Income Tax Appellate Tribunal - Delhi
Tek Chand vs Income-Tax Officer on 19 May, 1997
ORDER
Vimal Gandhi, J.M.
1. This appeal by the assessee for the asst. yr. 1981-82 is directed against order of Dy. CIT(A), Rohtak, upholding assessment of gain arising on sale of land and denial of exemption under s. 54B of IT Act.
2. The facts of the case briefly stated are that appellant along with his mother purchased agricultural land measuring 29 canals situated outside municipal limits of Rewari on 9th January, 1976, for total sum of Rs. 30,000. They got the land levelled and made it fit for cultivation. A Tubewell was also installed. In all total expenses of Rs. 26,670 were incurred. The aforesaid land was sold to members of Thathera Vikas (backward class), Mandals in asst. yr. 1981-82, for total consideration of Rs. 1,33,268. The AO held that the land was sold after cutting it into plots and, therefore, assessee and his mother carried on an adventure in trade. The gain on sale was assessed as business income after allowing deduction towards cost and expenses. This led to assessment of Rs. 32,300 in the hands of the assessee.
3. The assessee impugned above assessment in appeal before the learned Dy. CIT(A) who accepted that assessee did not carry any adventure in nature of trade having regard to his intention at the time of acquisition of land to carry agriculture. However, alternative claim of assessee that it was sale of agricultural land was not accepted. The learned Dy. CIT(A) held that plots in place of agricultural land were sold by the assessee and his mother. Accordingly claim under s. 54(B) was rejected.
4. The assessee has brought the issue in appeal before us. Reliance was placed on copies of khasra girdauri which showed that land was cultivated throughout. The assessee also relied upon his affidavit and detailed submissions made before the AO. In this connection contents of affidavit of assessee dt. 11th December, 1984, were brought to our notice. In the aforesaid affidavit, the assessee confirmed on oath that he was agriculturist by occupation. It was further stated that the land when sold was wholly agricultural. It was emphasised that after sale of this land, the assessee further purchased agricultural land to carry on agricultural operations. It was emphasised that against affidavit and written submissions of assessee supported by entries in khasra girdauri, the Revenue brought no material on record to show that agricultural operations were not carried on this land. The learned Departmental Representative relied upon impugned order of Dy. CIT(A). He argued that the land had not been sold as one block but was sold to different members of society through a number of sale deeds. It was, therefore, clear that land was divided into plots and in that situation, it was not possible to carry on agricultural operations on the said land.
5. We have given careful thought to rival submissions of the parties. The assessee filed whatever evidence could possibly be filed to show that till the date of sale agricultural operations were carried on this land. The claim is supported by written submissions, affidavit and khasra girdauri. It is admitted by the Revenue that land was purchased as agricultural land. It was levelled and tubewell was installed and actual agricultural operations were carried in earlier years. However, before sale the land ceased to be agricultural and, therefore, exemption claimed under s. 54B was denied to the assessee. However, no evidence on record is available to show that land which was admittedly agricultural ceased to be so prior to the date of sale. The claim, in our opinion, cannot be denied merely because the land was not sold to one person but to different members of the society. The assessee admittedly had no hand in the formation of society or cutting of plots. In our opinion, the beneficial provision is liable to be construed liberally and when so construed the Revenue authorities are not justified in denying claim of exemption to the assessee under s. 54B of IT Act. It is an accepted position that if investment in agricultural land made by the assessee is taken into account, no capital gain is exigible. Having regard to material available on record, we hold that the assessee sold agricultural land and invested sale proceeds thereof in acquiring agricultural land in terms of s. 54B and no capital gain was taxable in his hand. The AO is directed to revise the assessment as per above directions.
6. In the result, assessee's appeal is allowed.