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2006 (9) TMI 247 - ITAT PUNE-BCapital Gains - sale of agricultural land - Nature of land sold - Addition by treating the land as capital asset - revenue records as agricultural - No permission for non-agricultural use obtained - HELD THAT:- It is clear from the records, that the lands were subjected to land revenue and assessment of the land revenue was accordingly entered into the extract of 7/12. It is also seen that the total cultivable land has also been shown therein. It is nobody's case that the assessee had used the land for nonagricultural purposes before selling the same. No permission for non-agricultural use has also been obtained by the assessee. No evidence to that effect that the assessee had ever used the land for non-agricultural purposes was brought on record. The evidence in the form of 7/12 extracts clearly shows that agricultural operations were carried out on the land in question. The extract also gives the details and kinds of agricultural produce produced or cultivated on the said land. Merely because the assessee has not given any direct evidence of sale of agricultural produces, which were stated to have been consumed by the assessee for own purposes, is not sufficient to say that the land in question was not agricultural land when it is classified as agricultural land in 7/12 extracts where the nature of the crop and the person who cultivated the land are duly mentioned at the relevant point of time when the lands were sold by the assessee and where nothing is brought on record to show that the land was put in use for non-agricultural purposes by the assessee. In view of the decision of the Hon'ble jurisdictional High Court in the case of Gopal C. Sharma[1993 (10) TMI 41 - BOMBAY HIGH COURT], it is also clear that the profit motive of the assessee in selling the land without anything more by itself can never be decisive to say that the assessee used the land for non-agricultural purposes. We may also refer to a decision of the Hon'ble Supreme Court in the case of N. Srinivasa Rao v. Special Court [2006 (3) TMI 727 - SUPREME COURT] where it was observed that the fact that agricultural land in question is included in urban area without more, held not enough to conclude that the user of the same had been altered with passage of time. Thus, the fact that the land in question in the instant case is brought in industrial zone cannot be a determining factor by itself to say that the land was converted into use for nonagricultural purposes. Thus, we hold that the land in question sold by the assessee was an agricultural land in nature at the relevant point of time when the land was sold and, as such, any gain arising from sale thereof is exempted from tax under the Income-tax Act. Therefore, the addition of capital gain included by the Assessing Officer in the assessment of the assessee stands deleted. In the result, the appeal filed by the assessee is allowed.
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