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2018 (5) TMI 1870 - AT - Income TaxCapital gain - nature of land sold - capital asset - agricultural land - exemption u/s 10 - said land was surrounded by agricultural land and the Arabian Sea - character of the land at the time of sale is a material factor which has to be seen as per the sale deed - HELD THAT:- Land revenue shows that it was an agricultural land and some agricultural operation were carried out and simply because assessee had not shown agricultural income that does not mean no agricultural activity was ever carried out; secondly, even at the time of sale the agricultural land, the land continued to be agricultural land and no change of land used was ever sought at the time of sale and now it has also been brought on record that even after the sale also the land remained agricultural land in the hands of the seller and till date land used has not been changed and; lastly, even if land has been sold to a hotelier but if it is not used for commercial purpose even after the sale, then does not make any difference whether a prospective hotelier had purchased a land. All the facts and materials discussed above clearly pointed out that it was clear cut sale of agricultural land, and therefore, any Long Term Capital Gain arisen from sale of such land is to be treated as exempt u/s. 10. We do not find any infirmity in the order of the ld. CIT (A) that the gain on sale of such land cannot be taxed as capital gain. MAT - computation or taxation of book profit u/s. 115JB - HELD THAT:- No such grounds were raised in the original grounds of appeal by the Department. Apart from that, once Assessing Officer has not treated the said gain for the purposes of book profit then by way of such ground the issue cannot be raised by the Department. Otherwise also when the income of agricultural land is exempt from tax, then the said exempt income cannot be added to the books profit while calculating the MAT u/s. 115JB. Thus, the said ground raised by the Revenue cannot be entertained and same is dismissed. Receipts on account of compromise agreement and settlement - taxability as capital gain or not? - HELD THAT:- Looking to the nature of payment which is on account of compromise agreement and also settlement of withdrawal of cases, it cannot be held that the said amount received by the assessee is on account of sale of agricultural land, and therefore, CIT (A) has rightly held that the said amount cannot be treated as exempt from capital gain tax and accordingly the order of the CIT (A) is confirmed and the grounds raised in the Cross Objection is dismissed.
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