Ashvinkumar Joitaram Patel Vs ITO (ITAT Ahmedabad)
The appeal before the Income Tax Appellate Tribunal (ITAT), Ahmedabad, arose from the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre dated 15.07.2025 for Assessment Year 2016-17. The assessee challenged the denial of deduction under Section 54B of the Income Tax Act, 1961, contending that the land sold was agricultural land, that the remand report supported the claim, and that the issue of exemption under Section 54B was beyond the scope of the limited scrutiny assessment. The Assessing Officer had denied the deduction on the ground that the land was an urban agricultural land situated within 8 km of a municipal area, and the CIT(A) had upheld the disallowance.
During the appellate proceedings before the CIT(A), the Assessing Officer was directed to verify additional evidence produced by the assessee under Rule 46A of the Income Tax Rules, 1962. In the remand proceedings, the Assessing Officer examined an affidavit from an agriculturist stating that he cultivated the assessee’s land and shared 20% of the gross crop with the assessee. The Assessing Officer also verified bills and invoices relating to the purchase of seeds, fertilizers, pesticides, and urea for the financial years 2011-12 to 2014-15. After examining these materials, the Assessing Officer concluded in the remand report that agricultural and farming activities had been carried out on the land during the period immediately preceding its transfer. The report also recorded that the assessee had purchased another agricultural land for Rs.1,59,68,612 after the sale and had claimed deduction under Section 54B amounting to Rs.1,45,73,828.
