Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 989 - AT - Income TaxProfits arising on sale of lands - nature of land - capital income or business income - subject lands were classified in the revenue record as agricultural lands as per entries in 7/12 extracts of the lands - HELD THAT:- As in the light of the fact that the entries in the 7/12 extracts shows that lands were agricultural lands at the time of transfer and the lands have been put to agricultural operations, it can be said that the assessee company had discharged his burden and proved that the lands were agricultural lands - the fact that the purchaser of the lands had used the lands for non-agricultural purpose has no bearing in determining the nature of assets sold by the assessee on the date of sale as held by the Hon’ble Madras High Court in the case of M. S. Srinivas Naicker [2007 (1) TMI 149 - MADRAS HIGH COURT] Further, in the present case, the seller of the land had not taken any steps which would indicate the intention to exploit the land for non-agricultural use, it is only the buyer of the land who sought the permission for conversion of land into agricultural to nonagricultural on 05.09.2014 which is subsequent to the sale of land by the respondent. Recently the Hon’ble Kerala High Court in the case of CIT vs. Cochin Malabar Estates and Industries Ltd. [2022 (2) TMI 1146 - KERALA HIGH COURT] after referring to the judgement of the Hon’ble Madras High Court in the case of Mansi Finance Chennai Ltd. [2017 (1) TMI 1209 - MADRAS HIGH COURT]and MS. Srinivasa Naicker [2007 (1) TMI 149 - MADRAS HIGH COURT] Thus, the argument of the ld. CIT-DR that the land was used for non-agricultural purpose by the purchaser of the land has no impact in determining the issue whether the land is agricultural or not at the time of sale. The mere fact that the assessee company made huge amount of profit cannot be ground to treat the profit arising on sale of agricultural land as “business income” as held by the Hon’ble Gujarat High Court in the case of PCIT vs. Heenaben Bhadresh Mehta [2018 (8) TMI 987 - GUJARAT HIGH COURT] Thus we are of the considered opinion that the assessee company had brought on record a conclusive proof to infer that the lands sold were agricultural lands. Accordingly, we uphold that the findings of the ld. CIT(A) that the lands sold were agricultural lands. As the statements of directors of the assessee company, do not support the findings of the A.O. that the lands are held as business assets. Therefore, we do not find any illegality or perversity in the findings of the ld. CIT(A) in holding that the profits arising on sale of land cannot be brought to tax as “business income” or “capital gains”. Thus, we do not find any merit in the grounds of appeal filed by the Revenue. Hence, the grounds of appeal raised by the Revenue are dismissed.
|