Deputy Commissioner of Income-tax, V. Shri Mahesh Danabhai Patel, Nashik

ITA 1534/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9381 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-01-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 26-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Additional evidence; Competent authority
• Section: 54B; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , !' # $ , % BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWAS THY, JM '. / ITA NO. 1534/PUN/2015 ' (' / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, MALEGAON CIRCLE, MALEGAON. ....... / APPELLANT ) / V/S. SHRI MAHESH DANABHAI PATEL, 8, POURNIMA HOUSING SOCIETY, STATION ROAD, DWARKA, DIST. NASHIK-422 011 PAN : ABKPP4549C / RESPONDENT REVENUE BY : SHRI AJAY MODI, JCIT ASSESSEE BY : SHRI PRAMOD SHINGTE / DATE OF HEARING : 30.01.2018 / DATE OF PRONOUNCEMENT : 31.01.2018 * / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-1, NASHIK DATED 21.09.20 15 FOR THE ASSESSMENT YEAR 2012-13. 2 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 2. THE REVENUE IN APPEAL HAS RAISED SIX GROUNDS. ALL THE GROUNDS ARE DIRECTED TOWARDS SINGLE ISSUE I.E. ASSESSEES ELIGIBILITY FOR CLAIM ING DEDUCTION U/S. 54B OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) IN THE ABSENCE OF SUFFICIENT DOCUMENTARY EVIDENC E INDICATING THAT THE AGRICULTURAL LAND WAS USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE OR HIS PARENTS, IN THE TWO YEARS IMMEDIATELY PRECEDING THE D ATE OF TRANSFER OF ASSET. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE HAD INHERITED SHARE IN AGRICULTURAL LAND ADMEASUR ING 7.57 HECTORS COMPRISING IN SURVEY NOS. 177, 178 AND 188/1A SIT UATED AT MHASRUL, WITH MUNICIPAL LIMITS OF NASHIK. THE ASSESSEE WAS H AVING 1/4 TH SHARE IN THE SAID LAND. THE ASSESSEE ALONG WITH OTHER CO -OWNERS SOLD THE SAID LAND VIDE REGISTERED SALE DEED DATED 15.03.2012 FOR TOTAL CONSIDE RATION OF RS.4,80,00,000/-. THE ASSESSEE EARNED CAPITAL GAIN OF RS. 1,13,12,500/- ON SALE OF AGRICULTURAL LAND. AGAINST THE SAID CAPITAL GAIN, TH E ASSESSEE CLAIMED DEDUCTION OF RS.28,07,885/- U/S.54 AND RS.57,12,974/- U/S.54B OF THE ACT. DURING THE COURSE OF SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER ALLOWED ASSESSEES CLAIM OF DEDUCTION U/S. 5 4, BUT REJECTED THE CLAIM OF DEDUCTION U/S. 54B OF THE ACT ON TH E GROUND THAT ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE LAND WAS USED FOR AGRICULTURAL PURPOSE IN THE PAST TWO YEARS. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 11.03.2015, ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL). THE C OMMISSIONER OF INCOME TAX (APPEAL) VIDE IMPUGNED ORDER ALLOWED ASSESSEE S CLAIM OF DEDUCTION U/S.54B AND REVERSED THE FINDINGS OF ASSESSING OFFICER. NOW, THE 3 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL), RAISING FOLLOWING GROUNDS OF APPEAL: Q.1. