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2023 (5) TMI 1270 - AT - Income TaxNature of land sold - Treatment to Gain on sale of land - assessee cannot cultivate the land or incapacitated to do so - agricultural land or "capital assets" u/s 2(14) - land as classified in the revenue records - difference of opinion among the Members of the Bench - third member appointment - AM decided the issue in favour of the assessee - As argued land is barren and devoid of any irrigation - HELD THAT:- Case of the land of the assessee satisfies the most of conditions laid down by the Hon’ble Supreme Court in Smt. Sarifabibi Mohammed Ibrahim vs. CIT[1993 (9) TMI 10 - SUPREME COURT] that major chunk of land (9.08 acres) in the land revenue records is classified as “Lagvadi Yogya Shetra” which means cultivable land and the land is admittedly subjected to payment of land revenue.The land has been recorded in the land revenue records as agricultural land and the same was never been put to any alternative use. The land is ordinarily used for agricultural purposes and it is not the case of the department that it has ever been used or intended to be Zo ted Yor non-agricultural purposes. Since the land is situated in hill area and there was no direct source of irrigation, therefore, agriculture produce, under the circumstances, cannot be in proportionate to the land area. However, that fact cannot, in any manner, be said to affect the nature of the land being an ‘agricultural land’. Lands in hilly areas are generally dependent upon rain waters for irrigation purposes. It is not the case of the Revenue that the assessee has ever applied to the concerned authorities for the change of land user.Though, it has been alleged that as per the revenue records for many years that no agricultural activity has been carried out at major chunk of the land, however, the assessee, in this respect, has explained that vegetables and other minor millets grown are not mentioned in the revenue records of the land situated in Raigad District. Merely because of certain reason, whatever it may be, if an assessee cannot cultivate the land or incapacitated to do so, that will not change the nature of the land from agricultural to non-agricultural especially when there is no change of user of the land. The land is not situated in a developed area. The physical characteristics surrender situations and use of the land in adjoining area as held by the CIT(A), indicate that the land was an agricultural land. The land has not been developed by plotting an providing roads and other facilities. There was no previous sale of land for non-agricultural use. The price of the land sold does not show that it was shown at a high price or that price was not proportionate to the price of the agricultural land in the area.The land has been specifically mentioned in the revenue record as cultivable land and there is no mention that the land is a barren land. The vacant or fallow land does not mean that it is a barren land. There is no condition prescribed under the provisions of section 2(14(iii) of the Act that active agricultural activity should be there at the relevant time of sale of the land, rather, the only condition prescribed is that it must be classified as agricultural land. Order of Third member- Land sold by the assessee being agricultural land not falling within the definition and scope of capital asset, cannot be subjected to capital gain tax. Therefore, agree with the view of the Id. AM. In view of the majority opinion, we hold that the land sold by the assessee is an agricultural land and hence the gain arising therefrom cannot be subjected to Capital gains tax. Appeal filed by the Revenue is dismissed.
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