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2014 (9) TMI 85 - AT - Income TaxAgriculture land or not - Exemption on gain from sale of land nature of transaction adventure in the nature of trade - Held that:- The land is classified in the Revenue records as agricultural land and there is no dispute regarding this issue and actual cultivation has been carried on this land and income was declared from this land in the return of income filed by the assessee for the AY as agricultural income - the assessee has not applied for conversion of the agricultural land for non-agricultural purposes before sale of this property and the assessee has not put the land to any purposes other than agricultural purposes - neither the property nor the surrounding areas were subject to any developmental activities at the relevant point of time of sale of the land as per the evidence brought on record. The nature of the crop and the person who cultivated the land are duly mentioned in the revenue records shows that at the relevant point of time the land was used for agricultural purposes only and nothing is brought on record to show that the land was put in use for non-agricultural purposes by the assessees relying upon Gopal C. Sharma vs. CIT [1993 (10) TMI 41 - BOMBAY High Court] - 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. The agricultural land of the assessee is outside the Municipal Limits of Hyderabad Municipality and that also 8 km away from the outer limits of this Municipality, assessee's land does not come within the purview of section 2(14)(iii) either under sub clause (a) or (b) of the Act, hence the same cannot be considered as capital asset - no capital gain tax can be charged on the sale transaction of this land entered by the assessee relying upon Deputy Commissioner of Income-tax, Circle 8, Kolkata Versus Arijit Mitra [2011 (8) TMI 556 - ITAT, KOLKATA] - the mere circumstances that a property is purchased in the hope that when sold later on it would leave a margin of profit, would not be sufficient to show, an intention to trade at the inception. Merely because of the fact that the land was sold in a short period of holding, it cannot be held that income arising from the sale of land was taxable as profit arising from the adventure in the nature of trade or capital gain - The period of holding should not suggest that the activity was an adventure in the nature of trade - the land sold is not only agricultural in nature but is also situated beyond 12 kms from the limit of a municipality notified by the central govt. - land sold by assessee not being a capital asset, the gain derived there from is not taxable at the hands of the assessee - Decided in favour of assessee.
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