1. The Revenue has filed this appeal against the order of the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short 'the Tribunal') dt. 7th Sept., 2001 accepting the claim of the assessee under section 54b of the it act, 1961 (for short 'the act').
2. The assessee, an individual, sold 15 kanals 18 marlas of land out of her share in 23 kanals 17 marlas land during the financial year 1990-91, relevant to the asst. yr. 1991-92. The sale was effected vide three registered sale deeds dt. 16th June, 1990, 23rd June, 1992 and 26th June, 1990, for Rs. 1,80,000, Rs. 2,35,000 and Rs. 2,64,000, respectively. While filing her return of income, she claimed exemption from levy of capital gains under Section 54B of the Act on the ground that the land sold by her was agricultural land and the sale proceeds were invested in the purchase of agricultural land within two years as under :
On 8-1-1991 7 K.17M. vide Registration Deed No. 1001 for Rs. 80,000 + registration expenses;
On 19-2-1991 1 K.2M. vide Registration Deed No. 1209 for Rs. 11,000 + registration expenses;
On 5-8-1991
20K.2M. vide Registration Deed No. 4500 for Rs. 8,00,000 jointly with other co-owners, out of which the assessee had 161/402 shares, which amounted to Rs. 3,50,412 plus registration expenses;
On 23-9-1991
An advance of Rs. 2,00,000 to Sh. Sam Sunder etc. for purchase of agricultural land.
In support of her claim, she produced registered deed, Khasra Girdawari, etc. The AO also obtained Khasra Girdawari; from the Patwari and got the site inspected. The AO rejected the claim of the assessee holding that the land sold by the assessee was not agricultural land. He based his decision on the following factors :
(i) the land was situated within the municipal limits of Jagadhari adjoining a commercial area;
(ii) the assessee had jointly purchased a huge chunk of land in 1976 and had constructed seven godowns in the year 1977-78 on a part thereof;
(iii) only Poplar plantation stood on the land till 1988-89. Further only fodder grass and vegetables were grown in the Kharif season while the land remained fallow in the Rabi season. This also had been done as a fill-gap arrangement to ensure that the land did not remain unutilised or idle awaiting user or sale for non-agricultural purposes;
(iv) the purchaser had purchased this land for non-agricultural purposes. No bona fide purchaser of agricultural land would have paid such a high price for agricultural purposes; and
(v) the agricultural income declared by the assessee for the current year as well as for the preceding assessment year was merely Rs. 2,500 each.
The AO, therefore, concluded that the land in question not being agricultural land, exemption under Section 54B of the Act was not available to the assessee.
3. On appeal, the findings of the AO were upheld by the CIT(A) vide order dt. 24th Oct., 1994.
4. On further appeal, the Tribunal accepted the claim of the assessee by holding that the transaction in question duly fulfilled the conditions specified for relief under Section 54B of the Act.
5. Mr. R.P. Sawhney, learned counsel for the Revenue, contends that the findings recorded by the AO about the location of the land and its partial user for non-agricultural purposes in 1977-78 clearly shows that the land in question was not agricultural land. He further submits that no one could possibly use the land located in a commercial area for agricultural purposes. Even the vendees to whom the land had been sold by the assessee had put it to non-agricultural user.
6. After hearing the learned counsel for the Revenue and perusing the order of the authorities below, we find no merit in this appeal. The sole question for determination is whether the assessee is entitled to relief under Section 54B of the Act or not. Sub-section (1) of Section 54B of the Act, which is relevant for our purposes, reads as under:
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 or a parent of his 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 to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under Section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of the purchase, the cost shall be nil; or
(ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under Section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain."
From a plain reading of the above, it is clear that to claim the benefit of this provision, the following conditions are required to be satisfied.
(i) the capital gain arises from the transfer of land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or his parent for agricultural purposes; and
(ii) the assessee has purchased the land within a period of two years after the sale of the above land for being used for agricultural purposes. There is no dispute regarding condition No. (ii). The dispute is regarding condition No. (i). For the purposes of this condition, it is not necessary to go into the various authorities referred to by the AO or the CIT(A) to determine whether the land was agricultural land or not. The exemption is available to the seller of "a capital asset being land". It does not restrict the benefit to the agricultural land only. However, the land against which the benefit is sought must have been used by the assessee or his parent for agricultural purposes in the two years immediately preceding the date of sale. From the facts stated by the AO himself, it is evident that this condition is clearly fulfilled. It has been observed that Poplar plantation stood on this land till 1988-89. It has also been stated that the fodder grass and vegetables were grown in Kharif season. The Khasra Girdawari produced by the assessee also show that agricultural operations on this land were being carried on by the assessee and other co-owners till its sale. Even the records of the IT Department also show that the assessee had declared agricultural income from this land in her returns of the preceding two years.
7. In the light of this factual position, there is no merit in the contention of Shri Sawhney that no agricultural operations had been carried on in this land in the preceding two years and that the agricultural income shown in the returns by the assessee was not genuine. We do not think that after having assessed the income, it is open to the Department to take this stand without any evidence. At any rate, the findings of the Tribunal that there was material on record to show that the land had been used for agricultural purposes is based on cogent and relevant material. The Revenue record supports the claim. Thus, the Tribunal was justified in holding that the conditions laid down for claiming relief under Section 54B of the Act stood satisfied. Once it is so, the other contentions about the land being located in the commercial area or the land having been partially utilised for non-agricultural purposes or that the vendees have also purchased it for non-agricultural purposes, are totally irrelevant considerations for the purposes of application of Section 54B of the Act.
8. In view of the above, we find no ground to interfere in the findings recorded by the Tribunal. Even otherwise, these are essentially findings of fact. No substantial question of law has been shown to arise out of the order of the Tribunal. Accordingly, the appeal is dismissed in limine