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Issues involved: Appeal and cross objection arising from the order passed by the Commissioner of Income-tax (Appeals)-XV, Ahmedabad, regarding the addition of short-term capital gains u/s 2(14)(iii) of the Income Tax Act for Assessment Year 2005-06.
Revenue's Appeal: The Revenue contended that the agricultural land sold by the assessee should be treated as short-term capital gains under section 2(14)(iii) of the Act, as it was not agricultural land but for industrial use. The Assessing Officer found that the assessee systematically planned the purchase and sale of the land as part of a business venture, indicating it was not a sale of capital assets. The assessee failed to provide complete details and evidence for the agricultural land. The Assessing Officer concluded that the income from the sale of land is taxable as business income, not exempt under section 2(14)(iii). Assessee's Cross Objection: The CIT(A) deleted the addition of short-term capital gains, stating that the land in question was agricultural and exempt from taxation under section 2(14)(iii). The 7/12 extracts confirmed the ownership of the land by the appellant, situated in a village with a population of less than ten thousand, qualifying it as agricultural land. The land was sold for industrial use, supported by a sanction letter for an Industrial Park. The addition made by the Assessing Officer was directed to be deleted. Judgment: After reviewing the submissions and evidence, it was confirmed that the land sold by the assessee was indeed agricultural land, not a capital asset u/s 2(14)(iii). The addition of short-term capital gains was rightly deleted by the CIT(A) and upheld. The Revenue's appeal was dismissed. The assessee's cross objection, being supportive of the CIT(A)'s order and with the Revenue's appeal dismissed, was deemed infructuous and also dismissed. The appeal of the Revenue and the cross objection of the assessee were both dismissed.
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