallowance of brokerage of ₹ 3,12,500/-. 8.1 The facts concerning the issue have been recorded while dealing with the revisional action of the Pr.CIT in ITA No. 1226/Ahd/2013. As noted in ITA No. 1226/Ahd/2013 (supra), the ingredients of Section 54B of the Act were found to remain unfulfilled by the assessee. The assessee could not demonstrate that the land was subjected to agricultural activity before the date of transfer of land in question. Therefore, in our view, the AO as well as CIT(A) has rightly dealt with the issues and applied the law in correct perspective. We do not find any force in the claim of the assessee for eligibility of deduction under s.54B of the Act on capital gains arising from sale of the land in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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