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2015 (10) TMI 1275 - AT - Income TaxAddition under the head 'profit and gains of business' as against the claim of agricultural income claimed to be exempt by the assessee - CIT(A) delted the addition - Held that:- In the similar facts and circumstances the Hon'ble Delhi High Court in the case of Hindustan Industrial Resources Ltd. Vs. ACIT (2009 (1) TMI 1 - HIGH COURT DELHI ) observed that the assessee purchased agricultural land with an intention to use the land for industrial purposes. No agricultural activity was carried on that land by the assessee. The land was acquired by the competent authority under land acquisition Act for planned development of industry. The award passed in the acquisition proceedings also shows that the land was agricultural land. Now, the issue is that as the assessee has never used the said land for agricultural purposes and the land was intended to be used for industrial purposes, both by the assessee as well as by the acquiring authority, can it be said that it is an agricultural land and therefore, gain on transfer thereof is exigible to tax. The Hon'ble High Court observed that the intention does not alter the character and nature of the land. Further the fact that the assessee did not carry out any agricultural operations and did not also result in any conversion of the agricultural land into an industrial land. There is no material to show that any industrial activity or any operation for setting up of industry was actually carried out on the said land so as to change its character from agricultural to industrial. It is the character of the land at the time of sale that is relevant and not the purpose for which it was purchased by the assessee or from the assessee. Therefore, it was held that the land retained its character as agricultural and therefore, not liable for capital gains tax. We do not find any good reason to interfere with the findings of the Commissioner of Income Tax (Appeals) that the land was acquired by the assessee as investment and not as stock in trade of business and the transaction of holding the land for above 14 months before sale cannot be treated as business transaction of the assessee. - Decided in favour of assessee.
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