2018 (3) TMI 1194 - AT - Income Tax

Profit from sale of agricultural land - According to the AO this agricultural land is within 8 Km limit of the local limits of the municipality and, therefore, it will not be treated as capital asset - CIT(A) deleting the addition of short term capital gain - Held that - We find that the Revenue now before us could not controvert the finding of the learned CIT(A) as held since the above issue is squarely covered in favour of the appellant by various judicial pronouncements it is held that the distance of 8 Km has to be measured through nearest approach road method. Since evidences have already been submitted by the appellant before the Ld.AO to establish that the property in question is situated beyond 8 Kms. from the city municipal limits as measured by approach road method, and since no contrary evidence has been brought on record, it is held that the said agricultural land is not a capital asset as it is situated beyond 8 Km from the Nagpur city corporation limit - Decided against revenue. Deemed rent u/s 23(4) in relation to two houses - ALV determination - Held that - We find that the Assessing Officer has rightly assessed the ALV of the other two house properties and now before us, learned counsel for the assessee could not controvert the observations of the Assessing Officer because it is as per provisions of Section 23(4) of the Act. Accordingly, we uphold the addition and reverse the findings of the learned CIT(A). This issue of Revenue s appeal is allowed.

Summary

Issues:
1. Treatment of profit from sale of agricultural land as short term capital gain.
2. Deletion of addition of deemed rent on property.

Issue 1: Treatment of profit from sale of agricultural land as short term capital gain
The first issue in this appeal revolves around the treatment of profit from the sale of agricultural land as short term capital gain. The Assessing Officer treated the profit as short term capital gain instead of a capital receipt. The Revenue challenged the order of the learned CIT(A) on the grounds that the land should be situated within 8 Km from any municipal limits. The CIT(A) deleted the addition by holding that the asset is situated beyond the local limits of 8 Km, as evidenced by the approach road method. The Tribunal dismissed the Revenue's appeal as they could not provide contrary evidence to challenge the CIT(A)'s findings.

Issue 2: Deletion of addition of deemed rent on property
The second issue in this appeal concerns the deletion of the addition made by the Assessing Officer of deemed rent under Section 23(4) of the Act in relation to two houses owned by the assessee. The Assessing Officer calculated the income from house property at a specific amount after allowing deductions, based on the number of self-occupied properties. The CIT(A) deleted the entire addition by considering the facts of the case, including the appellant's business use of one of the properties. The Tribunal upheld the Assessing Officer's assessment of the annual letting value of the two house properties, as per the provisions of Section 23(4) of the Act, reversing the CIT(A)'s findings. Consequently, this issue of the Revenue's appeal was allowed partially.

In conclusion, the Tribunal's judgment addressed the issues of treatment of profit from the sale of agricultural land and the deletion of deemed rent on property. The decision provided detailed analysis and interpretation of the relevant legal provisions, considering the arguments presented by both parties and the findings of the lower authorities.