Exemption below phase 54B of the Income Tax (IT) Act may also be claimed in recognize of capital positive factors bobbing up on switch of agricultural land, supplied it’s been used for agricultural function for a minimum of two years previous to the sale. The capital positive factors are exempt to the level such positive factors are used to shop for any other agricultural land inside 3 years.
Tax officers indicate that it’s not simple to go off an source of revenue similar to tax-free agricultural source of revenue. Or for that subject, even if a taxpayer claims {that a} sale is of agricultural land, a spread of information – be it land information or, in relation to high-value issues, even satellite tv for pc pictures – turn out to hand.
In the case heard via the Chennai ITAT, the taxpayer Keshav Sunderam Rajam used to be a non-resident. He had invested the capital positive factors bobbing up from sale of ‘agricultural land’ via parking Rs 2.4 crore in a capital positive factors account scheme (the sum so deposited must be used for acquire of agricultural land throughout the specified length) and had paid Rs 1.2 crore to his father to procure agricultural land in Coonoor. He produced ‘adangal’ (native land information) to confirm the land bought used to be agricultural. The IT officer denied the capital positive factors exemption advantage of Rs 3-odd crore at the grounds that the land bought had now not been used for agricultural functions.
The litigation in the end landed on the ITAT bench, which seen that the ‘adangal’ presentations that there have been a couple of coconut bushes. This does now not denote that the taxpayer performed agricultural operations, in particular when he has now not reported any agricultural source of revenue. Further, the bench seen that the land bought used to be adjoining to the ocean. To perform agricultural operations, water is wanted. But sea water isn’t helpful to hold out any agricultural actions or lift any vegetation.
Similarly, within the Pune ITAT, taxpayer Sunil Bagul had claimed a deduction below phase 54B of the IT Act, to the track of Rs 1.7 crore, in opposition to acquire of 3 plots of agricultural land. In the process overview, the IT officer identified, to be eligible for this tax get advantages, two stipulations want to be fulfilled. First, the land bought must were used for agricultural functions for a minimum of two years prior to the sale. Second, the land bought must even be used for agriculture. In this situation, the primary situation used to be now not met as used to be proved via native land income information.
The ITAT bench held that the land income information had been the clinching proof that the land bought used to be now not agricultural. The receipts submitted via the taxpayer, that have been issued via the Nashik Agricultural Marketing Committee appearing sale of tomato and different greens, didn’t determine that agricultural actions had been performed on that exact plot of land.