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2022 (11) TMI 1030 - AT - Income TaxNature of land sold - Revenue not accepting the assesses claim of income from sale of land being exempt u/s 10 - whether the asset qualifies as “capital asset” or not as per section 2(14) ? - Whether the land sold was not capital asset as they were situated outside the specified limit of 8kms. meaning thereby that the land were rural agricultural land? - HELD THAT:- The finding of fact by the ld.CIT(A) that the land is non-agricultural land has remained unchallenged before us. In the light of this fact, the distance of land from Municipal limit is wholly irrelevant for the purpose of determining whether the asset qualifies as “capital asset” or not as per section 2(14) of the Act, since as per the said section only agricultural land situated beyond the specified municipal limits do not qualify as capital assets. Therefore, twin conditions of the land being agricultural land and land being situated beyond a specified limit from the municipal boundary ,both has to be fulfilled for the asset to qualify as not being a capital asset. In the present case, there being no dispute to the fact that the asset was not agricultural land, arguments raised vis-à-vis distance beyond municipal limit, is wholly irrelevant since the assesses fails to fulfill the criteria of being an agricultural land for not qualifying as a capital asset. Disallowance of expenditure incurred on the acquisition of the land made in cash u/s 40A(3) - We are in agreement with the finding of the ld.CIT(A) that the income from sale of the land was not exempt as it was not agricultural land. Further the assessee has nothing to say against holding the transaction as business income of the assessee. The income from the transaction having been assessed under the head “income from business”, disallowance made by invoking provisions of section 40A(3) has been rightly made by the lower authorities. The only argument of the ld.counsel for the assessee that the income was not taxable under the head “income from business or profession” having already been rejected and the income having been held taxable under the head “income from business or profession” the disallowance under section 40A(3) of the Act, we hold, has been rightly made. Appeal of assessee dismissed.
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