Alluri Thirumala,, Hyderabad v. ACIT, Circle-6(1),, Hyderabad

ITA 757/HYD/2013 | 2007-2008
Pronouncement Date: 16-04-2014 | Result: Allowed

Appeal Details

RSA Number 75722514 RSA 2013
Assessee PAN ABNPS7572B
Bench Hyderabad
Appeal Number ITA 757/HYD/2013
Duration Of Justice 11 month(s) 2 day(s)
Appellant Alluri Thirumala,, Hyderabad
Respondent ACIT, Circle-6(1),, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 16-04-2014
Assessment Year 2007-2008
Appeal Filed On 14-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE S/SHRI B. RAMAKOTAIAH A.M. & V.DURGA RAO J .M. ITA.NO. A.Y. APPELLANT RESPONDENT 777/HYD/2013 2006-07 SAGI KODANDA RAMA RAJU HYDERABAD PAN ABNPS 7572B ACIT CIRCLE 6(1) HYDERABAD 763/HYD/2013 2007-08 SMT. G.BHAGYAVATHI HYDERABAD PAN ACWPG 9809R 757/HYD/2013 2007-08 ALLURI TIRUMALA HYDERABAD PAN ACEPA 2143A FOR ASSESSEE : MR. A.V. RAGHURAM FOR REVENUE : MR. B. YADAGIRI DATE OF HEARING : 09.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 ORDER PER BENCH. THE ABOVE THREE APPEALS BY THE RESPECTIVE ASSESSEES ARE DIRECTED AGAINST THE ORDERS OF CIT(A) -IX MUMBAI CAMP AT HYDERABAD DATED 13.03.2013 FOR A.Y. 2006-20 07. SINCE THE ISSUE IN THE ABOVE APPEALS IS COMMON IN N ATURE ALL THE THREE APPEALS ARE CLUBBED TOGETHER AND HEARD AN D DISPOSED OFF BY THIS COMMON ORDER. 2. THE COMMON ISSUE INVOLVED IN THESE APPEALS IS WITH REGARD TO THE ALLOWABILITY OF DEDUCTION UNDER SECTION 54B OF THE I.T. ACT 1961. 2.1. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE S HEREIN ARE INDIVIDUALS DERIVING INCOMES FROM VARIOU S SOURCES. 2 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD FOR THE A.Y. 2006-07 ASSESSEES FILED INCOMES DECLA RING CAPITAL GAIN AFTER CLAIMING EXEMPTION UNDER VARIOUS PROVISI ONS OF THE ACT. ONE SUCH CLAIM DENIED BY THE A.O. IS WITH REFE RENCE TO DEDUCTION CLAIMED UNDER SECTION 54B OF THE ACT IN P URCHASE OF AGRICULTURAL LAND FROM THE SALE PROCEEDS OF THE AGR ICULTURAL LAND. A.O. DISALLOWED THE CLAIM ON THE REASON THAT THE LAND WHICH WAS SOLD BY THE ASSESSEE WAS NOT LAND USED FO R AGRICULTURAL PURPOSES SO AS TO GRANT DEDUCTION UNDE R SECTION 54B OF THE ACT. THE A.O. TOOK SIMILAR STAND IN OTHE R GROUP OF CASES ALSO OF MR. N. RAGHU VARMA MR. S. MANI RAJU AND SMT. A. PADMAVATHI FOR THE SAME ASSESSMENT YEAR WHO ALSO SIMILARLY SOLD THE LANDS TO M/S. APARNA INFRA HOUSI NG PVT. LTD. LIKE THE ASSESSEES IN THE CASE OF SMT. G. BHAGYAVAT HI AND SMT. ALLURI TIRUMALA. MR. S. KODANDA RAMA RAJU HOWEVER SEEMS TO HAVE SOLD THE LAND TO ANOTHER INDIVIDUAL. A.O. WAS OF THE VIEW THAT THE INTENTION TO SELL THE LAND TO AN INFRASTRU CTURE COMPANY ITSELF INDICATES THAT THERE ARE NO AGRICULT URAL OPERATIONS AND THE LAND IS NOT AGRICULTURAL LAND. F URTHER HE WAS OF THE VIEW THAT THE AREA HAS BECOME NOTIFIED A REA OF CYBERABAD DEVELOPMENT AUTHORITY. THEREFORE THE LAN D CANNOT BE CONSIDERED AS AGRICULTURAL LAND. MOREOVER THE A .O. ALSO DOUBTED THAT THE ASSESSEE HAS CARRIED ON ANY AGRICU LTURAL OPERATIONS IN THE LANDS. THE ASSESSEES SUBMITTED TH E RELEVANT DETAILS OF INCOME TAX RETURNS FILED EARLIER AND ALS O PAHANIS AND STRESSED THAT THE