The Tax Publishers2019 TaxPub(DT) 0774 (Del-HC) : (2019) 414 ITR 0037 : (2019) 307 CTR 0429 : (2019) 264 TAXMAN 0040

INCOME TAX ACT, 1961

Section 54B

Since concerned piece of land was not actually being used for agricultural purposes prior to sale, denial of exemption under section 54B was justified.

Capital gains - Deduction under section 54B - Use of land for agricultural purposes -

Assessee claimed exemption under section 54B in respect of capital gain derived on sale of certain piece of land to a real-estate developer. AO required assessee to prove that land was used by him for agricultural purposes during preceding two years before the date of transfer.Assessee submitted that Amar Pal Singh as a batidhar had undertaken agricultural activity on behalf of the assessee and 'jai chara' (foddar) and 'jawar chara' was grown on the land in Rabi and Kharif season respectively and assessee had earned profit from sale of said agricultural produce. AO denied exemption.Held: On being asked as to the crops grown on land in question, Amar Pal Singh stated that he had grown 'jawar' and wheat. He did not refer to 'jai' (oat). As per Khasra Girdwari, neither wheat nor 'jai' (oats) was grown. Amar Pal Singh also claimed that he had sold agricultural produce at Ghaziabad Mandi for Rs. 40,000 in cash in the first year and Rs. 47,000 in the second year. Accordingly there was, therefore, contradiction in the statement made by Amar Pal Singh regarding sale proceeds and the statement of the assessee. It is obvious that Amar Pal Singh had not 'worked' for free. This would contradict the assessee's assertion that he had earned or made profit from sale of agricultural produce. In view of this, it could not be said that land was actually being used for agricultural purposes prior to sale and accordingly, denial of exemption under section 54B was justified.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10



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