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2021 (7) TMI 1039 - HC - Income TaxRevision u/s 264 - computation of income from capital gains - HELD THAT:- The expression ‘capital asset’ is defined under Section 2(14) of the Act. While defining capital asset under the said provision, agricultural land in India is not included. However, by way of exception, certain agricultural lands are included which are stated in Section 2(14)(iii)(a) or (b) of the Act. Before applying Section 48 of the Act, it is necessary to ascertain whether the subject matter of transfer, namely immovable property or land is agricultural land or not. If it is to be construed to be agricultural land, then the parameters as stipulated under Section 2(14) has to be applied. In the instant case, we find that the Assessing Officer has not applied the parameters as stipulated under Section 2(14)(iii), inasmuch as either sub-clause (a) or sub-clause (b) would apply. Even while applying the said sub-clauses, there are certain criteria mentioned within the sub-clauses, which have been applied to the subject matter of transfer before demanding tax on capital gains on the transfer of land. Section 2(47) defines “transfer” in relation to a capital asset. Therefore, there has to be a transfer of a capital asset within the meaning of Section 2(47) of the Act, also before the said tax is attracted. Hence, if there is (i) transfer and (ii) of a capital asset, as defined under the provisions of Section 2 of the Act, then it would attract Section 48 and other related provisions of Chapter-IV of the Act, for the purpose of raising a demand with regard to ‘capital gains’. In the instant case, on perusal of the order of the AO, we find that the aforesaid provisions have not been applied to the facts of the case. Although, there is a detailed discussion with regard to the nature of the transaction, as to whether it is a transfer or not, we find there is no application of mind as to whether the subject lands are capital asset or not. We reiterate that unless the subject matter of transfer are capital assets, there cannot be any demand under Chapter-IV of the Act. Therefore, the assessees herein preferred a revision under Section 264 of the Act. Admittedly, the revision petition was filed in time, as the limitation period is one year from the date on which the order in question was communicated or the date on which the assessee otherwise came to know of it. There is no controversy with regard to the revision petition being belated in the instant case. However, we find that the revisional Authority had to consider the revision in light of the observations we have made above, as the Assessing Officer has not considered the case in that light. Thus we set aside the order of the revisional Authority - remand the matter to the concerned Assessing Officer to consider the case of the assessee.
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