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2017 (5) TMI 361 - AT - Income TaxRevision u/s 263 - capital gain on sale of land - nature of land - agriculture land situated within municipal limit or not - Held that:- In the present case, the land sold by the assessee not situated in any of the places as mentioned above. In fact the land situated in a hamlet village is not even situated in a village. Therefore, section 2(14)(iii)(a) has no application. So far as application of section 2(14)(iii)(b) of the Act is concerned to attract the capital gains, the land must situate within 8 kms. from the notified municipality. In the present case, the land is situated 3 kms. away from Anakapalle municipality, however, the Anakapalle municipality is not a notified municipality as per the notification dated 6.1.1991 and amended notification no.11186 dated 28.12.1999, therefore, section 2(14)(iii)(b) of the Act has also no application. Once land is classified in the revenue record as an agricultural land even assessee has not carried agricultural operations, capital gain tax cannot be attracted. Exclusion provided u/s 2(14)(iii) does not apply to agricultural land situated within the Panchayat limits. The impugned land sold by the assessee not attract the capital gains tax and no capital gain can be taxed. We also observed that the assessing officer has not at all examined before passing the order u/s 143(3) of the Act whether the capital gain attracts or not. After survey proceedings, assessee filed the return and same is accepted without making any enquiry. It is the duty of the A.O. to conduct an enquiry before assessing particular income has to be taxed or not. In this case, such enquiry was not made by the A.O. In view of the above, we are of the opinion that the A.O. is not correct in taxing exempt income as a capital gain. We find that the Ld. CIT(A) without considering the facts of the case and without examining whether the impugned land is an agricultural land or not, the ground raised by the assessee is dismissed. Thus, we reverse the order passed by the CIT(A) and the ground raised by the assessee is allowed.
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