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, NASHIK, ERRED IN ALLOWING THE DEDUCTION T O THE ASSESSEE U/S. 54B OF THE INCOME TAX ACT,1961, WHEN THE ASSESSEE H AD NOT SUBMITTED ANY DETAIL OF ANY AGRICULTURAL EXPENDITUR E OR INCOME FROM AGRICULTURAL, EITHER IN THE ASSESSMENT PROCEEDINGS OR IN APPELLATE PROCEEDINGS. Q.2. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, NASHIK, ERRED IN ALLOWING THE DEDUCTION T O THE ASSESSEE U/S. 54B OF THE INCOME TAX ACT,1961, WHEN NO AGRICULTURA L ACTIVITY WAS CARRIED OUT ON THE 3 LANDS, CONTINUOUSLY FOR A PERI OD OF 2 YEARS, PRIOR TO THE DATE OF TRANSFER OF THE ASSETS. Q.3. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, NASHIK, ERRED IN ALLOWING THE DEDUCTION T O THE ASSESSEE U/S. 54B OF THE INCOME TAX ACT, 1961, BY PROCLAIMING 3 P IECES OF LANDS AS 1 PIECE OF LAND, DESPITE THE IDENTIFICATION BY COMP ETENT AUTHORITY, I.E. REVENUE AUTHORITY AS 3 PIECES OF LANDS. Q.4. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, NASHIK, ERRED IN ALLOWING THE DEDUCTION T O THE ASSESSEE U/S. 54B OF THE INCOME TAX ACT,1961, BY ADMITTING ADDITI ONAL EVIDENCE AND BY OVERLOOKING THE PROCEDURE AS PER RULE 46A OF THE INCOME TAX RULES, 1962. Q.5. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, NASHIK, ERRED IN ALLOWING THE DEDUCTION T O THE ASSESSEE U/S. 54B OF THE INCOME TAX ACT, 1961, BY NOT CONSIDERING THE SAME PIECE OF EVIDENCE, IN THE FORM OF 7/12 EXTRACTS, TO CONSIDER THE 3 PIECES OF LAND AS SEPARATE LANDS, WHEN THE INFORMATION MENTIONED I N THE 7/12 EXTRACTS IS ACCEPTED FOR THE PURPOSE OF AGRICULTURA L INCOME AND ADDITION TO THE STATEMENT OF FACTS. Q.6. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, NASHIK, ERRED IN ALLOWING THE DEDUCTION T O THE ASSESSEE U/S. 54B OF THE INCOME TAX ACT,1961,WHEN THE ASSESSEE HA D NOT BEEN ABLE TO SUBMIT EVEN THE NARRATIVE OF THE ALLEGED AGRICUL TURAL ACTIVITY DONE, AS TO WHETHER WHO HAD CARRIED OUT THE CULTIVATION, THE ASSESSEE OR HIS PARENTS OR THROUGH HIRED LABOURERS AS IT IS FACT TH AT NEITHER THE ASSESSEE NOR ANY OF THE CO-OWNERS WERE FULL TIME AG RICULTURIST. 5. SHRI AJAY MODI REPRESENTING THE DEPARTMENT SUBMITTED THAT ASSESSEE HAD THREE PARCELS OF AGRICULTURAL LAND THAT WERE SOLD BY A SSESSEE ALONG WITH OTHER CO-OWNERS VIDE SINGLE SALE DEED DATED 15.03.2012. T HE ASSESSEE CLAIMED DEDUCTION U/S.54B IN RESPECT OF CAPITAL GAIN ARISING FR OM SALE OF AFORESAID LAND. THE LD. DR SUBMITTED THAT FOR CLAIMING BENEFIT OF DEDUCTION 4 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 U/S. 54B, IT IS MANDATORY THAT THE LAND IS USED FOR AGRICULT URAL PURPOSE IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH T RANSFER OF SUCH LAND TOOK PLACE. AND AGRICULTURAL ACTIVITIES SHOULD HAVE BEEN CARRIED OUT EITHER BY THE ASSESSEE OR HIS PARENTS. THE ASSESSEE HAS NOT PLACED ON RECORD ANY DOCUMENTARY EVIDENCE TO SHOW THAT THREE P IECES OF LAND IN QUESTION WERE USED FOR AGRICULTURAL PURPOSE IN THE PRECED ING TWO YEARS. THEREFORE, THE ASSESSING OFFICER RIGHTLY REJECTED ASSESSEE S CLAIM OF DEDUCTION U/S. 54B OF THE ACT. THE ASSESSEE NEVER FILED AN Y RETURN OF INCOME PRIOR TO THE SALE OF LAND INDICATING INCOME FROM AGRICU LTURAL ACTIVITIES. THE ASSESSEE COULD NOT PLACE ON RECORD ANY DO CUMENTARY EVIDENCE INDICATING PURCHASE OF SEED, MANURE ETC OR INVOICE INDICATING SALE OF CROP IN THE MARKET. THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE COMMISSIONER OF I NCOME TAX (APPEAL) TO SUBSTANTIATE THAT AGRICULTURAL ACTIVITIES WERE, IN FACT, CARRIED OUT ON THE LAND IN QUESTION. 