2012 (3) TMI 643 - AT - Income Tax

Summary

Issues Involved: Appeal against order of ld. CIT(A)-I, Ludhiana u/s 250(6) of the Income-tax Act for Assessment Year 2006-07.

Issue 1: Addition of Short Term Capital Gains

The assessee sold agricultural land and claimed exemption u/s 54B. Subsequently, the new asset was sold within 36 months. AO treated the entire consideration as short term capital gains. The Revenue defended this invoking section 54B extensively. However, the AR argued that the new asset does not fall u/s 2(14)(iii) of the Act as it falls beyond the M.C. limit of the town. The CIT(A) upheld the AR's contention, stating that the land sold was not a capital asset as per the Act's provisions. The AR referred to a notification stating that the area under the municipality was not notified. The CIT(A) relied on a previous ITAT decision and deleted the addition of &8377; 18,03,522/-.

Decision:

The findings of the CIT(A) were upheld, and the appeal of the Revenue was dismissed on 07.03.2012.