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2017 (10) TMI 387 - HC - Income TaxSale of land - nature of land sold - agricultural land or “capital asset" - Assessee has a case that the Tribunal was wrong in holding that there was transfer of the property as contemplated in Section 2(47) of the Act - Held that:- Admittedly, the assessee purchased the land which was a rubber estate. The land was purchased to utilize it for the non-agricultural purpose of expansion of its factory. The rubber trees in the land were slaughter tapped which is a process that immediately precedes the cutting and removal of the rubber trees. The income returned by the assessee, is the income from slaughter tapping of rubber trees. This income was not gained from agricultural operations, but was only from exploitation of standing trees at the end of its useful life. Thereafter, the assessee had converted the land into housing plots leaving out common areas for roads and other purposes. Before that assessee would have cut and removed rubber trees. The asset was brought in as the stock-in-trade of the assessee. Thereafter, gradually the plots were sold to several people and agreements were entered into with many of the buyers for construction of villas. This, therefore, would establish beyond any doubt that though the property was once an agricultural land, its acquisition was for non-agricultural purposes, the assessee did not carry on any agricultural activity in the land and at the relevant date, viz. the date of sale, the land had ceased to be an agricultural land. If that be so, the assessee could not have claimed that the income gained from the sale of the land is from the sale of agricultural land entitling it to exemption from levy of capital gains. Assessee does not have a case that the land was not treated as stock-in-trade. Their business also included real estate development. Therefore, Tribunal was perfectly justified in its conclusion that there was transfer of the asset. - Decided against assessee.
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