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Shri Ketan Moolchand Shah Versus DCIT, 1 (1) , Bilaspur

2018 (2) TMI 268 - ITAT RAIPUR

Addition on account of long term capital gain - whether the land sold by the appellant was a capital asset within the meaning of section 2(14) - sale of agricultural land - Held that:- The land in question is treated as agricultural land and the capital gains arising out of sale of agricultural land is entitled for exemption u/s.2(14) of the Act. Accordingly, we set aside the orders of the CIT(A) and direct the AO to delete the addition and allow the grounds of appeal in favour of the assessee. .....

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e assessment year 2010-2011. 2. Since the issue in both the appeals are similar, for the sake of convenience, they were heard together and are disposed off by the consolidated order and we take the appeal for the assessment year 2008-09 and facts narrated therein for our adjudication and our decision will apply mutatis-mutandis to the assessment year 2010-2011. 3. Followings are the Grounds of appeal raised for the assessment year 2008-09 as under: 1. In the facts and circumstances of the case a .....

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us finding and concluding that the amount of ₹ 1,37,72,502/- is not exempt and is taxable. 4. The brief facts of the case are that the assessee is an individual and derives income by way of remuneration, interest, dividend, agricultural income and in the year under consideration received compensation on compulsory acquisition of agricultural land by the State Government and for the said assessment year 2008-09, filed return of income on 26.9.2008 with total income of ₹ 46,62,847/- an .....

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nd claimed as exempt u/s.2(14) of the Act and the Assessing Officer reasons to believe that income has escaped assessment and issued notice u/s.148 of the Act and assessee filed letter on 5.8.2013 to treat the return of income filed earlier in compliance to reassessment proceedings and the Assessing Officer also issued notice u/s.143(2) and 142(1) of the Act and the parties were heard. In support of the claim that the land is agricultural land, the assessee filed copy of certificate dated 24.9.2 .....

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e Raipur. The assessee to support its claim of agricultural land relied on the decision of Hon ble Madras High Court in the case of CIT vs. P.J. Thomas, 211 ITR 837 (Mad), wherein, it was held that the exclusion u/s.2(14)(iii) does not apply to agricultural lands situated within Panchayats, hence capital gain arising from transfer of such agricultural land is not liable to tax. The Assessing Officer was not satisfied with the explanations and dealt on the provisions and factual aspects and obser .....

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.9447 dated 5.1.1994 and interpreted that the distance of 8 kms has to be counted from all directions of municipal limits of Raipur and the municipal limits of Raipur extend to more than 10 kms towards Aarang and observed that the land is situated in Chhatona village within the purview of Raipur district and the municipal limits need to be considered within municipal limits of Raipur and placed reliance on the decision of Hon ble P&H High Court in the case of CIT vs. Smt. Anjana Sehgal, 133 .....

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on the grounds of appeal and also the assessee furnished additional evidences. The CIT(A) held that the evidences were not submitted before the Assessing officer, hence referred to the Assessing officer for his comments. Whereas the Assessing Officer filed remand report with the submission and findings that the land transferred was a capital asset and the gain on transfer is assessable to capital gains tax and the assessee also filed reply to the comments of the Assessing Officer. The CIT(A) de .....

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dealt on this issue in respect of sale of agricultural land by the assessee to (NRDA) and prior to the sale of agricultural land, the assessee deriving income from agricultural activity alongwith other incomes in the earlier assessment years and disclosed in the Return of income. Whereas the Assessing Officer treated the land as capital asset and denied exemption to the assessee. 8. Ld D.R. submitted that the assessee has not carried out any agricultural operations and no proof was submitted, t .....

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holding of the land by the assessee and drew attention to page 103 of PB, wherein, the Patwari Certificate was issued dated 20.2.2013 stating that the land is situated 9 kms away from the Muncipality and also referred to certificate dated 24.9.2008 of Dy.Manager (Land), Raipur Development Authority, placed at page 104 of PB, certifying that the said agricultural land is situated outside the Municipality Area. Ld A.R. further drew our attention to the Income tax returns filed by the assessee and .....

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R. relied on the judicial decision in the case of Addl.CIT vs. Tarachand Jain, 123 ITR 567 (Pat). 10. On a query from the bench to ld D.D.R. whether any inquiry was conducted by the Assessing Officer regarding the agricultural income/land, the explanations are not convincing. Whereas ld A.R. has demonstrated supporting documents and certificates for the purpose of acquiring the property and also sale to the Naya Raipur Development Area referred to paper book Vol. 1 page 105. Ld D.R. submitted th .....

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therefore, any consideration out of sale of agricultural land, which is not assessable as the land was situated beyond 8 kms., therefore, the direction of the learned CIT(A) that the surplus may be treated as business income, has become now meaningless. Even and otherwise, this issue is also decided by various High Courts including the Hon ble Bombay High Court. Though learned CIT(A) has placed reliance on the decision of the Hon ble Bombay High Court in case of Gopal Ramnarayan Kasat, reported .....

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