5.1 THE LD. DR FURTHER SUBMITTED THAT ASSESSEE HAD FURNIS HED COPIES OF 7/12 EXTRACTS AND THE SAME ARE AT PAGES 26 TO 31 OF THE PAPER BOOK. A PERUSAL OF 7/12 EXTRACTS PLACED ON RECORD WOULD SHOW TH AT SMALL PART OF LAND COMPRISING IN SURVEY NO. 178 WAS CULTIVATED DURING THE FINANCIAL YEAR 2009-10 AND PART OF LAND COMPRISING IN SURVEY NO. 177 AND 188/1A WAS CULTIVATED DURING THE FINANCIAL YEAR 2010-11. IT IS AN ADMITT ED CASE OF ASSESSEE THAT LAND COMPRISING IN SURVEY NO. 178 WAS NEVE R UNDER CULTIVATION IN FINANCIAL YEAR 2010-11 AND LAND COMPRISING IN SU RVEY NO. 177 & 188/1A WAS NOT USED FOR AGRICULTURAL PURPOSE DURIN G FINANCIAL YEAR 2009-10. THUS, THREE PARCELS OF LAND WERE NEVER UNDER CU LTIVATION IMMEDIATELY IN PRECEDING TWO YEARS. EVEN WHEN THE SAID TH REE PARTS OF 5 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 LANDS WERE USED FOR AGRICULTURAL PURPOSE, ONLY SMALL CHUNK OF THE LAND WAS UNDER CULTIVATION. 5.2 THE LD. DR CONTENDED THAT COMMISSIONER OF INCOME TAX(A PPEAL) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE ON THE PREMISE THAT THREE PARCELS OF LAND ARE CONTIGUOUS AND PART CULTIVATION OF SUCH CONTIGUOU S LAND IS SUFFICE TO SATISFY THE CONDITIONS LAID DOWN U/S. 54B OF THE ACT. T HE LD. DR ASSERTED THAT CONTIGUOUS LAND DOES NOT MEAN IF ONE SURVEY NO IS CULTIVATED; THE CONDITION SET OUT IN SECTION 54B TO USE THE LAND FOR AGRIC ULTURAL PURPOSE IN THE IMMEDIATELY TWO PRECEDING YEARS WOULD BE SATISFIED. 5.3 THE LD. DR REFERRING TO THE OBSERVATION OF COMMISSIONER OF INCOME TAX(APPEAL) IN PARA 4.4 SUBMITTED THAT ASSESSEE HAD FURNISH ED FRESH EVIDENCE IN THE FORM OF PICTOGRAPHIC REPRESENTATION BEFOR E COMMISSIONER OF INCOME TAX (APPEAL) WHICH WOULD SHOW THAT LAND COMPRISING IN DIFFERENT SURVEY NOS ARE CONTIGUOUS PIECES OF LAND. THE COMMISSIONE R OF INCOME TAX (APPEAL) WHILE CONSIDERING FRESH EVIDENCE DID NOT CALL FOR REM AND REPORT FROM THE ASSESSING OFFICER. THUS, THERE IS VIOLATION OF PROVISION S OF RULE 46A OF THE INCOME TAX RULES, 1962. 5.4 THE LD. DR FURTHER REITERATING THE SUBMISSIONS MADE IN STATEMENT OF FACTS PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL) AND RESTORING THE DISALLOWANCE ON DEDUCTION U/S. 54 B MADE BY THE ASSESSING OFFICER. 