Order under section 254(1) of Income Tax Act

PER PAWAN SINGH, JUDICIAL MEMBER:

1. This appeal by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals) [for short “CIT(A)”] for assessment year 2022-23. The assessee has raised following grounds pf appeal;

(1) “Whether on the facts and circumstances of the case the learned CIT (Appeals) was justified in affirming the addition made by the learned assessing officer by disallowing the exemption claimed by the appellant under section 54B to the tune of Rs. 13,46,556/-.

(2) The appellant craves leave to add or alter any other ground that may be taken at the time of hearing of this case.”

2. Rival submissions of both the parties have been heard and record perused. The ld. Authorised Representative (AR) of the assessee submits that during the relevant financial year, the assessee sold agriculture land and earned long term capital gain. The long term capital gain earned by the assessee was invested for purchase of other agriculture land within the specified period prescribed under section 54B of Income Tax Act (Act). In the computation of income, the assessee claimed exemption under section 54B. The assessing officer (AO) accepted working of capital gain and other conditions, i.e. the assessee sold and purchased agriculture land, which were being used for such purpose. The AO disallowed claim of exemption only on the ground that the land purchased by the assessee falls in the residential zone. The basis of such disallowances is not justifiable. The ld. CIT(A) also confirmed the action of AO with similar observation.

3. On the other hand, ld. Senior departmental representative (Sr–DR) for revenue submits that he supports the orders of lower authorities. The assessee has not produced any evidence that the land purchased by assessee was used for agriculture purpose.

4. In short rejoinder submissions, the ld. AR of the assessee submits that it is not the stand of lower authorities that the assessee has not produced the required evidences, rather such facts are duly mentioned on the registered sale deed that the land is being used for agriculture purpose. Copy of sale deed of newly purchased land is placed on record.

5. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also seen various documentary evidences placed on record. We find that AO accepted the facts that the assessee sold agriculture land and also purchased another agriculture land. However, in para-4 of assessment order held that held that purchased land was not used for agriculture purpose as it falls in residential zone. The ld CIT(A) confirmed the action of AO by holding that the assessee failed to provide any evidence that she was carrying out any agriculture activities in the land and that the said land falls in residential zone. For better appreciation the provisions of section 54B of Income Tax Act is reproduced below;

“54B. Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases.

(1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes [(hereinafter referred to as the original asset)], and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,—

(i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred