Commissioner of Income Tax and Others vs Nagappa Nagaraj

Vineet Saran, J.—This is an appeal filed by the Revenue against the order passed by the Tribunal. Assessee - respondent holds agricultural land, part of which he sold in the assessment year in question, which is 2003-04. The Assessee - respondent claims that the transaction attracts the provisions of Section 54B of the Income Tax Act, 1961 (in short ''the Act'') and he is thus entitled for exemption on the income derived from such sale.

This appeal was admitted on the following substantial questions of law:

"(a) Whether the Tribunal was correct in holding that the property sold by the assessee cannot be treated as income of the assessee under the head ''income from business'' as held by the Assessing Officer without considering and recording a finding in this regard?

(b) Whether the Tribunal was correct in proceeding to hold that the assessee should be allowed exemption to the extent of property purchased by the assessee within the stipulated time of sale without recording a finding as to whether the property sold were agriculture property when the certificate produced by the Village Accountant did not disclose the correct picture about the agriculture operation?"

We have heard the learned counsel Mr. K.V. Aravind, for the appellants and learned counsel Mr. S. Parthasarathi, for respondent. Perused the records.

The learned counsel for both the parties agree that the entire dispute in the present appeal hinges upon the fact as to whether the properties which were sold and also the properties which were purchased are the agricultural lands as per Section 2(14) of the Act and also as to whether the same were being used for agricultural purpose so as to attract the provisions of Section 54B of the Act. The learned counsel for both the parties have also stated that though the evidence from both sides were adduced before the Assessing Authority, which formed part of paper book of the Tribunal, but there is no discussion with regard to such evidence on the basis of which the Tribunal has come to a finding that the properties in question which were sold and purchased by the Assessee were agricultural properties and were used for agricultural purposes. The learned counsel for both the parties thus jointly stated that the matter be remanded back to the Assessing Authority for considering such question of fact afresh after taking into account the evidence which was lead by the parties.

In such view of the matter, the appeal is allowed. The order dated 17.04.2009 passed by the Tribunal in I.T.A. No. 384/Bang/2008 as well as the order of the Authorities below are hereby quashed The matter is remitted back to the Assessing Authority with a direction to consider the matter afresh in the light of the observations made herein above.

In view of the fact that the questions, which have been referred for decision of this court, have to be decided afresh in the light of the evidence adduced by the parties by the Assessing Authority, we are not answering the questions framed at the time of Admission of this appeal and the same shall be looked into by the Assessing Authority.