SALE DEED ITSELF INDICATE THAT TH E LAND WAS AGRICULTURAL LAND BUT THE CONTENTIONS WERE NOT ACC EPTED BY THE A.O. 3. BEFORE THE LD. CIT(A) ASSESSEE SUBMITTED THAT IN THE CASE OF MR. N. RAGHU VARMA MR. S. MANI RAJU AN D SMT. A. 3 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD PADMAVATHI THE LD. CIT(A) REFERRED THE MATTER IN R EMAND AND GAVE RELIEF WHICH WAS SUBJECT MATTER OF APPEAL BEFO RE THE ITAT WHICH IN-TURN CONFIRMED THE ORDERS OF THE LD. CIT( A). SINCE THE FACTS ARE SIMILAR TO THE PRESENT THREE ASSESSEES T HE ASSESSEES RELIED ON THE FINDINGS OF THE LD. CIT(A) AND ITAT A LLOWING ASSESSEES CLAIM. LD. CIT(A) HOWEVER NOTED THAT TH ERE ARE GLARING DISCREPANCIES BETWEEN THE FACTS OF THE PRES ENT CASE AND FACTS OF OTHER CASE AS LISTED OUT IN PARA 5.2 OF HI S ORDER. THEREFORE HE WAS OF THE OPINION THAT THE ORDER OF ITAT IN OTHER THREE CASES CANNOT BE FOLLOWED AND FOR THE REASONS ADDUCED BY THE A.O. IN THE ASSESSMENT ORDER HE CONFIRMED THE ACTION OF THE A.O. THAT THE LAND SOLD WAS NOT AGRICULTURAL LA ND AND NOT USED FOR AGRICULTURAL ACTIVITIES AS PRESCRIBED IN T HE ACT. 4. ASSESSEES ARE AGGRIEVED. IN THE CASE OF SMT. G. BHAGYAVATHI AND SMT. ALLURI TIRUMALA THE ASSESSEE A LSO CONTESTED THE ISSUE OF REOPENING THE ASSESSMENT UND ER SECTION 147. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND DISMISSED THE GROUND STATING AS UNDER : 5.3.1. GROUND OF APPEAL NO.2 IS RELATED TO THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE AC T. IT IS NOT DISPUTED THAT IN THIS CASE PREVIOUS ASSESSMENT WAS MADE UNDER SECTION 143(1) OF THE ACT. SINCE THE RET URN FOR THE RELEVANT ASSESSMENT YEAR 2007-08 WAS ACCEPTED UNDER SECTION 143(1) OF THE ACT IN A ROUTINE MANNER NO O PINION WAS FORMED BY THE LAO. THEREFORE IT CANNOT BE SAID THA T THERE WAS CHANGE OF OPINION IN ISSUING THE NOTICE UNDER S ECTION 148 OF THE ACT. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF DESH RAJ UDYOG VS. ITO-2 MOG 318 ITR 6 (ALL) HAS HE LD THAT NOTICE UNDER SECTION 148 OF THE ACT CAN BE ISSUED B EYOND FOUR YEARS WHERE THE PREVIOUS ASSESSMENT WAS ACCEPT ED UNDER SECTION 143(1) OF THE ACT IN A ROUTINE MANNER . HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH ZHAVER I STOCK BROKERS PVT. LTD. 291 ITR 500 (SC) HAS HELD THAT IN THE CASES OF ASSESSMENT UNDER SECTION 143(1)(A) OF THE ACT T HE 4 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD REOPENING CANNOT BE INVALID SINCE THERE WAS NO APP LICATION OF MIND WHILE ISSUING INTIMATION UNDER SECTION 143( 1) OF THE ACT. THEREFORE GROUND OF APPEAL NO.1 IS NOT MAINTA INABLE. 5. BEFORE US LD. COUNSEL REITERATED THE SUBMISSIO NS MADE BEFORE THE CIT(A) TO STATE THAT THE REASONS RE CORDED ARE NOT CORRECT FOR INITIATING THE PROCEEDINGS AND RELI ED ON THE COORDINATE BENCH DECISION IN THE CASE OF PRUDENTIAL COOPERATIVE VS. ACIT IN ITA.NO.508/HYD/2010 TO SUBM IT THAT EVEN FOR REOPENING OF ASSESSMENT UNDER SECTION 143( 1) THERE SHOULD BE TANGIBLE MATERIAL. