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2016 (5) TMI 322 - AT - Income TaxSale of capital asset within the meaning of section 2(14) - nature of land - sale of agricultural land - Held that:- The reliance placed by the Assessing officer on the report of the Inspector of Income Tax to come to the conclusion that the land was not an agricultural land is misplaced. The Inspection was done by the Inspector after the transferee had constructed the building on the land. Even in the report of the Inspector, it is observed that there were some coconut trees on the land. Just because the transferee had not used the land for agricultural purposes, the land does not loose its character of being an agricultural land when the same is sold by the assessee. Moreover, the said inspection was done behind the back of the assessee and the assessee was not given any opportunity to rebut the same. In any case, it is settled law that evidence collected behind the back of the assessee can be used as evidence against the assessee. The nearness of the land to highway also does not alter the character of the land and appreciation in the price of land cannot be seen in isolation and if agricultural operations were carried out by the assessee, the appreciation in the price of land alone would not lead to the conclusion that the land is not an agricultural land. The objection of the Revenue that coconut plantation could not have been carried out on the soil which was present on the said land and the reliance placed on the letter of the Gram. Panchayat Secretary cannot be accepted in view of the clear report of the Village Officer. Thus, in view of the aforesaid, we hold that the land in question cannot be treated as capital asset u/s. 2(14) of the Act and therefore, capital gains cannot be assessed on the sale of the land. - Decided against revenue
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