Anil Kumar Nuwal, Bhilwara V. ACIT, Circle, Bhilwara

ITA 290/JODH/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2214 (ITAT-JODHPUR)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 02-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AVDHESH SINGHVI
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Corroborative evidences; Set aside; Capital Gains
• Section: 139; 143(3); 54B; 2(14); 139(1); 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 290/JODH/2019 (ASSESSMENT YEAR-2016-17) ANIL KUMAR NUWAL, 9, MAIN SECTOR, SHASTRI NAGAR, BHILWARA, RAJASTHAN- 311001. VS A.C.I.T., CIRCLE- BHILWARA. (APPELLANT) (RESPONDENT) PAN: AAVPN 4375 L ASSESSEE BY SHRI AVDHESH SINGHVI (CA) REVENUE BY SHRI ABHIMANYU SINGH YADAV (J CIT - DR ) DATE OF HEARING 19 /03/2020 DATE OF PRONOUNCEMENT 20/03/2020 O R D E R PER SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A), AJMER DATED 15/07/2019 FOR THE ASSESSMENT YEAR 2016-17. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF CLA IM OF RS.1,04,59,000/- ON ACCOUNT OF DEDUCTION CLAIMED US 54B OF THE IT AC T, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE HON'BLE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF CLAIM OF RS . 15,71,918/- ON ACCOUNT OF INDEXED COST OF IMPROVEMENT BEING INTERE ST PAID ON THE BORROWED MONEY TO PURCHASE THE SAID AGRICULTURAL LA ND IN VARIOUS YEARS. 2 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE HON'BLE CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 25,350/- BEING AGRICULTURE INCOME ON ACCOUNT OF INCOME FROM UNEXPLAINED SOURCES.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE DECLARING INCOME OF RS. 48,11,250/- AND AGRICULTURE INCOME OF RS. 25,350/-. THE CASE WAS SELECTED FOR L IMITED SCRUTINY THROUGH CASS AND AFTER ISSUANCE OF NOTICE AND REPLY OF THE ASSESSEE, THE A.O. PASSED ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) ON 16/12/2018 WHEREBY MAKING VARIOUS ADDITIONS /DISALLOWANCES UNDER VARIOUS HEADS INCLUDING DISALLOWANCE U/S 54B OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE FA CTS AND CIRCUMSTANCES AVAILABLE ON RECORD, DISMISSED THE APPEAL FILED BY THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN FURTHER APPEAL BEFORE THE ITAT ON THE GROUNDS MENTIONED ABO VE. 5. WITH REGARD TO GROUND NO. 1 OF THE APPEAL, THE L D AR APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENT AS WERE RAISED BEFORE THE LD. CIT(A) AND RELIED UPON THE WRITTEN S UBMISSIONS FILED BEFORE THE LD. CIT(A) WHICH IS CONTAINED IN PARA 5.2 OF TH E ORDER OF THE LD. CIT(A) AND THE SAME IS REPRODUCED BELOW. 3 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. A.O ERRED IN MAKING DISALLOWANCE OF CLAIM OF RS .1,04,59,000 ON ACCOUNT OF DEDUCTION CLAIMED US 54B OF THE IT ACT 1 961- A) DURING THE PERIOD UNDER CONSIDERATION, THE ASSESSEE HAS SOLD THE AGRICULTURAL LAND ON 27TH JUNE 2015 SITUATED AT VEL EMALA (V), RAMACHANDRAPURAM MANDAL, DIST. MEDAK, TELANGANA FOR RS. 1,58,00,000/- AGAINST WHICH THE ASSESSEE HAS CLAIME D THE DEDUCTION OF RS. 1,04,59,000/- U/S 54B OF THE ACT AND THE ASS ESSEE HAS ALSO PURCHASED THE AGRICULTURAL LAND ON 10TH MAY 2016, S ITUATED AT AARAJI NO. 944 03 BISWA, AARAJI NO. 945 4 BIGHA 4 BISWAAARAJI NO. 946 1 BIGHA 19 BISWA, RAISINGHPURA, BHILWARA, WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF TRANSFER. B) SINCE THE AGRICULTURAL LAND SOLD BY THE ASSESSEE HA S BEEN USED FOR AGRICULTURAL PURPOSE IN THE TWO YEARS IMMEDIATELY P RECEDING THE DATE ON WHICH TRANSFER TOOK PLACE I.E. BETWEEN 28.0 6.2013 TO 27.06.2015 AND THE TITLE OF LAND WHICH HAS BEEN SOL D WAS AGRICULTURAL DURING PRECEDING TWO YEAR FROM THE DAT E OF SALE, THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54B OF THE INCOM E TAX ACT. C) WHILE DISALLOWING THE CLAIM OF THE ASSESSEE, THE LD . A.O. HAS POINTED OUT IN PARA NO. 3.2 THAT THE ASSESSEE HAS FAILED TO SUBMIT ANY OTHER DOCUMENTARY EVIDENCE WHICH CAN PROVE THE UTILIZATION OF SUBJECTED CAPITAL ASSET FOR AGRICULTURE ACTIVITY IN LAST TWO YEARS FROM THE SALE OF SAID CAPITAL ASSET. THUS, THE CONDITION OF UTILIZATION OF CAPITAL ASSET BEING LAND FOR AGRICULTURE PURPOSE BY THE ASSESSEE OR HIS PARENT, HUF REMAIN UNPROVED . 