Deduction u/s 54B allowable even if nature of land converted to non-agriculture just before transfer

ITO Vs  Bharatkumar Laljibhai Tejani (ITAT Surat)

ITAT Surat held that deduction under section 54B duly allowable in case the nature of land was converted from agriculture to non-agriculture purpose just before transfer of land.

Facts- During the assessment, AO noted that the assessee has sold a non-agricultural land for a consideration of Rs. 3.95 crores. The assessee computed long term capital gain of Rs. 3.89 crores after availing indexation. The assessee also claimed deduction u/s. 54B of the Income Tax Act, 1961 for purchasing other agricultural land by investing sale proceed for purchase of new agricultural land. AO Officer was of the view that the assessee has sold non- agricultural land, so the deduction u/s. 54B of the Act cannot be allowed. Deduction under Section 54B of the Act was denied to the assessee and the Assessing Officer computed the long term capital gain by taking the value of sale consideration on the basis of stamp valuation authorities and added long term capital gain of Rs. 4.65 crores.

Conclusion- In the said case, the nature of land was also converted from agriculture to non-agriculture purpose just before transfer of land and the same was considered as a transfer of agriculture land as far as seller is concerned. Those facts exactly similar to the facts of the present case. Thus, we find that the ld. CIT(A) on appreciation of such evidence, allowed the deduction under Section 54B of the Act. We find that finding of ld. CIT(A) is based on appreciation of evidence with regard to claim of deduction under Section 54B of the Act. Therefore, we do not find any infirmity or illegality in his order which we affirm. In the result, grounds of appeal raised by the revenue are dismissed.

FULL TEXT OF THE ORDER OF ITAT SURAT

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