Land re-purchased need not be 'Agricultural' on the date of re-investment: ITAT

Land re-purchased need not be 'Agricultural' on the date of re-investment: ITAT

It found no substance in the revenue department's argument supporting the impugned disallowance

The Pune Branch of the Income Tax Appellate Tribunal (ITAT) has allowed a deduction claim under the Income Tax Act, 1961. It has held that the provision does not mandate that re-purchased lands have to be agricultural on the date of re-investment.

The assessee, Adit Rathi challenged the orders of the lower authorities declining the deduction claim of Rs.2,49,85,220 under the IT Act. He stated that at the time of re-investment, the land was not 'agricultural.'

A bench comprising S.S. Godara (judicial member) and Dr. Dipak P. Ripote (accountant member), ruled, "There is hardly any dispute between the parties that the Commissioner of Income Tax (Appeals) rejected the assessee's impugned deduction claim for the sole reason that the re-investment made in the Wagholil land had not proved to have been made in purchasing the agricultural land."

This was because the assessing officer's remand report filed before the CIT(A) had cleared all objections relating to the assessee's land sold at Bavdhan.

The bench further noted, "It has come on record that although the CIT(A) accepted that the assessee carried out agricultural activities on the land purchased in later years, he affirmed the assessment findings that the re-investment in the land was not agricultural at the time of purchase."

The tribunal stated that it found no substance in the revenue department's argument supporting the impugned disallowance for the foregoing reason(s). It stated, "We deem it proper to reproduce the relevant reinvestment clause of the Act that 'the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes.'"

It added, "The legislature has nowhere incorporated that the land re-purchased in the deduction claim must be agricultural on the date of re-investment as projected by the revenue department. We adopt stricter interpretation referring to Commissioner vs. Dilip Kumar & Co. to hold that both the lower authorities erred in law and on facts in disallowing the assessee's deduction claim."