4 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT IN PARA NO. 3.3, THE LD. A.O HAS ALSO POINTED OUT T HAT THE ASSESSEE DID NOT OFFER ANY AGRICULTURE INCOME IN THE ROI FOR A.Y. 2014-15 AND A.Y. 2015-16, WHICH GIVE STRENGTH TO THE VIEW OF TH E AO THAT NO AGRICULTURAL ACTIVITY WERE PERFORMED BY THE ASSESSE E ON THE SUBJECTED PIECE OF LAND. STRATEGICALLY, THE ASSESSE E HAS SHOWN AGRICULTURE INCOME FOR THE PERIOD UNDER CONSIDERATI ON AT RS. 25,350 FOR WHICH NO SUPPORTING EVIDENCE WAS FURNISHED. IN ADDITION TO THE ABOVE, THE LD. A.O HAS ALSO POINTED OUT THAT THE SUBJECTED CAPITAL ASSET WAS SOLD ON 27.06.2015 AND THE NEW ASSET BEING AGRICULTURE LAND WAS PURCHASED ON 10.05.2016, THE NEW ASSET WAS PURCHASED AFTER THE EXPIRY OF TEN MONTH FROM TH E SALE OF SUBJECTED ASSET AND ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE AS TO WHETHER THE SALE CONSIDERATION OF R S. 1,58,10,000/- RECEIVED FROM SALE OF SUBJECTED CAPITAL ASSET WAS D EPOSITED IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE S PECIFIED IN, AND UTILIZED IN ACCORDANCE WITH ANY SCHEME WHICH THE CE NTRAL GOVERNMENT NOTIFIED IN OFFICIAL GAZETTE. THE ASSESS EE HAS NOT DEPOSITED THE SAID AMOUNT FOR GAP PERIOD IN ANY CAP ITAL GAIN SCHEME OR BOND NOTIFIED BY THE GOVERNMENT. THUS, TH E CONDITION LAID DOWN IN SECTION 54B(2) OF THE ACT WERE ALSO NO T COMPLIED FOR. D) AT THIS OUTSET, WE WISH TO DRAW YOUR ATTENTION TO T HE PROVISIONS OF THE SECTION 54B OF THE INCOME TAX ACT 1961 WHICH AR E AS UNDER: CAPITAL GAIN ON TRANSFER OF LAND USED FOR AGRICULTU RAL PURPOSES NOT TO BE CHARGED IN CERTAIN CASES. 54B. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION ( 2), WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A CAPITAL ASSET BEING LAND 5 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE D ATE ON WHICH THE TRANSFER TOOK PLACE, WAS BEING USED BY THE ASSE SSEE BEING AN INDIVIDUAL OR HIS PARENT, OR A HINDU UNDIVIDED FAMI LY FOR AGRICULTURAL PURPOSES (HEREINAFTER REFERRED TO AS THE ORIGINAL A SSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER TH AT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICUL TURAL PURPOSES, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROV ISIONS OF THIS SECTION, THAT IS TO SAY, (I) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THAN THE COST OF THE LAND SO PURCHASED (HEREINAFTER REFERRED TO AS THE N EW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN A ND 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 TRA NSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHA LL BE NIL; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT B E CHARGED UNDER SECTION 45 ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRA NSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHA LL BE REDUCED, BY THE AMOUNT OF THE CAPITAL GAIN. (2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT UTI LISED BY THE ASSESSEE FOR THE PURCHASE OF THE NEW ASSET BEFORE T HE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139 , SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN [SUC H DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLIC ABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB- 6 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT SECTION (1) OF SECTION 139 ] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOT IFICATION IN THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILIS ED BY THE ASSESSEE FOR THE PURCHASE OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SU B-SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OF THE N EW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN, (I) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED U NDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF TWO YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SU CH AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID . FROM THE PERUSAL OF THE ABOVE PROVISIONS OF LAW, IT IS CLEARLY SEEN THAT THE ASSESSEE HAS TO SATISFY ALL THE BELOW COND ITIONS SET OUT IN SECTION 54B FOR CLAIMING EXEMPTION WHICH ARE AS UND ER. I. THE AGRICULTURAL LAND IS TRANSFERRED BY ANY INDIVID UAL OR HUF. II. THE AGRICULTURAL LAND HAS BEEN USED BY THE INDIVIDU AL OR HIS PARENTS FOR AGRICULTURAL PURPOSE DURING TWO YEARS I MMEDIATELY PRECEDING THE DATE OF TRANSFER. III. THE ASSESSEE HAD PURCHASED ANOTHER AGRICULTURAL LAN D (RURAL OR URBAN) WITHIN A PERIOD OF TWO YEARS AFTER THE DA TE OF TRANSFER OF THE ORIGINAL AGRICULTURAL LAND TO BE US ED FOR AGRICULTURAL PURPOSE. 7 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT IV. IF THE AMOUNT OF CAPITAL GAIN IS NOT UTILIZED BY TH E ASSESSEE FOR THE PURCHASE OF ANOTHER AGRICULTURAL LAND BEFOR E THE DATE OF FURNISHING RETURN OF INCOME U/S. 139 OF THE ACT, THE SAME SHOULD HAVE BEEN DEPOSITED BEFORE FURNISHING SUCH R ETURN IN A NOTIFIED CAPITAL SCHEME ACCOUNT WITH BANK. E) IN SO FAR AS CONDITIONS GIVEN IN CLAUSE (I), (III) ARE CONCERNED THERE IS NO DISPUTE IN THE PRESENT CASE HAS BEEN RAISED B Y THE LD. A.O IN HIS ASSESSMENT ORDER BECAUSE THE ASSESSEE HAS SATIS FIED THESE CONDITIONS. THE DISPUTE IS RELATED TO CLAUSE NO. (I I) AND (IV) WHETHER THE ASSESSEE HAS USED THE LAND FOR AGRICULTURAL PUR POSE DURING THE PERIOD OF 2 YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER AND WHETHER THE ASSESSEE HAS UTILIZED THE AMOUNT OF CAP ITAL GAIN FOR THE PURCHASE OF ANOTHER AGRICULTURAL