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2017 (9) TMI 1580 - AT - Income TaxAddition on sale of agricultural land/asset - distance of more than 8 KM from the local limit of Municipalities and less population as provided u/s 2(14)(iii) - CIT-A held that the agricultural land sold to Housing Society, the land though entered in Revenue record as agricultural and profit on sale assessable to Capital Gain tax - Held that:- The ratio of decision of Hon’ble Supreme Court in Smt. Sarifabibi Mohamed Ibrahim & Ors. (1993 (9) TMI 10 - SUPREME Court) squarely applicable is applicable on the fact of the present case. The assessee is permanent resident of Mumbai. The assessee has not shown any income from agriculture activities. The assessee in the return of income has also shown as income from ‘salary’ from M/s Federal Brands Ltd. No evidence to substantiate that any agriculture activity was undertaken by the assessee during the period of holding the land with him, was placed on record by the assessee. The assessee claimed that during the period of holding installed irrigation system, created check dam, water sprinkle etc. No evidence of such activity is filed on record. None of the activity carried by the assessee during the period qualified as agriculture activity. The facts of the various decision relied by ld. AR of the assessee are at variance and the ratio of none of the case is applicable. Moreover, the decision of the Hon’ble Supreme Court is a binding precedent by virtue of Article 141 of the Constitution of India. Thus, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Deduction of cost of acquisition as per section 48 - Held that:- We have seen that while taxing the Capital Gain arising on sale of land, the AO and the ld. CIT(A) has not considered the deduction on account of Index Cost of Acquisition and the cost of Improvement as provided under section 48 of the Act. The assessee has filed an application for addition ground of appeal which we have admitted of this order. As we have noted that assessee’s claim for deduction on acquisition of cost of improvement has not been considered by the lower authorities. Thus, we deem it appropriate to restore the additional ground of appeal to the file of AO to verify the Cost of Acquisition and improvement thereon and grant the appropriate relief to the assessee in accordance with law. Needless to say that before considering the deduction of Index Cost of Acquisition along with the Cost of Improvement the AO shall grant the assessee an opportunity of hearing The AO further directed to grant the benefit of beneficial rate of tax as provided u/s 112 of the Act.
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