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE AGR EE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) THAT A.O. HAS TANGIBLE MATERIAL BEFORE INITIATING PROCEEDINGS UNDER SECTIO N 147. IT IS ADMITTED THAT A.O. OBTAINED INFORMATION UNDER SECTI ON 133(6) AND THEREAFTER HE HAS INITIATED PROCEEDINGS FOR RE OPENING THE ASSESSMENT. MOREOVER SINCE THE ASSESSMENTS ARE REO PENED WITHIN 4 YEARS FROM THE END OF THE ASSESSMENT YEAR. AND FURTHER AS THERE WAS NO SCRUTINY IN EARLIER PROCEED INGS AND RETURNS WERE ACCEPTED UNDER SECTION 143(1) THE PRI NCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF AC IT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500 AS WELL AS THE DECISION OF THE APEX COURT IN THE CASE OF REYMO ND WOOLLEN MILLS LTD. VS. ITO 236 ITR 34 WOULD APPLY TO THE FA CTS OF THE CASE. ACCORDINGLY THE GROUNDS RAISED IN THE CASE O F SMT. G. BHAGYAVATHI AND SMT. ALLURI TIRUMALA ON THIS ISSUE ARE REJECTED. 7. THE MAIN ISSUE FOR CONTENTION IS WITH REFERENCE TO THE CLAIM OF DEDUCTION UNDER SECTION 54B. LD. COUNS EL PLACED ON RECORD A CHART INDICATING THAT THE FACTS IN THE CASE OF SMT. 5 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD A. PADMAVATHI ARE SIMILAR TO THE FACTS IN THE PRESE NT CASES AND THERE IS NO VARIATION. IN FACT IT WAS SUBMITTED TH AT THE APCPDCL PERMISSION GRANTED TO THE ENTIRE GROUP AS A COMMON ORDER WAS IN FACT MENTIONS THE NAME OF SMT. G. BHA GYAVATHI ONE OF THE APPELLANT IN THIS GROUP. IT WAS SUBMITTE D THAT ALL THE PERSONS ARE FRIENDS AND PURCHASED THE LAND AT THE S AME TIME BEING ADJACENT LANDS AND HAD USED THEM FOR AGRICULT URAL PURPOSES ONLY. IT WAS SUBMITTED THAT THE LD. CIT(A) IN THE CASE OF MR. N. RAGHU VARMA MR. S. MANI RAJU AND SMT. A. PADMAVATHI ADMITTED THE ADDITIONAL EVIDENCE AND SE NT THEM FOR VERIFICATION AND THEN GAVE FINDING THAT LAND WA S AGRICULTURAL LAND AND USED FOR AGRICULTURE. ON THE SET OF FACTS THE HONBLE ITAT UPHELD THE CONTENTION AND CONFIRMED THE ORDER OF THE CIT(A) BY STATING AS UNDER : 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL ON RECORD. U/S. 54B OF THE ACT WHERE A LAND WAS B EING USED BY THE ASSESSEE OR HIS PARENTS FOR AGRICULTURA L PURPOSES IN THE TWO YEARS PRECEDING THE DATE IT WAS TRANSFERRED AND THE ASSESSEE HAS WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE PURCHASED ANOTHER LAND FOR BE ING USED FOR AGRICULTURAL PURPOSES THEN THE AMOUNT OF CAPITAL GAIN SHALL BE REDUCED BY THE COST OF THE NEW ASSET. THE QUESTION THEREFORE IS WHETHER THE LAND WHICH WAS HELD BY THE ASSESSEE AND TRANSFERRED BY THE ASSESSEE HAD BEEN UTILISED BY THE ASSESSEE OR HIS PARENTS FOR AGRICULTURAL PURPOSE. THE REVENUE CANNOT DENY THIS FACT SINCE THE LAND WAS CONTINUOUSLY USED BY THE ASSESSE E FOR AGRICULTURAL PURPOSES AND THE ASSESSEE HAS BEEN DECLARING THE AGRICULTURAL INCOME FROM THE SAID PRO PERTY IN HIS RETURN OF INCOME AND THE DEPARTMENT ACCEPTED TH E AGRICULTURAL INCOME IN EARLIER YEARS. THE CONTENTI ON OF THE DR IS THAT THE USE OF THE LAND FOR AGRICULTURAL PUR POSES BY THE ASSESSEE OR HIS PARENTS HAS TO BE IGNORED ON TH E GROUND THAT IN THE SALE DEED IT WAS MENTIONED THAT THE VENDOR DECLARED THAT THERE WERE NO TREES FISH POND S MINES ETC. IN THE SCHEDULED LAND. HOWEVER IT WAS 6 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD CLARIFIED BY THE ASSESSEE THAT HE HAS BEEN GROWING SUBABUL PLANTATION IN THE SAID LAND AND HAS BEEN CA RRYING ON AGRICULTURAL ACTIVITIES BY GROWING JOWAR FROM 19 95 AND THE SAME WAS STOPPED SINCE THREE YEARS BY SHIFTING TO SUBABUL CULTIVATION DUE TO WATER SCARCITY AND PRODU CED THE PHOTOGRAPH OF SUCH CULTIVATION. THE ASSESSEE A LSO PRODUCED THE DETAILS OF EXPENDITURE FOR RAISING THE SUBABUL PLANTATION IN ITS COMPUTATION OF INCOME AND BEFORE SALE OF PROPERTY THE PLANTATION WAS CUT AND SO THAT IT WAS MENTIONED IN THE SALE DEED THAT THERE WERE N O TREES ON THAT LAND. THE ASSESSEE ALSO PRODUCED A COPY OF PATTADAR PASSBOOK IN PROOF OF THAT THE LAND WAS AGRICULTURAL LAND AND ALSO SALE DEED WHERE IT IS ME NTIONED AS AGRICULTURAL LAND. THE ONLY DISPUTE OF THE DEPA RTMENT IS THAT NO AGRICULTURAL ACTIVITY IS CARRIED ON BY T HE ASSESSEE ON THAT LAND. IN OUR OPINION WHATEVER AGRICULTURAL USE HE MADE OF IT PRIOR TO SALE OF T HE SAID LAND HAS TO BE CONSIDERED AS CARRYING ON THE AGRICU LTURAL OPERATIONS IN THE SAID LAND AND THE DEPARTMENT CANN OT DENY DEDUCTION U/S. 54B ON MERE TECHNICALITIES. TH E OBJECT OF SECTION IS TO ENCOURAGE CULTIVATION. THE HONBLE SUPREME COURT IN THE CASE OF CWT VS. OFFICER-IN-CHA RGE (COURT OF WARDS) 105 ITR 133 (SC) HELD THAT : 'THE DETERMINATION OF THE CHARACTER OF THE LAND ACCORDING TO THE PURPOSE FOR WHICH IT IS MEANT OR SET APART AND CAN BE USED IS A MATTER WHICH OUGHT TO BE DETERMINED ON THE FACTS OF EACH PARTICULAR CASE. WHAT IS REALLY REQUIRED TO BE SHOWN IS THE CONNECTION WITH AN AGRICULTURAL PURPOSE AND USER AND NOT THE MERE POSSIBILITY OF USER OF LAND BY SOME POSSIBLE FUTURE OWNER OR POSSESSOR FOR AN AGRICULTURAL PURPOSE. IT IS NOT THE MERE POTENTIALITY WHICH WILL ONLY AFFECT ITS VALUATION AS PART OF 'ASSETS' BUT ITS ACTUAL CONDITION AND INTENDED USER WHICH HAS TO BE SEEN FOR PURPOSES OF EXEMPTION FROM WEALTH- TAX. ONE OF THE OBJECTS OF THE EXEMPTION IS TO ENCOURAGE CULTIVATION OR ACTUAL UTILISATION OF LAND FOR AGRICULTURAL PURPOSES. IF THERE IS NEITHER ANYTHING IN ITS CONDITION NOR ANYTHING IN THE EVIDENCE TO INDICATE THE INTENTION OF ITS OWNERS OR POSSESSORS SO AS TO CONNECT IT WITH 7 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD AN AGRICULTURAL PURPOSE THE LAND COULD NOT BE 'AGRICULTURAL LAND' FOR THE PURPOSES OF EARNING AN EXEMPTION UNDER THE ACT. ENTRIES IN REVENUE RECORDS ARE HOWEVER GOOD PRIMA FACIE EVIDENCE.' 7. THOUGH THE OBSERVATIONS OF THE SUPREME COURT IS WIT H REFERENCE TO THE WEALTH-TAX ACT WHERE AGRICULTURAL LAND IS NOT DEFINED IT EQUALLY APPLIES TO INCOME-TAX ACT WHERE ALSO AGRICULTURAL LAND HAS NOT BEEN DENNED. WE MUST THEREFORE DETERMINE THE CHARACTER OF THE LAND IN Q UESTION APPLYING THE TESTS GIVEN BY THE SUPREME COURT. THE EVIDENCE AVAILABLE IN THE PRESENT CASE IS THAT THE LAND WAS ENTERED IN THE REVENUE RECORDS AS AGRICULTURAL LAND. IT IS STATED THAT THE LAND WAS ALWAYS TREATED AS AGRIC ULTURAL LAND AND THAT ONLY LIMITED CULTIVATION WAS POSSIBLE ON ACCOUNT OF SCARCITY. 