LAND BEFORE TH E DATE OF FURNISHING RETURN OF INCOME U/S. 139 OF THE ACT AND IF NOT, THEN THE SAME SHOULD HAVE BEEN DEPOSITED BEFORE FURNISHING S UCH RETURN IN A NOTIFIED CAPITAL SCHEME ACCOUNT WITH BANK. F) TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE THAT THE LAND WAS USED FOR AGRICULTURAL PURPOSE/AGRICULTURAL ACTIVATES WER E PERFORMED OR NOT, COPY OF AGRICULTURE INCOME CERTIFICATE RECEIVE D FROM MRO OFFICE IS SUBMITTED EVIDENCING CULTIVATION OF CROP IN THE SUBJECTED PIECE OF AGRICULTURAL LAND AS PER ANNEXURE 1. THE S ALE DEED OF LAND IS REFERRED AS AGRICULTURAL LAND AND THE LANDS ARE APPEARING AS AGRICULTURAL LANDS IN PATTADAR PASSBOOKS (ENCUMBRAN CE CERTIFICATE DOWNLOADED ONLINE FROM THE WEBSITE). (COPY OF SAME IS ENCLOSED FOR YOUR KIND PERUSAL AS PER ANNEXURE 2.). MOREOVER IT IS ALSO SUBMITTED THAT THE ASSESSEE IS NOT SEEKING MERE EXE MPTION OF THE CAPITAL GAINS FROM THE SALE OF EXEMPTED AGRICULTURA L LAND. THE ASSESSEE HAS INSTEAD SOUGHT EXEMPTION UNDER SECTION 54B OF THE 8 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT ACT AS THE SALE PROCEEDS OF THE AGRICULTURAL LAND W ERE INVESTED IN ACQUIRING OTHER AGRICULTURAL LANDS, WHICH WERE BEIN G TO AGRICULTURAL USE. G) IT IS FURTHER SUBMITTED THAT, THE ASSESSEE HAS CULT IVATED THE AGRICULTURE CROPS DURING THE PERIOD OF 2 YEARS IMME DIATELY PRECEDING THE DATE OF TRANSFER AND INCURRED THE LOS S AFTER MEETING OF ALL THE EXPENDITURE INCURRED DURING THE AGRICULT URAL ACTIVITIES AND DEBIT THE LOSS DIRECTLY TO CAPITAL ACCOUNT. HENCE A GRICULTURE INCOME WAS NOT SHOWN IN THE ROI OF AY 2014-15 & AY 2015-16 .(COPY OF AGRICULTURE INCOME AND EXPENSES FOR FY 2013-14 & 20 14-15 IS ENCLOSED FOR YOUR KIND PERUSAL AS PER ANNEXURE 3). H) GOING FURTHER, LD. A.O HAS MENTIONED THAT THE SUBJECTED CAPITAL ASSET WAS SOLD ON 27.06.2015 AND THE NEW ASSET BEIN G AGRICULTURE LAND WAS PURCHASED ON 10.05.2016, THE NEW ASSET WAS PURCHASED AFTER THE EXPIRY OF TEN MONTH FROM THE SALE OF SUBJ ECTED ASSET AND ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENTARY EVID ENCE AS TO WHETHER THE SALE CONSIDERATION OF RS. 1,58,10,000/- RECEIVED FROM SALE OF SUBJECTED CAPITAL ASSET WAS DEPOSITED IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AN D UTILIZED IN ACCORDANCE WITH ANY SCHEME WHICH THE CENTRAL GOVERN MENT NOTIFIED IN OFFICIAL GAZETTE. THE ASSESSEE HAS NOT DEPOSITED THE SAID AMOUNT FOR GAP PERIOD IN ANY CAPITAL GAIN SCHEME OR BOND N OTIFIED BY THE GOVERNMENT. THUS, THE CONDITION LAID DOWN IN SECTIO N 54B(2) OF THE ACT WERE ALSO NOT COMPLIED FOR. TO SUBSTANTIATE THE ASSESSEE CLAIM, WE WISH TO SUBMIT THAT, THE LD. A.O. HAS IGNORED TH E FACTS OF THE CASE WHICH WE RESUBMIT AS UNDER : PARTICULARS DATE DATE OF SALE OF AGRICULTURAL LAND SITUATED AT VILLA GE VELEMALA, DIST. MEDAK (TELANGANA 27.06.2015 9 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT PURCHASE OF NEW AGRICULTURAL LAND 10.05.2016 DUE DATE OF FILING OF RETURN U/S 139(1) BEING TAX AUDIT WAS APPLICABLE FOR THE YEAR UNDER CONSIDERATION 17.10.2016 ACTUAL DATE OF RETURN FILING 15.10.2016 FROM THE ABOVE FACTS OF THE CASE, IT IS CRYSTAL CLE AR THAT THE ASSESSEE HAD PURCHASED NEW AGRICULTURAL LAND ON 10. 05.2016 I.E. BEFORE THE DUE DATE OF FILING RETURN UNDER SECTION 139 WHICH IS 17.10.2016 ( 5 MONTHS BEFORE THE DUE DATE) AND AS P ER THE PROVISION OF THE SECTION 54B(2) OF THE INCOME TAX A CT IF T HE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT UTILIZED BY THE AS SESSEE FOR THE PURCHASE OF THE NEW ASSET BEFORE THE DATE OF FURNIS HING THE RETURN OF INCOME UNDER SECTION 139 , SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF T HE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION ( 1) OF SECTION 139 ] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILIZED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOM PANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB-SECTI ON (1), THE AMOUNT, IF ANY, ALREADY UTILIZED BY THE ASSESSEE FO R THE PURCHASE OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET. HENCE IN VIEW OF THE ABOVE FACTS OF THE CASE AND PR OVISIONS OF SECTION 54B (2) OF THE INCOME TAX ACT, THE LD. A.O CONTENTION TO DISALLOW THE CLAIM OF THE ASSESSEE ABOVE IS BAD IN LAW AND LIABLE TO BE DELETED. 10 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT 6. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDERS PASSED BY THE REVENUE AUTHORITIES. 7. WE HAVE HEARD THE LD. COUNSELS FOR BOTH THE PART IES AND HAVE ALSO CONSIDERED THE MATERIAL PLACED ON RECORD, ORDER PAS SED BY THE REVENUE AUTHORITIES AS WELL AS JUDGEMENTS RELIED UPON BY TH E PARTIES. FROM THE RECORD, WE NOTICE THAT THE ASSESSEE HAS SOLD THE AGRICULTURAL LAND ON 27TH JUNE 2015 IN THE STATE OF TELANGANA AS DETAILED IN THE ORDERS OF THE REVENUE AUTHORITIES, AGAINST WHICH THE ASSESSEE HAD CLAIMED DEDUCTION U/S 54B OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND AFTER THE SALE OF THE AGRICULTURA L LAND. HOWEVER, THE CLAIM OF THE ASSESSEE U/S 54B OF THE ACT WAS DISALLOWED B Y THE A.O. ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PROVE THAT T HE UTILIZATION OF SUBJECTED CAPITA ASSET FOR AGRICULTURE ACTIVITY IN LAST TWO YEARS FROM THE SALE OF SAID CAPITAL ASSET. THUS, IN THE EVENT OF, THE CONDITION OF UTILIZATION OF CAPITAL ASSET BEING LAND FOR AGRICULTURE PURPOSE BY THE ASSESSEE OR HIS PARENT, HUF REMAIN UNPROVED. THEREFORE, THE DISALLO WANCE WAS MADE WHILE PASSING THE ORDER OF THE ASSESSMENT BY THE A. O. 8. HOWEVER, DURING THE COURSE OF APPELLANT PROCEEDI NGS, THE ASSESSEE FILED APPLICATION FOR LEADING ADDITIONAL EVIDENCE U NDER RULE 46A OF THE INCOME TAX RULES, 1962 (IN SHORT, THE RULES) IN ORD ER TO PLACE ON RECORD THE CERTIFICATE OF AGRICULTURAL INCOME ISSUED BY TH E GOVT. OF TELANGANA, 11 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT REVENUE DEPARTMENT WHICH IS AT PAGE NO. 13 OF THE P APER BOOK. IN ORDER TO SUPPORT HIS CONTENTIONS, THE ASSESSEE HAD SUBMIT TED BEFORE THE LD. CIT(A) THAT THIS CERTIFICATE OF AGRICULTURAL INCOME COULD NOT PLACE ON RECORD BEFORE THE A.O. AS THERE WERE PROCESS OF ASS EMBLY ELECTIONS WAS BEING UNDERTAKEN IN THE STATE OF TELANGANA AND THUS IN THAT EVENTUALITY, THE ASSESSEE COULD NOT GET THAT CERTIFICATE IN TIME FROM THE REVENUE DEPARTMENT OF TELANGANA. CONSEQUENTLY, THE LD. CIT( A) SOUGHT REMAND REPORT FROM THE A.O. ON THIS CERTIFICATE PLACED ON RECORD BY THE ASSESSEE AND THE REMAND REPORT FILED BY THE A.O. IS CONTAINE D IN PARA 7 OF THE LD. CIT(A)S ORDER, WHICH IS REPRODUCED BELOW. THE WRITTEN SUBMISSION FILED BY THE APPELLANT WERE FORWARDED TO THE AO. THE AO HAS SUBMITTED THE REMAND REPORT AS UNDER :- 'KINDLY REFER TO YOUR OFFICE LETTER NO. 5020 DATED 19.03.2019 ON ABOVE MENTIONED SUBJECT. 2. DURING THE APPELLANT PROCEEDINGS THE AR OF THE A SSESSEE HAS MADE WRITTEN SUBMISSION BEFORE YOUR OFFICE WHICH WA S FORWARDED TO THIS OFFICE FOR REMAND REPORT/COMMENTS. THE COMMENT S OF THE AO ARE AS UNDER:- 2.1 GROUND NO.-1- THE ASSESSEE COMPANY HAS REQUESTE D TO GRANT RELIEF AND TO ALLOW THE DISALLOWANCE OF CLAIM OF RS . 1,04,59,000/- ON ACCOUNT OF DEDUCTION CLAIMED U/S 54B OF THE ACT. TH E SUBMISSION IN PARA A TO E ARE FACTUAL IN NATURE, HENCE NO COMMENT S ARE OFFERED. IN PARA-F THE ASSESSEE SUBMITTED THAT THE LAND WAS USE D FOR AGRICULTURAL ACTIVITIES AND SUBMITTED COPY OF AGRICULTURAL INCOM E CERTIFICATE RECEIVED FROM MRO OFFICE EVIDENCING CULTIVATION OF CROP IN THE 12 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT SUBJECTED PIECE OF LAND (ANNEXURE -1). THE CERTIFIC ATE FAILS TO PROVE CONTENTION OF THE ASSESSEE ON FOLLOWING GROUND:- A) IN IS PERTINENT TO MENTION HERE THAT THE SAID CERTIFI CATE WAS ISSUED ON 04.03.2019 I.E. AFTER THE EXPIRY OF ALMOST 4 TO 5 YEARS OF THE PERIOD UNDER CONSIDERATION . FURTHER, THE SAID CERTIFICATE DOES NOT CLARIFY THE AMOUNT OF AGRICULTURE INCOME EARNED DUR ING THE FY 2013- 14, 2014-15, AND 2015-16 (TILL THE DATE OF SALE OF THE AGRICULTURAL LAND) B) ON DATE OF ISSUANCE OF CERTIFICATE, THE SUBJECTE D LAND WAS NOT OWNED/POSSESSED BY THE ASSESSEE. C) IN THE CERTIFICATE, THE ASSESSEE IS SHOWN TO BE RESIDENT OF VILLAGE VELMALA WHICH IS NOT CORRECT, THE ASSESSEE RESIDED AT BHILWARA. D) AT THE BOTTOM OF THE CERTIFICATE, THERE IS A DIS CLAIMER THAT THIS CERTIFICATE IS NOT VALID FOR ANY CIVIL, CRIMINAL CA SE AND ANY OTHER PURPOSE, EXCEPT TO OBTAIN BANK LOAN SUBJECT TO RULE S AND REGULATION OF THE BANK. THEREFORE, THE SAID CERTIFICATE HAS B EEN ISSUED FOR THE PURPOSE OF BANK LOAN AND HAS NO LEGAL SANCTITY OR B INDING ON THE INCOME TAX PROCEEDINGS. E) MOREOVER, THE PERIOD OF INCOME DERIVED IS ALSO N OT MENTION IN THE CERTIFICATE. THE PERIOD OF USE OF SUBJECTED LAND IS VERY VITAL ELEMENT TO BE MENTIONED WHICH COULD NOT BE ASCERTAINED FROM THE CERTIFICATE. IN VIEW OF THE ABOVE, THE SAID CERTIFICATE FAILED T O PROVE THAT THE SUBJECTED LAND WAS USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE OR HIS PARENT IN ELIGIBLE TIME PERIOD REFERRED IN THE SECTION 54B OF THE ACT. 13 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT IN SUPPORT OF CLAIM, THE ASSESSEE SUBMITTED ' ENCUM BRANCE CERTIFICATE' DOWNLOADED FROM THE WEBSITE (ANNEXURE- 2). THE SAID CERTIFICATE IS ENCUMBRANCE CERTIFICATE WHICH SHOWS THE STATUS OF OWNERSHIP OF THE LAND AND TRANSACTION OF SALE/PURCH ASE OF SUCH LAND. THIS CERTIFICATE COULD NOT BE UTILIZED TO PROVE THA T SUBJECTED LAND WAS UNTILIZED FOR AGRICULTURAL PURPOSE OR NOT? IN PARA-G, THE ASSESSEE WANT PROVE THAT THE SUBJECT ED LAND WAS USED FOR AGRICULTURAL PURPOSE AND INCURRED LOSS OUT OF SUCH ACTIVITIES. IN