2013 (12) TMI 1709 - AT - Income Tax

Summary

Issues involved: Interpretation of whether the land sold by the assessee falls within the definition of "capital asset" u/s 2(14) of the Income Tax Act.

Summary:
1. The appellant sold certain plots of lands inherited from forefathers during F.Y. 2006-07. The appellant claimed the lands were agricultural and thus not a "capital asset" u/s 2(14) of the Act, hence no capital gains tax was disclosed. However, the AO assessed the profit under Section 45 as Long Term Capital Gain.

2. On appeal, the ld. CIT(A) referred to a Tribunal decision regarding agricultural land situated within a certain distance from Municipalities or Cantonment Boards, as notified by the Central Government. The Tribunal held that the appellant's land, located outside Rajarhat Municipality and 2.5 KM away from its limits, did not fall within the definition of "capital asset" u/s 2(14)(iii) of the Act. Therefore, no capital gains tax was chargeable on the sale transaction.

3. The ld. CIT(A) relied on the Tribunal's decision and held that the land transferred by the appellant was agricultural and did not constitute a "capital asset" u/s 2(14) of the Act. The AO was directed to delete the addition made on account of long term capital gains.

4. The Revenue appealed against the CIT(A)'s order, arguing that the issue was covered in favor of the assessee based on the Tribunal's previous decision regarding a co-owner of the property. The Tribunal upheld the CIT(A)'s decision, stating that the land in question was agricultural and did not fall within the definition of "capital asset" u/s 2(14) of the Act.

5. The Tribunal confirmed the CIT(A)'s order, dismissing the Revenue's appeal.

Judges: Shri Mahavir Singh (Judicial Member) and Shri Shamim Yahya (Accountant Member)