Case Law Details
Keshav Sunderam Rajam Vs ITO (ITAT Chennai)
ITAT Chennai held that simply because there are coconut trees on the land it doesn’t mean that agricultural operations are carried out. Accordingly, deduction claimed under section 54B on sale of the land is disallowed.
Facts- The assessee is a Non-Resident sold a capital asset in which the assessee’ share of sale consideration was ₹.3,70,00,000/-. After adjusting the indexed cost of acquisition and improvement, brokerage and expenses in connection with sale, LTCG was computed to be ₹.3,58,24,032/-. The assessee had invested LTCG relating to section 54B of the Act to the extent of ₹.2.43 crores in capital gains account scheme and ₹.1.20 crores was paid to his father Shri Srinath Rajam to acquire agricultural land at Burliar Village, Coonoor. Accordingly, the taxable long term capital gain was brought to NIL.
The case was selected for scrutiny and the assessment was completed by disallowing the deduction claimed u/s. 54B of the Act amounting to ₹.3,08,24,032/-. During the course of original assessment, AO concluded that the property sold by the assessee is not ‘agricultural land’ and rejected the claim of deduction u/s. 54B of the Act of ₹.3,08,24,032/-.
Conclusion- The piece of land sold by the assessee is within the purview of Coastal Regulation Zone [CRZ] adjoining to sea. The case of the assessee is that he has carried agricultural operation. Except adangal, there was no evidence bought on record that the assessee carried agricultural operations. The adangal filed by the assessee shows that there were few coconut trees. Simply because, there are coconut trees, it does not mean that the assessee carried agricultural operation, particularly, when the assessee has not reported any agricultural income. Apart from that, the said extent of land was just adjacent to the sea not useful for any agricultural purposes, whereas, the assessee’s statement is that he has carried agricultural operation. To carry agricultural operation water is very much required and sea water is not useful for carrying any agricultural activities or to raise any agricultural crop. Under these facts and circumstances of the case, we are of the considered opinion that the assessee has not carried any agricultural activities.
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