8. NO DOUBT THE LAND HAS BEEN SOLD FOR A HIGH PRICE A ND THE PURCHASER HAS CONVERTED IT INTO HOUSE SITES. BUT WE FIND ON THE FACTS ON RECORD THAT UNTIL THE DECISION TO S ELL THE LANDS WAS TAKEN BY THE ASSESSEE THE ACTUAL CONDITI ON OF THE LAND WAS AGRICULTURAL LAND INTENDED TO BE USED AS AGRICULTURAL LAND AS IT WAS USED EARLIER. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE BY HIMSELF HAD DECIDED TO ABANDON THE INTENTION TO CULTIVATE THE L AND EVEN THOUGH THE ACTUAL CULTIVATION WAS NOT POSSIBLE DUE TO LACK OF WATER. THAT MIGHT HAVE BEEN THE REASON FOR SELLING THE LANDS AND MIGHT HAVE FETCHED A HIGHER PRICE BEC AUSE OF THE INTENDED USER OF THE PURCHASER; BUT IN OUR OPINION IT DOES NOT IN ANY WAY REBUT THE INITIAL PRESUMPTIO N THAT THE PROPERTY CLASSIFIED AS AGRICULTURAL LAND IN RE VENUE RECORDS AND ACCEPTED AS AGRICULTURAL LAND IN THE WE ALTH- TAX ASSESSMENTS CEASED TO BE SUCH AGRICULTURAL LAN D BEFORE THE TRANSFER OF SUCH LANDS. 9. SECTION 2(14) WHICH DEFINES CAPITAL ASSET WAS AME NDED BY THE FINANCE ACT 1970 TO INCLUDE AGRICULTURAL LA ND SITUATED WITHIN THE LIMITS OF ANY MUNICIPALITY. IT IS NOT IN DISPUTE THAT THESE LANDS WERE SITUATED WITHIN MUNIC IPAL CORPORATION AND THEREFORE THE CAPITAL GAINS ARISI NG FROM THE TRANSFER OF THESE LANDS WOULD BECOME ASSESSABLE BECAUSE THE LANDS IN QUESTION MUST BE REGARDED AS C APITAL 8 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD ASSET WITHIN THE MEANING OF SECTION 2(14). HOWEVER THE FINANCE ACT 1970 ALSO INTRODUCED SECTION 54B GRANT ING EXEMPTION IN CASE THE PROCEEDS OF SALE OF AGRICULTU RAL LANDS ARE REINVESTED IN THE PURCHASE OF OTHER AGRIC ULTURAL LANDS. THE FINANCE BILL DID NOT CONTAIN THIS SECTIO N AND THEREFORE WE DO NOT HAVE ANY NOTES ON CLAUSES IN R ESPECT OF THIS SECTION. HOWEVER AFTER THE FINANCE ACT INT RODUCED THIS SECTION THE CBDT HAS EXPLAINED ITS MEANING BY CIRCULAR NO. 45 DATED 2-9-1970. IT STATES: 'THE EFFECT OF THE AMENDMENTS TO SECTION 2(14) AND SECTION 47 AS STATED ABOVE WILL BE THAT CAPITAL GAINS ARISING FROM TRANSFER OF AGRICULTURAL LANDS SITUATED IN THE MUNICIPAL AND OTHER URBAN AREAS ON OR AFTER 1-3-1970 WILL BECOME LIABLE TO TAXATION EVEN WHERE SUCH LAND WAS HELD FOR BONA FIDE AGRICULTURAL PURPOSES OFTEN AS THE MAIN SOURCE OF LIVELIHOOD. WITH A VIEW TO RELIEVING THE BURDEN OF TAXATION ON THE CAPITAL GAINS IN SUCH CASES A PROVISION HAS BEEN MADE IN A NEW SECTION 54B FOR EXEMPTING FROM TAX THE CAPITAL GAIN ARISING FROM THE TRANSFER OF AGRICULTURAL LAND IN CERTAIN CIRCUMSTANCES. UNDER THE NEW SECTION 54B WHERE THE CAPITAL GAIN ARISES FROM TRANSFER OF LAND WHICH IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER WAS BEING USED BY THE ASSESSEE OR A PARENT OF HIS FOR AGRICULTURAL PURPOSES AND THE ASSESSEE HAS WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE PURCHASED ANY OTHER LAND (WHETHER IN THE SAME AREA OR ELSEWHERE) FOR BEING USED FOR AGRICULTURAL PURPOSES THEN THE CAPITAL GAIN WILL NOT BE CHARGED TO TAX TO THE EXTENT THAT IT HAS BEEN UTILISED FOR ACQUIRING THE FRESH LAND. WHERE THE AMOUNT OF THE CAPITAL GAIN EXCEEDS THE COST OF ACQUISITION OF THE FRESH LAND ONLY THE EXCESS WILL TOE CHARGEABLE TO TAX. THE CONCESSION WILL HOWEVER BE FORTIFIED IF THE ASSESSEE TRANSFERS THE FRESH LAND ACQUIRED BY HIM WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF ITS PURCHASE.' . 