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2018 (11) TMI 1733 - AT - Income TaxProfit from sale of land - Characterization of income - nature of land sold - agricultural income or capital asset - whether the transaction of purchase and sale carried out by the assessee during the year under consideration are in the nature of trade ? - HELD THAT:- In the case in hand, there is no dispute that the assessee has purchased the lands in question with the intention to sell without holding it for a considerable period of time. The actual use of land and the intended future use of land is also not in dispute as it was not for agriculture purpose as subsequently the lands were converted for nonagricultural use. The location of the land and the area surrounding the land are also in the process of development of real estate for nonagricultural purpose and therefore, the entire exercise of purchase and sale of agricultural lands in questions were to use the same for development of real estate. Hence, the lands have no more retained the character of agricultural land. When the entire surrounding area was under real estate development and already developed area then the transaction of purchase and sale of said agricultural land not a isolated single transaction but a systematic repeated transactions are with the motive and view to earn profit on resale. Incentive of exempting the agricultural land from definition of capital asset and consequently from chargeability of income tax is to encourage the cultivation of land and preserve the character of agricultural land to be used for cultivation and agricultural operations. Therefore, the scheme and the object of providing these incentives to keep the income arising from agricultural land exempt from tax is to promote more and more agricultural operations by the agriculturists and the sole object of this incentive is not to tax the agriculturists who is dealing, cultivating and carrying out the agricultural operations on the agricultural land and then in case if the said land is sold the same is excluded from the purview of income tax either on capital gain or agricultural income. Claiming the said exemption by business person merely because he has purchased the land and then sold it would be defeating the very purpose of the incentive which is only for the genuine cultivator of the land. Hence, we hold that the income arising on sale of the lands in question is not exempt from income tax either as a capital gain U/s 2(14)(iii) or as an agricultural income U/s 2(1A) of the Act. This issue is decided against the assessee
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