6. AU-CONTRAIRE , SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF ASSESSEE VEHEMENTLY DEFENDED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL) AND PRAYED FOR DISMISSING THE APPEAL OF REVENUE. THE LD. AR SUBMITTE D THAT 6 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 THE LAND IN QUESTION COMPRISING IN SURVEY NO.177, 178 AND 1 88/1A WAS PURCHASED BY THE FATHER OF ASSESSEE IN THE YEAR 1976 V IDE REGISTERED SALE DEED DATED 14.02.1976 WHICH IS AT PAGE 154 TO 159 OF THE PAPER BOOK. THE ASSESSEE INHERITED 1/4 TH SHARE IN AFORESAID AGRICULTURAL LAND. THE ENTIRE LAND WAS SOLD BY THE ASSESSEE AND OTHER CO-OWNERS VIDE SALE DEED DATED 15.03.2012. THE PICTOGRAPHIC REPRESENTATION MENTIONED BY COMMISSIONER OF INCOME TAX (APPEAL) IN HIS ORDER REFERS TO THE OUTLAY OF LAND AT PAGE 121 OF THE PAPER BOOK. THE SAID PLAN IS PART OF SALE DEED DAT ED 15.03.2012 AND THE SAME WAS FURNISHED BEFORE THE ASSESSING OFFICER. NO NE W EVIDENCE WAS FURNISHED BEFORE COMMISSIONER OF INCOME TAX (APPEAL) IN THE FORM OF PHOTOGRAPHS OR ANY OTHER PICTOGRAPHIC REPRESENTATION . THUS, THERE IS NO VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 AS ALLEGE D BY THE DEPARTMENT. THE LD. AR SUBMITTED THAT COMMISSIONER OF INC OME TAX (APPEAL) HAS REFERRED TO PICTOGRAPHIC REPRESENTATION TO INDICATE THAT SURVEY NO. 178, 177 AND 188/1A ARE CONTIGUOUS LAND. MERELY FOR T HE REASON THAT LAND IS COMPRISING IN THREE SURVEY NOS., IN ACTUAL WOULD NOT DIVIDE THE LAND IN THREE PIECES UNLESS THERE IS PHYSICAL DIVISION OR BREAK IN THE LAND. THE LD. AR CONTENDED THAT AS PER PROVISION OF SECTION 54B, THE LAND SHOULD BE USED FOR AGRICULTURAL PURPOSE IN THE IMMEDIATELY TWO PRECE DING YEARS PRIOR TO THE DATE OF TRANSFER. THE LAW DOES NOT REQUIRE THAT ENTIRE LAND SHOULD BE USED FOR CULTIVATION PURPOSE OR THE LAND SHOULD BE USED FO R AGRICULTURAL PURPOSE THROUGHOUT THE YEARS. EVEN IF PART OF THE LAND IS USED FOR AGRICULTURAL PURPOSE BY ASSESSEE FOR THE PART OF THE YEAR, ASSESS EE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S. 54B OF THE ACT. 6.1 THE LD. AR FURTHER SUBMITTED THAT HON'BLE SUPREME COU RT OF INDIA IN THE CASE OF SARIFABIBI MOHMED IBRAHIM VS COMMISSIONER OF I NCOME-TAX 7 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 REPORTED AS 204 ITR 631 HAS LAID DOWN CERTAIN TESTS TO IDENTIFY WHETHER THE LAND WAS USED FOR AGRICULTURAL PURPOSE OR NOT. IF THOSE TE STS ARE APPLIED IN THE CASE OF ASSESSEE, IT WOULD BE EVIDENTLY CLEAR THAT LAN D OF ASSESSEE WAS, INDEED, USED FOR AGRICULTURAL PURPOSES. THE LD. AR REFERRING T O 7/12 EXTRACT AT PAGE 26 TO 31 OF THE PAPER BOOK SUBMITTED THAT PAR T OF LAND COMPRISING IN SURVEY NO. 178 WAS USED FOR CULTIVATING GROUNDNUT IN FINA NCIAL YEAR 2009-10. THE ASSESSEE HAD CULTIVATED GROUNDNUT ON 40R LAND. IN THE LAND COMPRISING IN SURVEY NO.188/1A, GROUNDNUT WAS CULTIVATED O N 40R AND BRINJAL WAS GROWN ON 40R IN FINANCIAL YEAR 2010-11. IN THE LAND COMPRISING IN SURVEY NO. 177, GROUNDNUT WAS GROWN ON 1H IN FINANCIAL YEAR 2010-11. THUS, ONE PART OR THE OTHER OF THE LAND WAS ALWAYS UND ER CULTIVATION. THE LD. AR FURTHER REFERRED TO 7/12 EXTRACT TO INDICATE THAT LAND WAS UNDER SELF CULTIVATION OF ASSESSEE. 