SUPPORT OF HIS CLAIM, HE HAS FURNISHED COPIES OF LEDGER ACCOUNT OF AGRICULTURAL ACCOUNT OF AGRICULTURAL INCOME AND EXP ENSES FOR FN. 2013-14 & 2014-15 AND MARKED AS ANNEXURE-3. THE ASS ESSEE HAS SUBMITTED ONLY THE LEDGER ACCOUNT OF AGRICULTURE SA LE AND AGRICULTURE WORK MADE IN CASH AND HAS FAILED TO PRODUCE ANY COR ROBORATING EVIDENCE SUCH AS SALE BILLS OF CROP, PURCHASE BILLS AND KHAD & BEEJ, PAYMENT PROOF OF SALARY/WAGES EXPENSES, DETAILS OF PERSON TO WHOM THE SALARY WAS PAID. EVEN THE DETAILS OF CROP, ITS QUANTITY DETAILS HAVE NOT BEEN MENTIONED/SUBMITTED. THE EVIDENCE SO PRODUCED ARE SELF SERVING AND HAVE NO GRAVITY IN THE EYE OF LAW. THE SAID DOCUMENTS HAVE BEEN PROCURED, ARRANGED AND PREPARED PURPOSELY TO PROVE HIS CLAIM U/S 54B OF THE ACT CORRECT. THUS , THE SUBMISSION OF THE ASSESSEE BEFORE YOUR GOOD OFFICE IS LIABLE T O BE REJECTED IN LIGHT OF ABOVE FACTS. THEREFORE, THE GROUNDS RAISE D BY THE ASSESSEE COMPANY IN GROUND NO. 1 MAY KINDLY BE DISMISSED AND ADDITION ON THIS GROUND MAY KINDLY BE SUSTAINED.' 9. THE LD AR HAS ALSO DRAWN OUR ATTENTION TO THE RE PLY/REJOINDER FILED BY THE ASSESSEE IN REGARD TO THE SAID REMAND REPORT WHICH IS AT PAGE NO. 8 OF THE LD. CIT(A)S ORDER, WHICH IS REPRODUCED BE LOW: 14 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT THE ASSESSEE HAS SUBMITTED THE REJOINDER TO THE RE MAND REPORT AS UNDER:- ON THE COMMENTS OFFERED BY THE LD. A.O. IN RELATION TO GROUND NO 1 OF THE APPEAL, WE WISH TO SUBMIT OUR STAND AS UND ER: 1. IN PARA 2.1 THE LD. A.O. HAS MENTIONED THE FOLLO WING OBSERVATION WHICH ARE SET OUT VERBATIM AS UNDER (A) IT IS PERTINENT TO MENTION HERE THAT THE SAID CERTI FICATE WAS ISSUED ON 04.03.2019 I.E. AFTER THE EXPIRY OF ALMOS T 4 TO 5 YEARS OF THE PERIOD UNDER CONSIDERATION . FURTHER, THE SAID CERTIFICATE DOES NOT CLARIFY THE AMOUNT OF AGRICULTURE INCOME EARNED DURING THE FY 2013-14, 2014-15, AND 2015-16 (TILL THE DATE OF SAL E OF THE AGRICULTURAL LAND) (B) ON DATE OF ISSUANCE OF CERTIFICATE, THE SUBJECTED L AND WAS NOT OWNED/POSSESSED BY THE ASSESSEE. (C) IN THE CERTIFICATE, THE ASSESSEE IS SHOWN TO BE RES IDENT OF VILLAGE VELMALA WHICH IS NOT CORRECT, THE ASSESSEE RESIDE D AT BHILWARA. (D) AT THE BOTTOM OF THE CERTIFICATE, THERE IS A DISCLA IMER THAT THIS CERTIFICATE IS NOT VALID FOR ANY CIVIL, CRIMINAL CA SE AND ANY OTHER PURPOSE, EXCEPT TO OBTAIN BANK LOAN SUBJECT TO RULE S AND REGULATION OF THE BANK. THEREFORE, THE SAID CERTIFICATE HAS B EEN ISSUED FOR THE PURPOSE OF BANK LOAN AND HAS NO LEGAL SANCTITY OR B INDING ON THE INCOME TAX PROCEEDINGS. (E) MOREOVER, THE PERIOD OF INCOME DERIVED IS ALSO NOT MENTION IN THE CERTIFICATE. THE PERIOD OF USE OF SUBJECTED LAN D IS VERY VITAL ELEMENT TO BE MENTIONED WHICH COULD NOT BE ASCERTAI NED FROM THE CERTIFICATE. 15 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT IN VIEW OF THE ABOVE, THE SAID CERTIFICATE FAILED T O PROVE THAT THE SUBJECTED LAND WAS USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE OR HIS PARENT IN ELIGIBLE TIME PERIOD REFERRED IN THE SECTION 54B OF THE ACT. AFTER PERUSAL OF THE COMMENTS GIVEN BY THE LD. A.O. WE WISH TO STATE THAT THE LD. A.O HAS GENERALLY PERUSED THE AG RICULTURE INCOME CERTIFICATE ISSUED BY THE CONCERNED TAHSILDAR OF TH E SUBJECTED AGRICULTURE LAND - REVENUE DEPARTMENT GOVERNMENT OF TELANGANA AND OUT-RIGHTLY REJECTED THE CERTIFICATE ISSUED BY THE GOVERNMENT AUTHORITY BY STATING THAT SAID CERTIFICATE FAILED T O PROVE THAT THE SUBJECTED LAND WAS USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE OR HIS PARENT. FURTHER, TO SUPPORT THE ASSESSEE CLAIM, WE SUBMIT A S UNDER: 1. THE AGRICULTURE INCOME CERTIFICATE ISSUED BY THE CONCERNED TAHSILDAR OF THE SUBJECTED PIECE OF LAND ITSELF STA TES THE FACT THAT AS PER GOVERNMENT RECORDS THERE IS AN AGRICULTURAL INC OME DERIVED FROM THE SUBJECTED PIECE OF LAND WHICH SUBSTANTIATE D THE FACT THAT THE LAND WAS USED FOR AGRICULTURAL PURPOSES. 2. LD. A.O. HAS MENTIONED IN POINT NO (C) ABOVE THA T, IN THE CERTIFICATE, THE ASSESSEE IS SHOWN TO BE RESIDENT O F VILLAGE VELMALA WHICH IS NOT CORRECT, THE ASSESSEE RESIDED AT BHILW ARA . THE CERTIFICATE ISSUED BY THE TAHSILDAR IS AS PER THE P RESCRIBED FORMAT UNDER RULES AND REGULATIONS OF THE CONCERNED STATE AND IN GENERAL ANY GOVERNMENT AUTHORITY WILL MENTION THE ADDRESS A S PER HIS OFFICIAL RECORDS ONLY. HENCE IT IS TO STATE THAT TH E ASSESSEE IS RESIDING IN BHILWARA AND LAND WAS NOT USED FOR AGRI CULTURAL PURPOSES IS A PERCEPTION ONLY AND NOT ON FACTS. 