2015 (7) TMI 1140 - AT - Income Tax

Addition made on account of capital gains on sale of agricultural land - whether the land sold by the assessee is agricultural land or non-agricultural land for the purpose of capital gains? - Held that - For the elaborate reasons given by the Commissioner of Income Tax (Appeals) we hold that the land sold by the assessee is agricultural land and thus sustained the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue.

Summary

Issues:
- Whether the land sold by the assessee is agricultural land or non-agricultural land for the purpose of capital gains.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2010-11, specifically focusing on the addition made on account of capital gains on the sale of agricultural land. The Assessing Officer had denied the exemption claimed under section 54 and 54B of the Act, stating that the property sold was only vacant land intended for housing plots. The Commissioner of Income Tax (Appeals) allowed the claims of the assessee, leading to the Revenue's appeal. The main contention revolved around whether the land in question should be considered agricultural or non-agricultural for the purpose of capital gains taxation.

The Departmental Representative supported the Assessing Officer's decision, arguing that the land sold was not agricultural. On the other hand, the Counsel for the assessee presented various arguments to establish that the land was indeed agricultural, citing the remote location, surrounding agricultural lands, and certificates confirming agricultural activities on the land. The Commissioner of Income Tax (Appeals) extensively considered the submissions and documents provided by both sides. The AR of the appellant argued that the land was classified as agricultural in revenue records, supported by a 'Google Map' showing the distance from municipal limits and population details of the area. The Commissioner of Income Tax (Appeals) analyzed relevant case laws and documents to conclude that the land sold was agricultural, thus exempt from capital gains tax under section 2(14) of the IT Act.

Upon reviewing the Commissioner's order, the ITAT Chennai upheld the decision, finding no valid reason to interfere with the findings that the land in question was indeed agricultural. Consequently, the appeal of the Revenue was dismissed. The cross objection filed by the assessee was also deemed infructuous and dismissed since the Commissioner's order was upheld. The judgment was pronounced on 17th July 2015 by the ITAT Chennai.