Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 12 - AT - Income TaxSale of agricultural land - business income or capital gains - whether the land purchased by the assessee as agricultural land and also sold as agricultural land, is a capital asset u/s 2(14) ? - HELD THAT:- Admittedly, the assessee is a company which is engaged in the business of real estate and has apparently purchased the property for development of the same into plots as is evident from the Balance sheet of the company. If the assessee had carried on such activity and had derived income therefrom, it would definitely be business income, as held by the AO - assessee has not carried on any agricultural activity nor has it converted the said agricultural land into non-agricultural land and had not shown any intention of developing the same into plots. Undisputedly, the assessee has sold the land as it is i.e. in the same status of agricultural land to the vendee for a sale consideration in acres. We agree with the contention of the assessee that the land did not loose its character of being agricultural land at the time of sale. Since the location of the land is beyond 8kms from the Municipal area, it did not become a capital asset u/s 2(14) of the I.T. Act. Further, the AO himself has held the land to be agricultural land and thus not a ‘capital asset’, but since the assessee was engaged in the business of real estate, he held the income from such sale of land to be business income. We find that the CIT (A), has held the land to be a capital asset only because the land was shown as a fixed asset in the balance sheet of the assessee. Since the assessee before us has purchased the agricultural land and had sold it as agricultural land and there is no evidence brought on record that the assessee has carried on any developmental activities on the said land and since the land was described by the Revenue authorities as agricultural land only, we accept the contention of the assessee and hold that the land, in question, is agricultural land and the profit therefrom is not taxable in the hands of the assessee either as business income or as capital gains. Appeal of the assessee is accordingly allowed.
|