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2023 (3) TMI 1238 - AT - Income TaxEligibility of exemption u/s 2(14)(iii) - addition made in respect of Capital Gains earned on rural agriculture land - assessee contended that the land qualifies as agricultural land and assessee is eligible to claim exemption section 2(14)(iii) as the said land is a rural agriculture land and relevant documents like the sale deed, purchase deed, 7/12 extract, copy of certificate from Soyala Gram Panchayat stating that the population is below 10000 and distance from Ahmadabad Municipal Corporation is more than 8 km were submitted before the AO for his consideration - HELD THAT:- In light of the facts of the instant case that the land had been shown as agricultural land in Revenue records, there was no application made for conversion of aforesaid agricultural land to non-agricultural land, the agriculture land under consideration was situated beyond 8 km from the municipal limits and further in light of the judicial precedents reproduced above, we are of the considered view that Ld. CIT(A) has not erred in facts and in law in holding that the assessee was eligible for claim of deduction u/s 2(14)(iii) of the Act on sale of aforesaid agricultural land. Disallowance of interest expense - AO observed that while these interest expenses were for the period March 2011 but the land in question was already sold on 10-01-2011. Therefore, these interest expenses are not related to the above land transaction - CIT(A) allowed the appeal of the assessee on the ground that the AO erred in facts in holding that the interest expenditure was paid after the date on which the aforesaid land was sold - HELD THAT:- CIT(A) on appreciation of the facts of the case has observed that the assessee has been able to establish the nexus between interest paid on borrowed fund and the sale of land and accordingly the assessee in the instant set of facts was justified in claiming interest expenditure as interest paid on the purchase of said land against sale of land at Soyala Gam. CIT(A) on going through the relevant records has also satisfied itself that no portion of interest expenses were incurred after the date of sale of the aforesaid property. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) so as to call for any interference. Appeal of the Department is dismissed.
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