S. CHOCKALINGAM Vs. DEPUTY COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessees have filed appeals for the Assessment Year (AY) 2008 -09 assailing the order of the Commissioner of Income -tax (Appeals) -VI, Chennai, dated 28 -10 -2013 in their respective cases. The Revenue has also filed cross -appeals impugning the order of CIT (Appeals) in respect of all the three assessees. The brief facts as emanating from the records are as under: The assessees during the period relevant to the AY under consideration, sold agriculture land along with standing trees. In the return of income, the assessees claimed exemption u/s. 54B of the Income -tax Act, 1961 (herein after referred to as 'the Act') on account of purchase of new agriculture land from the sale proceeds of agriculture land. The assessment in case of all the assessees was made u/s. 143(3). The Assessing Officer while making assessment in case of Kumari Devisankari Chokalingam (TTA No. 2223/2013) and S. Chokalingam (ITA No. 2224/2013) held, that the number of trees as mentioned by the assessees in deed of sale appears to be highly exaggerated. The Assessing Officer estimated agriculture income from the sale of standing trees as 1/3rd of the value shown in the deed of sale and thus, made addition of remaining 2/3rd amount in the income returned by the assessees. As regards deduction u/s. 54B claimed by the assessees, the Assessing Officer held that the purchase deed shows that along with new agriculture land, the assessees have purchased a plot described as house -site. The assessees had also claimed expenditure towards development of the new agriculture land. The said development charges relate to removing rocks, leveling and fencing of the land. The Assessing Officer held that the amount spent towards purchase of house -site and development charges cannot be allowed as part of investment u/s. 54B. The Assessing Officer accordingly disallowed the amount of exemption claimed by the assessee to the extent of aforesaid two expenditures.

(2.) SHRI B. Ramakrishnan, appearing on behalf of the assessees submitted that the authorities below have erred in not taking into consideration the revised computation filed at the time of assessment proceedings. In the revised computation, the assessees have only claimed that the sale proceeds arising from the sale of agriculture land does not give rise to liability of capital gain tax. The claim was made on the factual matrix of the case.

(3.) WE have heard the submissions made by the representatives of both the sides. From the submissions and the pleadings of the rival parties, issues which have come up before us for adjudication are as under: