July 2008
S. 54B : Tube wells and trees are part of the agricultural land for the relief.
By K. B. Bhujle, Advocate
Reading Time 2 mins
New Page 1
31 Capital gains : Exemption u/s.54B of Income-tax Act,
1961 : A.Y. 1978-79 : Notification for acquisition of agricultural land on
14-1-1977 and 12-5-1977 : Possession of land taken on 26-6-1977. Purchase of
agricultural land with wells and trees on 15-6-1979 : Assessee entitled to
deduction u/s.54B : Deduction available on cost of wells and trees also.
[CIT v. Janardhan Das, 299 ITR 210 (All)]
The assessee’s agricultural land was acquired by the
Government by issuing Notifications dated 14-1-1977 and 12-5-1977. The
possession of the land was taken on 26-6-1977 : The assessee purchased
agricultural land with tubewells and trees on 15-6-1979. The assessee’s claim
for deduction u/s.54B was rejected by the AO on the ground that the purchase
of the agricultural land was beyond the period of two years. The Tribunal
allowed the claim. Since the agricultural land contained tubewells and
standing trees, the Department contended that the value of the tubewells and
the standing trees should be deducted from the total investment made by the
assessee in purchasing the agricultural land. The Tribunal rejected the claim
of the Revenue.
On appeal by the Revenue, the Allahabad High Court upheld
the decision of the Tribunal and held as under :
“(i) The assessee was an agriculturist and he received
the initial compensation on 12-7-1977, and having invested the compensation
within two years from that date, was entitled to get the benefit of S. 54B.
(ii) The tubewells and trees were part of the
agricultural land purchased by the assessee and their value could not be
deducted from the total investment made by the assessee in the purchase of
the agricultural land.”
