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2019 (4) TMI 265 - ITAT CHENNAILevy of capital gains tax on sale of land - nature of land sold - capital asset - agricultural land by the revenue department and as per the deed of purchase and sale made by the appellant - land could not be used for large scale agricultural operations - entitlement to claim the exemption u/s.10(1) - HELD THAT:- AO has not made any addition on account of the rejection of the assessee’s claim of agricultural income. The assessee owned more than 90 acres of land is also not disputed. A perusal of the Assessment Order clearly shows that the AO has examined the VAOs of the various villages wherein the assessee properties are situated. As noticed that the said VAOs were not provided for cross-examination to the assessee. A perusal of what has been extracted by the AO in respect of the VAO statements recorded clearly shows that as per the revenue records, the said lands were agricultural lands during the relevant period. The examination of the VAOs has also brought out the fact that the agricultural operations had been done on the said lands. How the AO draws the conclusion that the lands were left barren after purchase by the assessee is not coming out of the Assessment Order. It is also an admitted fact that the said lands are beyond 8 kms from the nearest Municipality. Thus, clearly, the said lands do not fall within the purview of the definition of capital asset under Income Tax Act. Once, the revenue records clearly shows that the said lands are agricultural lands and it is also noticed that the agricultural operations have been done on the said lands, just because, the assessee has not been able to generate desired agricultural income from the said lands and the assessee had sold the said lands within one year of its purchase, would not change the character of agricultural land to a non-agricultural land. This view of ours is supported from the principles laid down in the case of M.S.Srinivasa Naicker [2007 (1) TMI 149 - MADRAS HIGH COURT] as also the decision in the case of Ashok Kumar Rathi [2018 (1) TMI 277 - MADRAS HIGH COURT]. This being so, we are of the view that what has been sold by the assessee is an agricultural land and consequently the assessee is entitled to claim the benefit of exemption u/s.10(1) - Decided in favour of assessee.
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