6.2 THE LD. AR POINTED THAT THE ASSESSING OFFICER ERRED IN O BSERVING THAT ONLY A MINISCULE PART OF LAND WAS UNDER CULTIVATION. THE COM MISSIONER OF INCOME TAX (APPEAL) IN PARA 4.3 OF HIS ORDER HAS RIGHTLY M ENTIONED THAT THE TOTAL AREA OF LAND IS 7 H 44R OUT OF WHICH 40 R IN FINANCIAL Y EAR 2009-10, WAS UNDER CULTIVATION AND 1H 80R WAS UNDER CULTIVATION IN FINANCIAL YEAR 2010-11. THE ASSESSEE HAD EXPLAINED THAT DUE TO SCARCIT Y OF WATER, ASSESSEE COULD NOT CULTIVATE THE ENTIRE LAND. 6.3 AS REGARDS DISCLOSURE OF AGRICULTURAL INCOME IN RETURN O F INCOME IS CONCERNED, AGRICULTURAL PRODUCE WAS PRIMARILY USED FOR SE LF CONSUMPTION. AGRICULTURAL INCOME WAS LESS THAN RS.5000/- AND THEREFORE, ASSESSEE HAD NOT DISCLOSED THE SAME IN THE RETURN OF INCOME. THE COMMIS SIONER OF INCOME TAX (APPEAL) HAS APPRECIATED THIS FACT IN THE RIGHT PERSPECTIVE AND 8 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 GRANTED RELIEF TO THE ASSESSEE. THE ASSESSEE HAS FILED COPY OF 7/12 EXTRACT TO INDICATE THAT LAND WAS UNDER CULTIVATION. THE 7/12 EXTRACT S FILED BY ASSESSEE HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICE R NOR ANY SUSPICION HAS BEEN RAISED OVER ITS AUTHENTICITY. THE ASSESSEE HAS DISCHARGED HIS ONUS. NO CONTRARY EVIDENCE HAS BEEN PLACED ON RECORD B Y THE ASSESSING OFFICER TO SHOW THAT NO AGRICULTURAL ACTIVITIES WERE CARRIED OUT BY ASSESSEE IN THE PAST TWO YEARS ON THE LAND. 6.4 THE LD. AR REFERRED TO THE OBSERVATION OF ASSESSING O FFICER IN PARA 3.3.4 WHEREIN, THE ASSESSING OFFICER HAS OBSERVED THAT THE INQUIRIES MADE U/S.133(6) INDICATE THAT THERE WAS NO INTENT OF THE PURCH ASER OF LAND TO DO ANY AGRICULTURAL ACTIVITY. THE LD. AR SUBMITTED THAT AS PER PROVISION OF SECTION 42 OF THE MAHARASTRA LAND REVENUE CODE, AGRICULT URAL LAND CANNOT BE SOLD TO NON-AGRICULTURIST WITHOUT OBTAINING CHANGE OF LAN D USE PERMISSION FROM COMPETENT AUTHORITY. A PERUSAL OF SALE DEE D DATED 15.03.2012 PLACED ON RECORD WOULD SHOW THAT ASSESSEE HA S SOLD AGRICULTURAL LAND TO THE PURCHASER FOR AGRICULTURAL PURPOSE . IT IS NOT THE CASE OF DEPARTMENT THAT ASSESSEE HAS CONVERTED THE LA ND FROM AGRICULTURE TO NON AGRICULTURE BEFORE SALE OF LAND. 6.5. THE LD. AR TO FURTHER SUPPORT HIS SUBMISSIONS PLACED R ELIANCE ON THE FOLLOWING DECISIONS: 1) CIT VS. SMT. DEBBIE ALEMAO REPORTED AS 196 TAXMA N 230 (BOMBAY) 2) ITO VS. SHRI MAHESH AHIRE IN ITA NO.346/PUN/2013 DECIDED ON 14.07.2017 3) HARESH V. MILANI VS. JCIT REPORTED AS 114 ITD 42 8 (PUNE) 4) CIT VS. MINGUEL CHANDRA PAIS REPORTED AS 149 TAX MAN 131 (BOMBAY) 9 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 5) GOPAL C. SHARMA VS. CIT REPORTED AS 72 TAXMAN 35 3 (BOMBAY) 7. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE SOLITARY ISSUE RAISED IN THE PRESENT APPEAL BY THE DEPARTMENT IS ASSES SEES ELIGIBILITY FOR CLAIMING DEDUCTION U/S. 54B OF THE ACT. AS PER CONTENTION O F THE REVENUE, ASSESSEE IS NOT ELIGIBLE FOR CLAIMING BENEFIT OF DEDUCTION U/S. 5 4B, AS STATUTORY CONDITION QUA USE OF LAND FOR AGRICULTURAL PURPO SE IN THE TWO YEARS PRECEDING THE DATE OF SALE IS NOT SATISFIED. 