16 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT 3. LD. A.O. HAS MENTIONED IN POINT NO (D) ABOVE THA T AT THE BOTTOM OF THE CERTIFICATE, THERE IS A DISCLAIMER TH AT THIS CERTIFICATE IS NOT VALID FOR ANY CIVIL, CRIMINAL CASE AND ANY OTHE R PURPOSE, EXCEPT TO OBTAIN BANK LOAN SUBJECT TO RULES AND REGULATION OF THE BANK. THEREFORE, THE SAID CERTIFICATE HAS BEEN ISSUED FOR THE PURPOSE OF BANK LOAN AND HAS NO LEGAL SANCTITY OR BINDING ON T HE INCOME TAX PROCEEDINGS. WE WELCOME THE COMMENTS OF THE LD. A.O. BUT THE CERTIFICATE ISSUED BY THE GOVERNMENT AUTHORITY WILL GOVERN ACCORDING TO THE CONCERNED STATES PRESCRIBED RULES AND REGULATIONS AND NOT ACCORDING TO THE INCOME TAX ACT RULES AND R EGULATIONS. HOWEVER CERTIFICATE ISSUED BY THE CONCERNED TAHSILD AR OF THE SUBJECTED PIECE OF LAND STATES THE FACT THAT AS PER GOVERNMENT RECORDS THERE IS AN AGRICULTURAL INCOME DERIVED FRO M THE SUBJECTED PIECE OF LAND WHICH SUBSTANTIATED THE FACT THAT THE LAND WAS USED FOR AGRICULTURAL PURPOSES AND ASSESSEE IS ELIGIBLE FOR THE CLAIM U/S 54B OF THE IT ACT 1961. 4. MOREOVER, IN THE CASE OF ASSTT. CIT V. N. RAGHU VARMA (HYD- TRIB) :(2013) 142 ITD 0421 HAS RECOGNIZED THE AGRIC ULTURE INCOME CERTIFICATE ISSUED BY THE MRO OFFICE (TAHSILDAR O FFICE OF THE GOVERNMENT OF THE TELANGANA) AND DISMISSED THE APPE AL OF THE REVENUE. IN PARA 5 OF THE ORDER, THE HONBLE TRIBUN AL OBSERVED THAT THE SALE DEED LAND IS REFERRED AS AGRICULTURAL LAND . THE LANDS ARE APPEARING AS AGRICULTURAL LANDS IN PATTADAR PASSBOO KS AND IN THE RETURNS OF INCOME WERE FILED EARLIER CLAIMING AGRIC ULTURAL INCOME. COPY OF PAHANI FROM MRO OFFICE IS SUBMITTED EVIDENC ING CULTIVATION OF SUBABUL.MRO CERTIFICATE IS EVIDENCING CULTIVATIO N OF SUBABUL CROP ON THE LAND . 17 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT 5. GOING FURTHER, THE HONBLE TRIBUNAL HAD ALSO CON SIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CWT V. OFFICER-IN-CHARGE (COURT OF WARDS) (1976) 105 ITR 133 WHEREIN THE APEX COURT HELD THAT : 'THE DETERMINATION OF THE CHARACTER OF THE LAND, AC CORDING TO THE PURPOSE FOR WHICH IT IS MEANT OR SET APART AND CAN BE USED, IS A MATTER WHICH OUGHT TO BE DETERMINED ON THE FACTS OF EACH PARTICULAR CASE. WHAT IS REALLY REQUIRED TO BE SHOWN IS THE CO NNECTION WITH AN AGRICULTURAL PURPOSE AND USER AND NOT THE MERE POSS IBILITY OF USER OF LAND, BY SOME POSSIBLE FUTURE OWNER OR POSSESSOR, F OR AN AGRICULTURAL PURPOSE. IT IS NOT THE MERE POTENTIALI TY, WHICH WILL ONLY AFFECT ITS VALUATION AS PART OF ASSETS, BUT ITS ACT UAL CONDITION AND INTENDED USER WHICH HAS TO BE SEEN FOR PURPOSES OF EXEMPTION FROM WEALTH-TAX. ONE OF THE OBJECTS OF THE EXEMPTION IS TO ENCOURAGE CULTIVATION OR ACTUAL UTILIZATION OF LAND FOR AGRIC ULTURAL PURPOSES. IF THERE IS NEITHER ANYTHING IN ITS CONDITION, NOR ANY THING IN THE EVIDENCE TO INDICATE THE INTENTION OF ITS OWNERS OR POSSESSORS SO AS TO CONNECT IT WITH AN AGRICULTURAL PURPOSE, THE LAN D COULD NOT BE AGRICULTURAL LAND FOR THE PURPOSES OF EARNING AN EX EMPTION UNDER THE ACT. ENTRIES IN REVENUE RECORDS ARE, HOWEVER, G OOD PRIMA FACIE EVIDENCE.' MOREOVER, THE FINANCE ACT, 1970 ALSO INTRODUCED SEC TION 54B GRANTING EXEMPTION IN CASE THE PROCEEDS OF SALE OF AGRICULTURAL LANDS ARE REINVESTED IN THE PURCHASE OF OTHER AGRIC ULTURAL LANDS. THE FINANCE BILL DID NOT CONTAIN THIS SECTION AND, THER EFORE, WE DO NOT HAVE ANY NOTES ON CLAUSES IN RESPECT OF THIS SECTIO N. HOWEVER, THE CBDT HAS EXPLAINED ITS MEANING BY CIRCULAR NO. 45, DATED 2-9- 1970. IT STATES: 18 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT 'THE EFFECT OF THE AMENDMENTS TO SECTION 2(14) AND SECTION 47, AS STATED ABOVE, WILL BE THAT CAPITAL GAINS ARISING FR OM TRANSFER OF AGRICULTURAL LANDS SITUATED IN THE MUNICIPAL AND OT HER URBAN AREAS ON OR AFTER 1-3-1970, WILL BECOME LIABLE TO TAXATIO N EVEN WHERE SUCH LAND WAS HELD FOR BONA FIDE AGRICULTURAL PURPO SES, OFTEN AS THE MAIN SOURCE OF LIVELIHOOD. WITH A VIEW TO RELIEVING THE BURDEN OF TAXATION ON THE CAPITAL GAINS IN SUCH CASES, A PROV ISION HAS BEEN MADE, IN A NEW SECTION 54B, FOR EXEMPTING FROM TAX THE CAPITAL GAIN ARISING FROM THE TRANSFER OF AGRICULTURAL LAND IN CERTAIN CIRCUMSTANCES. UNDER THE NEW SECTION 54B, WHERE THE CAPITAL GAIN ARISES FROM TRANSFER OF LAND WHICH IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER WAS BEING USED BY TH E ASSESSEE OR A PARENT OF HIS FOR AGRICULTURAL PURPOSES, AND THE AS SESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE, PURCHASED AN Y OTHER LAND (WHETHER IN THE SAME AREA OR ELSEWHERE) FOR BEING U SED FOR AGRICULTURAL PURPOSES, THEN THE CAPITAL GAIN WILL N OT BE CHARGED TO TAX TO THE EXTENT THAT IT HAS BEEN UTILIZED FOR ACQ UIRING THE FRESH LAND. WHERE THE AMOUNT OF THE CAPITAL GAIN EXCEEDS THE COST OF ACQUISITION OF THE FRESH LAND, ONLY THE EXCESS WILL BE CHARGEABLE TO TAX. THE CONCESSION WILL, HOWEVER, BE FORTIFIED IF THE ASSESSEE TRANSFERS THE FRESH LAND ACQUIRED BY HIM WITHIN A P ERIOD OF THREE YEARS FROM THE DATE OF ITS PURCHASE. THOUGH THE OBSERVATIONS