Can deduction be denied for partial cultivation on agricultural land?
Case: Rajendra Bastimal Chordiya vs Income Tax Officer, ITAT, Pune
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Assessee’s claim of deduction u/s 54B of the Act related to the sale of agricultural land was denied by the AO as:
- out of the total area of land, agricultural activities were carried out on a portion of the land
- there was no evidence of crop grown on the balance portion of the land provided by the assessee
- Referring to the case of DCIT vs Shri Mahesh Danabhai Patel, where it was held that if any part of the land is under cultivation for the preceding two years from the date of transfer then it would be sufficient to claim benefit u/s 54B of the Act.
- The assessee submitted that even if a part of the land is used for agricultural purpose, it is eligible for claim of deduction u/s 54B of the Act.
Following the case of Shri Mahesh Danabhai Patel cited by the assessee, the tribunal held that AO was not justified in denying the claim of deduction u/s 54B of the Act and therefore directed the AO to deduct the claim.