8. BEFORE PROCEEDING TO DECIDE THE ISSUE RAISED IN THE P RESENT APPEAL, IT WOULD BE NECESSARY TO FIRST REFER TO THE PROVISION OF SECT ION 54B OF THE ACT. THE RELEVANT EXTRACT OF THE SECTION IS REPRODUCED HEREIN BELOW: 54B. [(1)] [ SUBJECT TO THE PROVISIONS OF SUB-SECT ION (2), WHERE THE CAPITAL GAIN ARISES] FROM THE TRANSFER OF A CAPITAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE, WAS BEING USED BY [THE ASSESSEE OR HIS PARENT OR HINDU UNDIVI DED FAMILY] FOR AGRICULTURAL PURPOSES [(HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET)], AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER T HAT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURPOSES , THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WI TH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SA Y,- (I) IF THE AMOUNT OF CAPITAL GAIN IS GREATER THAN THE COST OF THE LAND SO PURCHASED (HEREINAFTER REFERRED TO AS THE NEW ASSET ), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PER IOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE NIL; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGED UN DER SECTION 45; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF T HREE YEARS OF ITS PURCHASE, THE COST SHALL BE REDUCED, BY THE AMOUNT OF THE CAPITAL GAIN] 10 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 A PERUSAL OF THE ABOVE PROVISIONS OF SECTION 54B SHOW TH AT TO BE ELIGIBLE FOR CLAIMING BENEFIT OF DEDUCTION U/S. 54B OF THE ACT, FOLLO WING CONDITIONS SHOULD BE SATISFIED: I. THE AGRICULTURAL LAND IS TRANSFERRED BY ANY INDIVIDUAL OR HUF. II. THE AGRICULTURAL LAND HAS BEEN USED BY THE INDIVIDUAL OR HIS PARENTS OR HUF FOR AGRICULTURAL PURPOSE DURING TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER. III. THE ASSESSEE HAD PURCHASED ANOTHER AGRICULTURAL LAND (RURAL OR URBAN) WITHIN A PERIOD OF TWO YEARS AFTER THE DAT E OF TRANSFER OF THE ORIGINAL AGRICULTURAL LAND TO BE USED FOR AGRICULTURAL PURPOSE. IV. IF THE AMOUNT OF CAPITAL GAIN IS NOT UTILIZED BY THE ASSE SSEE FOR THE PURCHASE OF ANOTHER AGRICULTURAL LAND BEFORE THE D ATE OF FURNISHING RETURN OF INCOME U/S.139 OF THE ACT, THE SAME SHOULD HAVE BEEN DEPOSITED BEFORE FURNISHING SUCH RETURN IN A NOTIFIED CAPITAL SCHEME ACCOUNT WITH BANK. IN SO FAR AS CONDITIONS GIVEN IN CLAUSE (I), (III) AND (IV) ARE CONC ERNED, THERE IS NO DISPUTE IN THE PRESENT CASE. THE ASSESSEE HAS SATISFIED THESE CONDITIONS. THE ONLY DISPUTE IS WHETHER AGRICULTURAL ACTIVIT IES CARRIED OUT BY THE ASSESSEE ON THE PART OF LAND, WOULD BE SUFFICIENT TO COMPLY WITH THE CONDITIONS AS MENTIONED AT SERIAL NO. (II). 9. IT IS AN ADMITTED FACT THAT LAND WHICH IS SUBJECT MATT ER OF DISPUTE IS COMPRISING IN THREE SURVEY NOS. I.E.177,178 AND 188/1A. THE LAND COMPRISING IN SURVEY NO. 178 WAS USED FOR AGRICULTURAL PURP OSE DURING FINANCIAL YEAR 2009-10 AND THE LAND COMPRISING IN 177 AND 1 88/1A WAS CULTIVATED DURING FINANCIAL YEAR 2010-11. THE CONTENTION OF THE REVENUE IS THAT SINCE THE LAND COMPRISING IN SURVEY NO. 178 WAS NOT CULTIVATED IN FINANCIAL YEAR 2010-11 AND THE LAND COMPRISING IN SURVEY NO . 177 AND 11 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 188/1A WAS NOT CULTIVATED IN FINANCIAL YEAR 2009-10, THE M ANDATORY CONDITION SET OUT IN SECTION 54B I.E. THE LAND SHOULD BE USE D FOR AGRICULTURAL PURPOSE IN THE TWO YEARS IMMEDIATELY THE DA TE OF TRANSFER OF ASSET IS NOT SATISFIED. 