10. IT WAS ARGUED ON BEHALF OF THE REVENUE THAT THIS SECTION IMPOSED A FURTHER CONDITION THAT THE LAND S HOULD BE USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSES W ITHIN A PERIOD OF TWO YEARS PRIOR TO THE SALE AND IT WOUL D NOT BE SUFFICIENT THAT IF THE LANDS ARE FOUND TO BE AGRICU LTURAL 9 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD LANDS THOUGH REMAINING FALLOW. WE DO NOT THINK THA T PARLIAMENT COULD HAVE INTENDED TO IMPOSE SUCH A RESTRICTION ON THE RELIEF UNDER SECTION 54B. AS POI NTED OUT BY THE SUPREME COURT ONE OF THE OBJECTS OF THE EXE MPTION IS TO ENCOURAGE CULTIVATION. THEREFORE IT STANDS T O REASON THAT AN ASSESSEE WHO IS UNABLE TO CULTIVATE THE LA ND IN HIS POSSESSION SHOULD BE ENCOURAGED TO REPLACE IT WITH LAND WHICH HE CAN CULTIVATE. THAT IS WHY THE FINANC E ACT 1970 WHILE BRINGING TO TAX AGRICULTURAL LANDS WITH IN THE LIMITS OF A MUNICIPALITY SIMULTANEOUSLY GRANTED RE LIEF UNDER SECTION 54B FOR REINVESTMENT OF THE PROCEEDS. THE EXPRESSION 'USED FOR AGRICULTURAL PURPOSES' IN THIS SECTION COULD ONLY BE THE DESCRIPTION OF THE AGRICULTURAL L AND WHICH IS THE SUBJECT OF THE TRANSFER AND NOT A COND ITION PRECEDENT FOR GRANTING THE RELIEF UNDER SECTION 54B . EVEN IF WE TAKE IT TO BE SO ON THE FACTS OF THE PRESENT CASE WE FIND THAT THE ASSESSEE HAD IN FACT CULTIVATED A PAR T OF ITS LANDS ACCORDING TO THE ADANGAL REGISTER AND NO FURT HER CULTIVATION WAS POSSIBLE BECAUSE OF LACK OF WATER. THE USE REFERRED TO IN THE SECTION CAN ONLY BE REGARDED AS SUCH USE AS THE LANDS ARE CAPABLE OF WITH THE AID OF FAC ILITIES AVAILABLE AND THE ASSESSEE CANNOT BE DENIED THE REL IEF BECAUSE HE WAS ACTUALLY UNABLE TO PUT THE LAND TO U SE DUE TO VAGARIES OF NATURE AND NON-AVAILABILITY OF RESOURCES. IT CAN HARDLY BE THE FAULT OF THE ASSESS EE IF RAINED LANDS ARE NOT ACTUALLY PUT TO USE DURING THE DROUGHT. WE ARE THEREFORE CONVINCED THAT THE ASSE SSEE WAS ENTITLED TO RELIEF UNDER SECTION 54B OF THE ACT . 8. LEARNED D.R. HOWEVER SUBMITTED THAT THOUGH THE LAND WAS CLASSIFIED IN THE REVENUE RECORDS AS AGRIC ULTURAL LANDS THERE IS NO PROOF ON RECORD REGARDING PAYMEN T OF LAND REVENUE AND FURTHER ASSESSEES HAVE NOT FURNISHED AN Y EVIDENCE WITH REGARD TO AGRICULTURAL OPERATIONS AND D.R. ALS O DISTINGUISHED THAT THE EVIDENCE FILED IN THE CASE O F SMT. A. PADMAVATHI ARE NOT FURNISHED IN THESE CASES AND THE REFORE THE FACTS REQUIRE VERIFICATION. LEARNED D.R. REITERATED THE ARGUMENTS OF THE A.O. AND THE LD. CIT(A) IN SUPPORT OF HIS CONTENTION THAT THE LAND WAS NOT USED AS AGRICULTUR AL LAND. 10 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE TH E LD. CIT(A) ASSESSEE SUBMITTED THAT THE FACTS IN THESE THREE CA SES ARE SIMILAR TO THE OTHER THREE CASES WHICH HAVE ALREADY BEEN SUBJECT MATTER OF APPEAL BEFORE ITAT AND DECIDED AS STATED ABOVE. WE ALSO NOTICED THAT EXCEPT IN THE CASE OF L AND FROM MR. KODANDA RAMA RAJU ALL OTHER LANDS ARE IN THE SAME V ILLAGE AND ARE ADJACENT. THEREFORE AS FAR AS THE FACTS IN THE CASE OF SMT. G. BHAGYAVATHI AND SMT. ALLURI