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2019 (4) TMI 1981 - AT - Income TaxGain on sale of land - nature of land sold - agricultural land or capital asset - Whether the land was classified in the revenue records as agricultural and whether it was subjected to payment or land revenue? - HELD THAT:- In the present case in hand, the assessee has obtained preliminary approval for conversion of agricultural land into non-agricultural purposes. However, neither the assessee nor the purchaser used the said land for non-agricultural purposes and the status of the asset remains in the Revenue records as ‘AGRICULTURAL LAND” as could be evidenced from the Encumbrance Certificate issued by the Registration Department for the period from 01.07.2007 to 01.03.2016. The Information Officer, Dy. Block Development Officer, Sholavaram Panchayat Union vide his letter bearing No. N.K. No. 2272/2015/A-3 dated 27.07.2015, which was obtained under Right to Information Act – 2005, confirmed that the approval obtained by the assessee was valid for 3 years only, based on the file, District Fire Dept. License and Dist. Health Dept. approval has not been obtained and submitted and if NO action has been initiated to fulfil the terms and conditions of the approval, then the approval is considered to be lapsed. While conveying approval for conversion, the competent authority has imposed various conditions and one of the conditions at 7 is that “This concern should be accorded final sanction only after obtaining necessary approvals from the other Central and State Government Departments under the applicable laws and regulations”. Admittedly, the assessee has not obtained any approval as mandated in the preliminary approval. Encumbrance Certificate issued by the Registration Department for the period from 01.07.2007 to 01.03.2016, the status of the land remains as agricultural land and moreover, the assessee has declared agricultural income from their agricultural lands. The Assessing Officer accepted the agricultural income declared by the assessee during regular assessment under section 143(3) of the Act, but, in the assessment under section 143(3) r.w.s. 263 of the Act, the Assessing Officer treated the same as income from other sources merely on the ground that the assessee has not produced any bills or vouchers either for sale of produce or for purchase of seeds etc. Even now also, it is not possible to obtain any pakka bill or vouchers for the sale of agricultural produce or purchase of seeds from surrounding farmers/villagers. We find that most of the replies stated by the ld. DR are incorrect or not supported by any material and or against the valid documents of the State Revenue authorities. In our considered opinion and based on our observations on the replies filed by the ld. DR, it is not the case of the Department. Thus we hold that the land sold by the assessees and purchased by M/s. Agility Logistics Pvt. Ltd. is in the nature of agricultural land and the sale of agricultural land no capital gain tax is warranted in all the assessees case. - Decided against revenue.
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