INCOME TAX ACT, 1961

Section 54B

Capital gains - Deduction under section 54B - Assessee produced agriculture income certificate from MRO office evidencing cultivation of crop -

Assessee had claimed deduction under section 54B on the ground that assessee had purchased agricultural land after sale of the agricultural land. However, claim of the assessee was disallowed by AO on the ground that assessee failed to prove utilization of subjected capital asset for agriculture activity in last two years from sale. Held: Assessee submitted copy of Agriculture income Certificate received from MRO office evidencing cultivation of crop in subjected piece of agricultural land and in sale deed of land same was referred as agricultural land and lands was appearing as agricultural lands in Pattadar passbooks also. Also agriculture income certificate issued by revenue department of the State of Telangana has been got issued in favour of the assessee by applying online and format in which it was issued was as per concerned state's prescribed rules and regulations. Assessee had cultivated agriculture crops during the period of 2 years immediately preceding the date of transfer and incurred loss after meeting of all expenditure incurred during agricultural activities and debited the loss directly to capital account. Therefore, agricultural income was not shown in return of income for assessment year 2014-15 and 2015-16. Accordingly AO was directed to allow exemption under section 54B.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

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