Commissioner of Income Tax vs. Narsing Gopal Patil INCOME TAX APPEAL NO. 2319 of 2013 dated: 1st MAR CH, 2016. (Bom HC)
(Narsing Gopal Patil, Pune vs. Asst CIT ITA No. ITA No.1544/PN/2012 & ITA 1815/PN/2012 (A Y: 2008-09) dt 3rd, May 2013).
The assessee for the subject assessment year, sold land which according to him had been used as agricultural land. The sale consideration was partly invested in the purchase of agricultural land and partly utilised for construction of the two buildings claiming it to be a residential house. The assessee claimed the benefit of exemption as available u/s. 54B of the Act to the extent the sale proceeds were utilised for purchase of the agricultural land and section 54F to the extent that the sale proceeds were utilised to construct the residential house. The Assessing Officer denied both the claims. Regarding the claim for the benefit of section 54B was concerned, he held that the assessee had not been able to prove that the land sold had been used for Agricultural purposes in the two preceding years prior to its sale.
The CIT(A) held that the assessee was entitled to the benefit of section 54B in as much as it had led evidence before the Assessing Officer, that the user of the land sold was for agricultural purposes by furnishing 7/12 extract and his return of income filed for the Assessment years 2002 – 03 to 2007 – 08 disclosing agricultural income. The other claim of the assessee for exemption u/s. 54F was denied by the CIT(A).
The Dept. challenged the CIT (A) order to the extent it allowed the claim for benefit of section 54B, and assessee as regard section 54 F, before the Tribunal. The Tribunal upheld the order of the CIT(A) in granting the benefit of section 54B to the assessee, on the ground that the assessee had produced evidence, to show that the land which was sold, was in fact used for agricultural purpose during the period of two years prior to the date of its transfer. This evidence was in the form of 7/12 extract as per land revenue record and also return of income filed for the assessment year 2005 – 2006 to 2007- 2008 in which the assessee had declared its agricultural income.
Similarly, the Tribunal upheld the claim of section 54 F by holding that, so long as the assessee’s claim of exemption was limited to the investment in the construction of the residential portion of the building, the same was held to be allowable.
The Hon’ble High Court observed that the finding recorded by the lower authorities was a finding of fact, that the subject land was being used for agricultural purpose in the two years preceding the date of the sale. This finding of fact was rendered on the basis of 7/12 extract led as evidence before the Assessing Officer, which indicates the manner in which the land is being used. In fact, as correctly observed by the Tribunal, there is a presumption of the correctness of entries in the land revenue record in terms of section 157 of the Maharashtra Land Revenue Code, 1966. This presumption is not an irrebuttable presumption and it will be open for the Assessing Officer to lead evidence to rebut the presumption. However, no such evidence was brought on record by the Revenue to rebut the presumption. Moreover, the assessee has also placed before the authorities its return of income filed for the assessment year 2005 – 2006 to 2007- 2008, wherein he had inter alia declared agricultural income. In view of the fact that the revenue has not been able to establish that the evidence led by the assessee is unreliable by leading any contrary evidence, there is no reason to discard the evidence produced by the assessee. Thus, there is a concurrent finding of fact by CIT(A) as well as the Tribunal that the land has been used for agricultural purpose. Thus, no substantial question of law arises. However, the Court admitted the question relating to section 54 F claim i.e allowing exemption under section 54F, when the investment made by the assessee is in a ‘commercial cum housing complex’.