TIRUMALA ARE CONCERN ED THE LANDS SEEMS TO BE ADJACENT AND ARE SIMILARLY PLACED . EVEN IN THE CASE OF MR. KODANDA RAMA RAJU EVEN THOUGH THE L AND BELONGS TO ANOTHER REVENUE VILLAGE IT WAS SUBMITTE D THAT THEY ARE ADJACENT TO EACH OTHER AND FACTS ARE SIMILAR. T HEREFORE PRIMA FACIE THE FACTS IN THE CASES ALREADY DECIDED BY THE ITAT WILL EQUALLY APPLY TO THE FACTS OF THE CASE. 10. THE A.O. RELIED ON THE FACT THAT M/S. APARNA I NFRA HOUSING PVT. LTD. HAS PURCHASED THE LAND FOR NON-AG RICULTURAL PURPOSES. HOWEVER THIS ASPECT WAS NOT MATERIAL AS RIGHTLY HELD BY THE COORDINATE BENCH IN THE ABOVE GROUP OF CASES AND ALSO BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SAVITA RANI TAX LR 713 WHEREIN IT WAS HELD THAT BEN EFIT UNDER SECTION 54B IS AVAILABLE IN RESPECT OF LAND USED FO R AGRICULTURAL PURPOSES AND THE FACT THAT IT IS LOCATED IN COMMERC IAL AREA OR IT WAS PARTIALLY USED FOR NON-AGRICULTURAL PURPOSES OR WHEN IT IS PURCHASED FOR NON-AGRICULTURAL PURPOSES OR IRRELEVA NT CONSIDERATIONS FOR APPLICATION OF SECTION 54B. THER EFORE EVEN IF THE LAND AREA IS NOTIFIED UNDER CYBERABAD DEVELOPME NT AUTHORITY IT CANNOT DENY THE CLAIM OF THE ASSESSEE SO LONG AS THE LAND WAS USED FOR AGRICULTURAL PURPOSES. IN FAC T ASSESSEE 11 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD HAS OFFERED THE CAPITAL GAINS INVESTED AMOUNTS IN 54E BONDS ON WHICH A.O. HAS NO OBJECTION. THEREFORE ONLY IF IT IS AGRICULTURAL LAND OUTSIDE THE CITY LIMITS THEN ENT IRE CAPITAL GAIN IS EXEMPT. IN THESE CASES THE ASSESSEES HAVE OFFERED THE CAPITAL GAINS TO TAX AS THEY ARE FALLING WITHIN THE CITY LIMITS. HOWEVER THE CONTENTION IS WITH REFERENCE TO CLAIMI NG OF EXEMPTION UNDER SECTION 54B FOR INVESTING IN PURCHA SE OF AGRICULTURAL LANDS. IT IS ALSO NO DISPUTE ABOUT TH E FACT THAT ASSESSEES HEREIN HAVE PURCHASED AGRICULTURAL LANDS ON WHICH CLAIM OF SECTION 54B WAS MADE. THEREFORE THE ONLY ISSUE TO BE EXAMINED IS WHETHER THE AGRICULTURAL LANDS ARE USE D FOR AGRICULTURAL PURPOSES OR NOT. 11. A.O. AS WELL AS LD. CIT(A) RELIED ON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARIFABIBI MOH MED IBRAHIM AND OTHERS VS. CIT (1993) 204 ITR 631 (S.C. ) TO DENY THE BENEFIT TO THE ASSESSEE ON THE REASON THAT INTE NTION OF THE PARTY AT THE TIME OF SALE IS ALSO NECESSARY FOR DET ERMINING THE NATURE OF THE AGRICULTURAL LAND. WE ARE OF THE OPIN ION THAT THE PRINCIPLES LAID DOWN IN THE ABOVE JUDGMENT IS WRONG LY APPLIED TO THE PRESENT SET OF FACTS. IN THAT CASE THE LAND WAS SITUATED NEAR TO RAILWAY STATION. IT WAS SOLD ON SQ. YARD BA SIS TO A HOUSING SOCIETY AFTER APPLYING FOR TRANSFER OF LAND USAGE FOR NON-AGRICULTURAL PURPOSES. EVEN THOUGH THE LAND WAS NOT AGRICULTURAL THOUGH ENTERED INTO REVENUE RECORDS A S AGRICULTURAL THE PROFITS ON SALE OF LAND WAS HELD ASSESSABLE TO CAPITAL GAINS AND THE HONBLE SUPREME COURT IN THAT CONTEXT HAS CONSIDERED THAT THERE MAY BE FACTORS BOTH FOR O R AGAINST A PARTICULAR POINT OF VIEW AND INTENTION OF THE PARTI ES AT THE TIME OF SALE IS ALSO REQUIRED TO BE CONSIDERED AS IN TH AT CASE THE 12 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD LAND