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2016 (6) TMI 550 - AT - Income TaxAddition under the head ‘capital gains’- Nature of land - Agricultural income - Held that:- Agricultural income for the purpose of assessment to agricultural income tax, income derived from any building owned and occupied by the receiver of the rent or revenue of any such land is also regarded as agricultural income under the Act. Such building should be on or in the immediate vicinity of the land and is occupied by the owner by reason of his connection with the land and is required by him for his dwelling house or as a store house or other out building. All these qualifications are satisfied in the case of the house where the assessee by reason of his connection with the land is living. The entire land of 30 cents retains the character of the agricultural land. The assessee is actually cultivating the land with agricultural crops. The land is not within the notified area and admittedly within a Panchayat far away from the notified areas in Cochin Corporation as per Notification No. SO 10/6.1.1994. The assessing officer himself admits that 1/3rd of the land could be regarded as agricultural land. The existence of well, septic tank, compound wall, cattle shed, pump house, a small house etc., would not make any difference to nature of land being agricultural in nature. The assessee had also declared agriculture income and the same have been accepted in the asst. order. For the aforesaid reasons, we are of the view that the Income Tax Authorities was not justified in treating 2/3rd of the subject property as capital asset and bringing the same for tax under the head “income from capital gains”. - Decided in favour of assessee.
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