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2017 (8) TMI 1301 - AT - Income TaxSurplus arising out of the sale of agricultural land being treated as business income - nature of land - "capital asset" - beyond 8 kms. from the municipal limits - AO considered the transaction in the nature of adventure in the nature of trade - Held that:- The intention of the owners to do agricultural operation in the subject land is clear from the attendant facts and they had returned agricultural income for various assessment years preceding the impugned assessment year. They were having certificates issued by the competent authorities showing that the land was agricultural. No doubt, the Ld. CIT(A) has relied on various judgments for supporting his conclusion that the subject land could not be considered as agricultural and sale therefrom gave rise to business income. However, almost all of these judgments including that of the Hon’ble Apex Court in the case of Sarifibhai Mohamed Ibrahim vs. CIT and others (1993 (9) TMI 10 - SUPREME Court) and in the case of Smt. Asha George vs. ITO (2013 (1) TMI 545 - KERALA HIGH COURT) were examined by this Tribunal in the case of M.J. Thomas (2014 (10) TMI 353 - ITAT COCHIN). Hon’ble Madras High Court in the case of Shakuntala Vedachalam vs. Vanitha Manickavasagam (2014 (9) TMI 3 - MADRAS HIGH COURT) has also held that classification of land in revenue records, was clearly indicative of the nature of the land. In the circumstances, we are of the opinion that the subject land could only be considered as agricultural. Since it was situated beyond 8 kms. from the municipal limits, sale thereof would not result in any capital gains. Surplus could not have been treated as income from business since assessee had not ventured into the business of real estate. For the very same reason, we are of the opinion that the agricultural income returned by the assessee could not have been added to the total income since it was exempt u/s. 10(1) of the Act. - Decided in favour of assessee.
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