WAS ALREADY APPLIED FOR CONVERSION AND SOLD PE R SQ. YARD BASIS AND AFTER THE SAID PURCHASE THE SOCIETY COMM ENCED CONSTRUCTION OPERATIONS WITHIN 3 DAYS OF PURCHASE. IN THE PRESENT CASE THE ASSESSEE HAS NOT APPLIED FOR CONV ERSION NOR SOLD ON THE BASIS OF SQ. YARD BASIS AND THE SALE DE ED ALSO MENTIONS THAT THE LAND SOLD WAS AGRICULTURAL LAND A ND THERE WAS NO STANDING CROP AT THE TIME OF SALE. THEREFORE WE ARE OF THE OPINION THAT THE DECISION RELIED ON BY THE A.O. AND LD. CIT(A) DOES NOT APPLY TO THE FACTS OF THE PRESENT C ASE. MOREOVER THE ISSUE IS NOT WHETHER THE LAND IN QUES TION IS AGRICULTURAL LAND OR NOT AS THE ASSESSEE HAS OFFERE D CAPITAL GAINS ON THE SALE OF THE LAND. THE ONLY ISSUE IS WH ETHER THE LAND WAS USED FOR AGRICULTURAL PURPOSE OR NOT BEFOR E SALE SO AS TO ALLOW PURCHASE OF ANY OTHER AGRICULTURAL LAND UN DER SECTION 54B. 12. EVEN THOUGH PRIMA FACIE THE FACTS OF THE SE CASES ARE SIMILAR TO THE FACTS AS DECIDED BY OTHER GROUP OF CASES BY THE ITAT BOTH A.O. AND LD. CIT(A) GAVE FINDINGS THAT A SSESSEE HAS NOT FURNISHED NECESSARY EVIDENCES WITH REFERENCE TO AGRICULTURAL OPERATIONS ON THE LAND. ASSESSEES HAVE PLACED A PAPER BOOK WITH REGARD TO PAHANIES CONNECTION OF P OWER AND ALSO SOME PHOTOGRAPHS RELEVANT FOR AGRICULTURAL OPE RATIONS. EVEN THOUGH THESE WERE SEEMS TO HAVE BEEN PLACED BE FORE THE A.O. WE ARE UNABLE TO EXAMINE THIS ASPECT AS THERE IS NO DISCUSSION. LD CIT WAS OF THE OPINION THAT FACTS AR E DISTINGUISHABLE. THERE WAS A REMAND REPORT IN THE O THER CASES RELIED ON BY ASSESSEES WHERE AS LD.CIT(A) DID NOT CALL FOR THE SAME IN THESE CASES. THEREFORE WHILE AGREEING THAT THE ASSESSEES CLAIM UNDER SECTION 54B CANNOT BE DENIED SO LONG AS 13 ITA.NO. 757 763 & 777/HYD/2013 ALLURI TIRUMALA G. BHAGYAVATHI & S. KODANDA RAMA RAJU HYDERABAD THE LANDS IN QUESTION WERE USED FOR AGRICULTURAL PU RPOSES BEFORE SALE THIS ASPECT OF USAGE FOR AGRICULTURAL PURPOSES REQUIRE VERIFICATION BY THE A.O. ASSESSES ARE DIREC TED TO FURNISH NECESSARY EVIDENCE IF NOT FURNISHED ALREADY BEFORE THE A.O. SO AS TO SUBSTANTIATE THAT THE LANDS IN QUESTION WERE USED FOR AGRICULTURAL PURPOSES BEFORE SALE. IN VIEW OF THIS WE ALLOW THE ASSESSEES GROUNDS ON LEGAL QUESTION WHEREAS VERIFI CATION OF USAGE IS RESTORED TO THE FILE OF THE A.O. WHO SHOUL D EXAMINE AND ALLOW THE CLAIM ON THE BASIS OF THE FACTS AFTE R AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 13. IN THE RESULT APPEALS OF THE ASSESSEES ARE AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2014. SD/- SD/- (V. DURGA RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD DATED 16 TH APRIL 2014 VBP/- COPY TO : 1. MR. SAGI KODANDA RAMA RAJU 7-1-621/299 SANJEEV A REDDY NAGAR HYDERABAD 2. SMT. BHAGYAVATHI PLOT NO.613/1 ADITYA ENCLAVE ROAD NO.33 JUBILEE HILLS HYDERABAD. 3. ALLURI TIRUMALA 7-1-4 BEGUMPET HYDERABAD C/O. K. VASANTKUMAR & A.V. RAGHURAM ADVOCATES 610 6 TH FLOOR BABUKHAN ESTATE BASHEERBAGH HYDERABAD-1. 4. ACIT CIRCLE 6(1) HYDERABAD 5. CIT(A)-9 MUMBAI CAMP AT HYDERABAD (HAVING CONC URRENT JURISDICTION OVER) & 4. CIT(A)-IV HYDERABAD. 6. CIT-III HYDERABAD 7. D.R. ITAT A BENCH HYDERABAD.