ITAT Allows Section 54B Relief on Sale of Agricultural Land

Case Details: Deputy Commissioner of Income-tax vs. Bhupinder Singh Bhalla - [2026] 183 taxmann.com 465 (Delhi-Trib.) (TM)

Judiciary and Counsel Details

• Mahavir Singh | Vice President (As a third Member), Vimal Kumar | Judicial Member & Brajesh Kumar Singh | Accountant Member
• Jitender Singh, CIT-DR for the Appellant.
• Somil Aggarwal, Deepesh Garg & Dr Rakesh Gupta, Advs. for the Respondent.

Facts of the Case

Assessee-individual sold agricultural land and invested sale proceeds in the purchase of three agricultural lands. While filing the return of income, the assessee claimed exemption under section 54B. During the assessment proceedings, the Assessing Officer (AO) denied the exemption on the ground that the land was not used for agricultural purposes.

The matter reached the Delhi Tribunal.

ITAT Held

The Tribunal held that the assessee had established that the land was assessed to land revenue, as was evident from the Khasra/Girdawri and Halqa Patwari report. Even the land was assessable under the Delhi Land Revenue Act, and the competent authorities, i.e., the Sub-Divisional Magistrate, Kalkaji District, and the Deputy Commissioner/Collector (South) Saket, passed an order that the land was primarily used for agricultural purposes.

Further, it was noted that the Assessing Officer and the revenue relied on the report of the Inspectors who visited the premises and reported that no agricultural activity was carried out. These Inspectors clicked photographs of the property, but they never informed the assessee of the visit, and it appeared to be a discrete enquiry conducted by them without informing the party. The authenticity of this report and the photographs reproduced in the assessment order were specifically discarded by the assessee. Even otherwise, the Inspectors’ Report was dated 28-12-2018, whereas the point of transfer of land was dated 07-12-2015. Thus, the report of the Inspectors and consequent photographs cannot be taken into consideration while adjudicating this issue, as it was without any evidence contrary to the facts on record.

In the instant case, the character of this land, as on the date of transfer, was agricultural land, and the revenue records also prove that the agricultural land was put to use. Moreover, this is supported by the assessee consistently declaring agricultural income, and the quantum of agricultural income cannot be the reason for disallowing the claim of deduction under section 54B. The assessee proved that the land is agricultural in nature and was used for agricultural activity as per the records. The revenue had not discharged the onus of disproving the same.

List of Cases Referred to

• ITO v. Babita Gupta [2023] 147 taxmann.com 317 (Delhi-Trib.)
• S. Sundaramurthy v. Pr. CIT [2020] 113 taxmann.com 341/269 Taxman 107 (Madras).