OF THE SUPREME COURT IS WIT H REFERENCE TO THE WEALTH-TAX ACT, WHERE AGRICULTURAL LAND IS NOT DEFINED, IT EQUALLY APPLIES TO INCOME-TAX ACT, WHERE ALSO AGRICULTURAL LAND HAS NOT BEEN DENIED. WE MUST, THEREFORE, DETERMINE THE CHAR ACTER OF THE LAND IN QUESTION APPLYING THE TESTS GIVEN BY THE SU PREME COURT. THE EVIDENCE AVAILABLE IN THE PRESENT CASE IS THAT THE LAND WAS 19 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT ENTERED IN THE REVENUE RECORDS AS AGRICULTURAL LAND . IT IS STATED THAT THE LAND WAS ALWAYS TREATED AS AGRICULTURAL LAND . IN THE INSTANT CASE, IT IS SUBMITTED THAT THE ASSESSE USED FOR THE LAND FOR AGRICULTURAL PURPOSE/AGRICULTURAL ACTIVATE S AND COPY OF AGRICULTURE INCOME CERTIFICATE RECEIVED FROM MRO OF FICE- (TAHSILDAR OFFICE OF THE GOVERNMENT OF THE TELANGANA) IS ALSO SUBMITTED EVIDENCING CULTIVATION OF CROP IN THE SUBJECTED PIE CE OF AGRICULTURAL LAND AND THE SALE DEED OF LAND IS REFERRED AS AGRIC ULTURAL LAND AND THE LANDS ARE APPEARING AS AGRICULTURAL LANDS IN PA TTADAR PASSBOOKS ALSO. HENCE IN VIEW OF THE FACTS OF THE CASE AND AB OVE APEX COURT DECISION AND CBDT CIRCULAR NO. 45, DATED 2-9-1970, ASSESSE IS ELIGIBLE FOR CLAIM UNDER SECTION 54B OF THE IT ACT 1961 . 10. AFTER HAVING APPRECIATED FACTS OF THE PRESENT C ASE, WE FOUND THAT AS PER PROVISIONS OF SECTION 54B OF THE ACT, WE CLEARL Y OBSERVE THAT THAT THE ASSESSEE HAS TO SATISFY CERTAIN CONDITIONS AS SET O UT IN SECTION 54B OF THE ACT FOR CLAIMING EXEMPTION WHICH ARE ENUMERATED BEL OW: I. THE AGRICULTURAL LAND IS TRANSFERRED BY ANY INDI VIDUAL OR HUF. II. THE AGRICULTURAL LAND HAS BEEN USED BY THE INDI VIDUAL OR HIS PARENTS FOR AGRICULTURAL PURPOSE DURING TWO YEARS I MMEDIATELY PRECEDING THE DATE OF TRANSFER. III. THE ASSESSEE HAD PURCHASED ANOTHER AGRICULTURA L LAND (RURAL OR URBAN) WITHIN A PERIOD OF TWO YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL AGRICULTURAL LAND TO BE USED FOR AGRIC ULTURAL PURPOSE. IV. IF THE AMOUNT OF CAPITAL GAIN IS NOT UTILIZED B Y THE ASSESSEE FOR THE PURCHASE OF ANOTHER AGRICULTURAL LAND BEFORE TH E DATE OF FURNISHING RETURN OF INCOME U/S. 139 OF THE ACT, TH E SAME SHOULD 20 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT HAVE BEEN DEPOSITED BEFORE FURNISHING SUCH RETURN I N A NOTIFIED CAPITAL SCHEME ACCOUNT WITH BANK. 11. IN SO FAR AS CONDITION GIVEN IN CLAUSE (1) & (I II) ARE CONCERNED, THERE IS NO DISPUTE IN THE PRESENT CASE BECAUSE THE ASSES SEE HAD ALREADY SATISFIED THESE CONDITIONS. THE ONLY DISPUTE IS REL ATING TO CLAUSE (II) AND (IV), AS TO WHETHER THE ASSESSEE HAS USED THE LAND FOR AGRICULTURAL PURPOSES DURING THE PERIOD OF 2 YEARS IMMEDIATELY P RECEDING THE DATE OF TRANSFER AND AS TO WHETHER THE ASSESSEE HAS UTILIZE D THE AMOUNT OF CAPITAL GAIN FOR THE PURCHASE OF ANOTHER AGRICULTURAL INCOM E BEFORE THE DATE OF FURNISHING RETURN OF INCOME U/S 139 OF THE ACT AND IF NOT, THEN THE SAME SHOULD HAVE BEEN DEPOSITED BEFORE FURNISHING SUCH R ETURN IN A NOTIFIED CAPITAL SCHEME ACCOUNT WITH BANK. HOWEVER, FROM PE RUSAL OF THE ORDER OF THE LD. CIT(A), WE NOTICE THAT THE DISALLOWANCE U/S 54B OF THE ACT WAS UPHELD BY THE LD. CIT(A) ONLY ON THE GROUND THAT TH E ASSESSEE HAS FAILED TO PROVE THAT HE OR HIS PARENTS WERE CARRYING ON AG RICULTURE ACTIVITIES FOR TWO YEARS IMMEDIATELY PRECEDING THE SALE OF THE LAN D. IN ORDER TO SUBSTANTIATE HIS CLAIM THAT THE AGRICULTURAL LAND W AS USED FOR AGRICULTURE ACTIVITIES. WE HAVE PERUSED THE COPY OF AGRICULTURA L INCOME CERTIFICATE ISSUED BY THE DEPARTMENT OF REVENUE, GOVT. OF TELAN GANA EVIDENCING THE ONLY INCOME DERIVED FROM THE AGRICULTURAL LAND OWNE D AND POSSESSED BY THE ASSESSEE. ALTHOUGH IN HIS REMAND REPORT, THE A. O. HAD RAISED OBJECTIONS TO THE SAID CERTIFICATE BUT NO WHERE THE REVENUE AUTHORITIES 21 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT HAVE CHALLENGED THE AUTHENTICITY OR THE VERACITY OF THE SAID CERTIFICATE WHICH HAS BEEN ISSUED BY THE GOVT. OF TELANGANA, DE PARTMENT OF REVENUE. THUS, IN OUR VIEW, SINCE THE CERTIFICATE I SSUED IN FAVOUR OF THE ASSESSEE WAS ISSUED BY THE GOVERNMENT DEPARTMENT, T HEREFORE, THE PRESUMPTION OF CORRECTNESS IS ATTACHED WITH THE SAI D DOCUMENT AND ON THE CONTRARY, THE REVENUE AUTHORITIES HAVE NOT LEAD ANY EVIDENCE IN ORDER TO CONTROVERT OR REBUT THE SAID PUBLIC DOCUMENT ISSUED BY THE GOVT. OF TELANGANA, DEPARTMENT OF REVENUE. THE ASSESSEE HAD ALSO FILED A DETAILED REJOINDER AS REPRODUCED IN THE ABOVE PARAS OF THIS ORDER WHEREIN POINTWISE, THE ASSESSEE HAS DEALT WITH THE OBJECTIO NS SO RAISED BY THE A.O.. MOREOVER, THE COORDINATE BENCH OF THE ITAT HY DERABAD IN THE CASE OF ACIT VS N. RAGHU VARMA (2013) 142 ITD 0421 HAS R ECOGNIZED THE AGRICULTURE INCOME CERTIFICATE ISSUED BY THE MRO OF FICE (TAHSILDAR OFFICE OF THE GOVERNMENT OF THE