10. THE LAND OF ASSESSEE COMPRISING IN SURVEY NO. 177, 178 AND 188/1A IS CONTIGUOUS LAND AS IS EVIDENT FROM THE SITE PLAN AT PAGE 121 OF THE PAPER BOOK. THIS FACT HAS BEEN ENDORSED BY THE COMMISSIONER OF INCOME TAX (APPEAL), AS WELL. THE EXPRESSION USED IN THE SECTION 54B IS CAPITAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE WAS BEING USED BY THE ASSESSEE BEING INDIVIDUAL OR PARENT OR HUF FOR AGRICULTURAL PURPOSE . THE SECTION DOES NOT SPECIFY THAT THE ENTIRE LAND SHOULD BE USED FOR CULTIVATION OR ALL SURVEY NOS. SHOULD BE UNDER CULTIVATION TO QUALIFY FOR CLAIMING BENEFIT OF DEDUCTION U/S. 54B OF THE ACT. THE SURVEY NOS. ALLOTTED TO THE LANDS ARE RELEVANT FOR LAND REVENUE RECORDS AND FOR IDENTIFICATION OF THE LAND. FOR THE PURPOSE OF CONSIDERING BENEFIT OF DEDUCTION U/S. 54B OF THE ACT, THE DIV ISION OF LAND IN VARIOUS SURVEY NOS. IS NOT OF RELEVANCE EXCEPT FOR IDENTIFICA TION OF LAND. AS LONG AS THE LAND IS CONTIGUOUS PIECE, IT MAY COMPRISE IN DIFFER ENT SURVEY NOS., IF ANY PART OF THE LAND IS UNDER CULTIVATION IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER, IT WOULD BE SUFFIC IENT FOR CLAIMING BENEFIT OF DEDUCTION U/S. 54B OF THE ACT. 11. FURTHER, WE FIND THAT ASSESSEE HAS EXPLAINED THE REAS ON FOR NOT CULTIVATING THE ENTIRE LAND. AS PER CONTENTIONS OF THE ASSE SSEE, THE ENTIRE LAND COULD NOT BE BROUGHT UNDER CULTIVATION DUE TO WATER SHORTAGE AND CROP SECURITIES CONCERN. THEREFORE, AGRICULTURAL ACTIVITIES WERE CA RRIED OUT ON 12 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 DIFFERENT PORTION OF LAND ON ROTATION BASIS. WE OBSERVE T HAT THE REASON GIVEN BY ASSESSEE FOR CULTIVATING ONLY PART OF LAND REMAINED UN -REBUTTED. THE BENEFIT OF DEDUCTION U/S. 54B CANNOT BE DENIED TO THE ASS ESSEE IF HE IS UNABLE TO USE ENTIRE LAND FOR AGRICULTURAL PURPOSE FOR THE REASONS BEYOND HIS CONTROL. THE HYDERABAD BENCH OF TRIBUNAL IN THE CASE OF ACIT VS. N. RAGHU VERMA REPORTED AS 142 ITD 421 (HYD.) EXEMPTION U/S. 54B WAS HELD TO BE EXIGIBLE ON SALE OF LAND WHERE THE ASSESSEE WAS UNABLE TO USE ENTIRE LAND FOR AGRICULTURAL PURPOSE DUE TO VAGARIES OF NATURE AND NO N AVAILABILITY OF RESOURCES. SIMILAR VIEW WAS TAKEN BY CHENNAI BENCH OF TRIBU NAL IN THE CASE OF M.A. ALAGAPPAN VS. INCOME TAX OFFICER REPORTED AS 29 ITD 69(MA D.), WHEREIN, ASSESSEE HAD CULTIVATED PART OF HIS LAND AND NO FURTHER CULTIVATION WAS POSSIBLE BECAUSE OF LACK OF WATER. THE TRIBUNAL HELD THA T THE ASSESSEE CANNOT BE DENIED RELIEF BECAUSE HE WAS ACTUALLY UNABLE T O PUT THE LAND TO USE DUE TO VAGARIES OF NATURE AND NON-AVAILABILITY OF RESOURCES . THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECISION DI SCUSSED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIO NER OF INCOME TAX (APPEAL) IN ALLOWING BENEFIT OF DEDUCTION U/S. 54B TO THE ASSESSEE. 12. THE REVENUE IN APPEAL HAS RAISED THE GROUND ALLEGING V IOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962. THE CONTENTION OF THE LD. DR IS THAT ASSESSEE HAD FILED ADDITIONAL EVIDENCE IN THE FORM OF P ICTOGRAPHIC REPRESENTATION BEFORE THE FIRST APPELLATE AUTHORITY AND THE SAME WAS NOT REFERRED TO ASSESSING OFFICER FOR HIS COMMENT. THE LD. AR HAS STATED AT BAR THAT THE PICTOGRAPHIC REPRESENTATION OF LAND MENTIONED BY COMMISSIONER 13 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 OF INCOME TAX (APPEAL) IN PARA 4.4 OF HIS ORDER REFERS TO S ITE MAP AT PAGE 121 OF THE PAPER BOOK. THE SAID SITE MAP IS PART OF SALE DEED DATED 15.03.2012 AND THE SAME WAS FURNISHED BEFORE THE ASSESSIN G OFFICER. THE ASSESSEE HAD NOT FURNISHED ANY NEW DOCUMENTARY EVIDENC E IN THE FORM OF PHOTOGRAPHS OR ANY OTHER PICTOGRAPHIC REPRESENTATION BEFORE COMMISSIONER OF INCOME TAX (APPEAL). A PERUSAL OF OBSERVATION MADE BY COMMISSIONER OF INCOME TAX (APPEAL) WITH REGARD TO PICTOGRAPHIC REPRESENTATION OF LAN D INDICATE THAT REFERENCE WAS MADE TO THE SAID SITE PLAN TO INDICATE THA T THE DIFFERENT SURVEY NOS. ARE CONTIGUOUS PIECES OF LAND. THIS FACT IS EVIDE NT FROM THE SITE MAP WHICH IS AT PAGE 121 OF THE PAPER BOOK. THE LD. DR H AS NOT CONTROVERTED THAT THE SAID SITE PLAN AT PAGE 121 OF THE PAPER BOOK WAS FURNISHED BEFORE THE ASSESSING OFFICER. THUS, OBJECTION RAISED BY THE DEPARTMENT ALLEGING VIOLATION OF RULE 46A IS WITHOUT ANY SUBSTANCE. 13. IN SO FAR AS OBJECTION RAISED BY THE REVENUE THAT ASSESSEE IN HIS RETURN OF INCOME HAS NOT DISCLOSED AGRICULTURAL INCOME, IT HA S BEEN CONTENTED THAT AGRICULTURAL PRODUCE FROM THE LAND WAS MA INLY USED FOR SELF CONSUMPTION AND AS THE INCOME FROM SALE OF AGRICULTURAL PRO DUCE WAS LESS THAN RS. 5000/-, THEREFORE, THE SAME WAS NOT REFLECTED IN THE RETURN OF INCOME. A PERUSAL OF 7/12 EXTRACT SHOWS THAT DURING FINANC IAL YEAR 2009- 10, OUT OF TOTAL LAND ADMEASURING 7H 44R, ONLY 40R WAS U NDER CULTIVATION AND IN FINANCIAL YEAR 2010-11, ONLY 1H 80R WAS CULTIVATED. THE ASSESSEE HAD CULTIVATED GROUNDNUT AND BRINJAL ON THE LAND. THE AS SESSEE IS HAVING 1/4 TH SHARE IN TOTAL UNDIVIDED LAND. WE FIND MERIT IN THE SUBMISSIO N OF ASSESSEE. THE INCOME FROM AGRICULTURAL ACTIVITIES MAY NOT BE SUBSTANTIAL SO 14 ITA NO. 1534/PUN/2015 A.Y. 2012 - 13 AS TO BE CONSIDERED FOR THE RATE PURPOSE UNDER THE P ROVISION OF THE ACT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. DE BBIE ALEMAO (SUPRA) HAS HELD THAT IF AN AGRICULTURAL OPERATION DOES NOT RESULT IN GENERATION OF SURPLUS, IT CANNOT BE A GROUND TO SAY THAT THE LAND WAS NOT USED FOR THE AGRICULTURAL PURPOSE. THUS, IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) AND ACCORDINGLY, TH E SAME IS UPHELD AND APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 31ST DAY OF JANUARY, 2018. SD/- SD/- ( / ANIL CHATURVEDI ) ( # $ /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 31ST JANUARY, 2018 SB * + ,-# .#( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEAL)-1, NASHIK. 4. THE PR. CIT-1, NASHIK. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE // TRUE COPY // *2 / BY ORDER, 3 (- /PRIVATE SECRETARY * () , / ITAT, PUNE.