Ashok Manshukla Doshi Vs ITO (ITAT Hyderabad)
Can Deduction under Section 54B Be Denied If Agricultural Operations Are Carried Out Through Villagers?
The ITAT Hyderabad held that deduction under Section 54B cannot be denied merely because agricultural operations were carried out through third parties, as the law only requires that the land be used for agricultural purposes and not necessarily cultivated personally by the assessee.
In the present case, the assessee-HUF sold agricultural land and purchased another agricultural land within the prescribed period, but the deduction was disallowed on the ground that agricultural activities were not directly carried out and no supporting bills for expenses or sale of produce were furnished.
The Tribunal observed that the land was duly classified as agricultural in revenue records, agricultural income had been consistently declared and accepted in earlier years, and cultivation through villagers still qualifies as use of land for agricultural purposes.
Accordingly, the disallowance was held to be unjustified and the assessee was held entitled to deduction under Section 54B, with the addition deleted and appeal allowed in favour of the assessee.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 08.07.2025, pertaining to the assessment year 2022-23.