TELANGANA) AND DISMISSED T HE APPEAL OF THE REVENUE. IN PARA 5 OF THE ORDER, THE COORDINATE BEN CH OF THE TRIBUNAL HAS CATEGORICALLY BEEN HELD THAT THE SALE DEED LAND IS REFERRED AS AGRICULTURAL LAND. THE LANDS ARE APPEARING AS AGRICULTURAL LANDS IN PATTADAR PASSBOOKS AND IN THE RETURNS OF INCOME WERE FILED EARLIER CLA IMING AGRICULTURAL INCOME. COPY OF PAHANI FROM MRO OFFICE IS SUBMITTED EVIDENCING CULTIVATION OF SUBABUL.MRO CERTIFICATE IS EVIDENCIN G CULTIVATION OF SUBABUL CROP ON THE LAND. 22 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT 12. FURTHER THE COORDINATE BENCH OF THE TRIBUNAL HA D ALSO CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF CWT VS OFFICER IN CHARGE (1976) 105 ITR 133 (SC). 13. AS PER THE FACTS OF THE PRESENT CASE, IT WAS CA TEGORICALLY SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE USED THE LAND FOR AGRICULTURAL PURPOSE/AGRICULTURAL ACTIVITIES AND COPY OF AGRICUL TURE INCOME CERTIFICATE RECEIVED FROM MRO OFFICE (TAHSILDAR OFFICE OF THE G OVERNMENT OF THE TELANGANA) IS ALSO SUBMITTED EVIDENCING CULTIVATION OF CROP IN THE SUBJECTED PIECE OF AGRICULTURAL LAND AND THE SALE D EED OF LAND IS REFERRED AS AGRICULTURAL LAND AND THE LANDS ARE APPEARING AS AGRICULTURAL LANDS IN PATTADAR PASSBOOKS ALSO. WE HAVE ALSO CONSIDERED T HE FACT THAT THE AGRICULTURE INCOME CERTIFICATE ISSUED BY THE REVENU E DEPARTMENT OF THE STATE OF TELANGANA HAS BEEN GOT ISSUED IN FAVOUR OF THE ASSESSEE BY APPLYING ONLINE AND THE FORMAT IN WHICH IT IS ISSUE D IS AS PER THE CONCERNED STATES PRESCRIBED RULES AND REGULATIONS. WE HAVE SO CONSIDERED THE SUBMISSION OF THE ASSESSEE TO THE EF FECT THAT THE ASSESSEE HAD CULTIVATED THE AGRICULTURE CROPS DURING THE PER IOD OF 2 YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER AND INCU RRED THE LOSS AFTER MEETING OF ALL THE EXPENDITURE INCURRED DURING THE AGRICULTURAL ACTIVITIES AND DEBIT THE LOSS DIRECTLY TO CAPITAL ACCOUNT. THE REFORE, THE AGRICULTURAL INCOME WAS NOT SHOWN IN THE RETURN OF INCOME FOR TH E A.Y. 2014-15 AND 2015-16. 23 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT 14. WE HAVE ALSO METICULOUSLY CONSIDERED THE CHRONO LOGICAL EVEN OF SALE AND PURCHASE OF AGRICULTURAL LAND WHICH IS REP RODUCED AS UNDER: PARTICULARS DATE DATE OF SALE OF AGRICULTURE LAND SITUATED AT VILLAG E VELEMALA, DIST. MEDAK (TELANGANA) 27.06.2015 PURCHASE OF NEW AGRICULTURE LAND 10.05.2016 DUE DATE OF FILING OF RETURN U/S 139(1) BEING TAX AUDIT WAS APPLICABLE FOR THE YEAR UNDER CONSIDERATI ON 17.10.2016 ACTUAL DATE OF RETURN FILING 15.10.2016 FROM THE ABOVE FACTS OF THE CASE, IT IS CRYSTAL CLE AR THAT THE ASSESSEE HAD PURCHASED NEW AGRICULTURAL LAND ON 10. 05.2016 I.E. BEFORE THE DUE DATE OF FILING RETURN UNDER SECTION 139 WHICH IS 17.10.2016 (5 MONTHS BEFORE THE DUE DATE) AND AS PE R THE PROVISION OF THE SECTION 54B(2) OF THE INCOME TAX A CT IF THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT UTILIZED BY THE ASSESSEE FOR THE PURCHASE OF THE NEW ASSET BEFORE THE DATE OF FU RNISHING THE RETURN OF INCOME UNDER SECTION 139, SHALL BE DEPOSI TED BY HIM BEFORE FURNISHING [SUCH DEPOSIT BEING MADE IN ANY C ASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASS ESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION ( 1) OF SECTION 139 IN AN ACCOUNT OF ANY SUCH BANK OR INSTITUTION A S MAY BE SPECIFIED IN, AN UTILIZED IN ACCORDANCE WITH, ANY S CHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CIAL GAZETTE FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOM PANIED BY PROOF OF SUCH DEPOSIT, IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILIZED IN ACCORDANCE WIT H, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION I N THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND FOR THE PURPOSE OF SU B-SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILIZED BY THE ASSESSE E FOR THE 24 ITA 290/JOHD/2019 ANIL KR NUWAL VS ACIT PURCHASE OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET. THEREFORE, KEEPING IN VIEW OUR ABOVE OBSERVATIONS A ND ALSO CONSIDERING THE DECISION OF THE COORDINATE BENCH OF THE ITAT AN D THE PROVISIONS OF SECTION 54B OF THE ACT, WE ALLOW THIS GROUND RAISED BY THE ASSESSEE AND SET ASIDE THE ORDER PASSED BY THE REVENUE AUTHORITI ES AND DIRECT THE A.O. TO ALLOW EXEMPTION U/S 54B OF THE ACT. 15. GROUNDS NO. 2 AND 3 OF THE APPEAL ARE CONSEQUEN TIAL IN NATURE AS PER OUR FINDING OF GROUND NO. 1 OF THE APPEAL. THER EFORE, THESE TWO GROUNDS BECOME INFRUCTUOUS. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 20/03/2020. SD/- SD/- (R.C.SHARMA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :. 20/03/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. THE CIT(A) 5. DR, ITAT, JODHPUR 6. GUARD FILE (ITA NO. 290/JODH/2019) ASSISTANT REGISTRAR JODHPUR BENCH