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2021 (5) TMI 424 - AT - Income TaxAddition on account of short term capital gain u/s 50C - sale of agricultural land by observing that the land sold by the appellant are capital assets within the meaning of section 2(14)(iii) of the Act and liable for capital gains - assessee claimed that the land in question was agricultural land under the provision of section 2(14)(iii) of Act being situated beyond 8 km from the limit of the Municipal Corporation - HELD THAT - In the case on hand, the ld. CIT-A has given a very clear finding that the land in dispute was not used for the agricultural. The land was sold after the purchases within a short span of time. Thus a cumulative reading of the facts as discussed above, it is transpired that the assessee was not intending to use the land in dispute for the purpose of agricultural operations. Before parting, there is no information available on record whether the land in dispute was used for the agricultural operations prior to the date of purchase by the assessee viz a viz whether the land in dispute was to be used for agricultural operations in future by the buyer of the land from the assessee. To our understanding, the information for the prior and the future use of the land was necessary to arrive at the conclusion whether the land in dispute was an agricultural land within the meaning of the provisions of section 2(14). We are inclined to restore the issue to the file of the AO for fresh adjudication as per the provisions of law and in the light of the above stated discussion. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
Issues Involved:
1. Whether the land sold by the assessee qualifies as agricultural land under section 2(14)(iii) of the Income Tax Act, 1961, and therefore is exempt from capital gains tax. 2. Whether the sale consideration should be substituted with the Jantri value for the purpose of calculating short-term capital gains under section 50C of the Income Tax Act, 1961. Detailed Analysis: Issue 1: Classification of Land as Agricultural Land The primary issue is whether the land sold by the assessee qualifies as agricultural land under section 2(14)(iii) of the Income Tax Act, 1961, thereby exempting it from capital gains tax. Arguments by the Assessee: - The assessee contended that the land was agricultural and situated beyond 8 km from the municipal limits, supported by a certificate from the Talati. - The assessee also referenced a similar case involving her brother, where the land was accepted as agricultural by the DCIT. Findings of the AO and CIT (A): - The AO noted that the land was sold within a short period after purchase, indicating it was an investment rather than for agricultural use. - The land was under the jurisdiction of the Ahmedabad Urban Development Authority (AUDA), within 8 km of its limits. - The AO emphasized that the land was not used for agricultural purposes at the time of transfer. Tribunal's Analysis: - The Tribunal referred to judicial precedents, emphasizing that the actual use of the land for agricultural purposes is crucial. - The Tribunal noted the absence of evidence showing agricultural use before purchase or intended future use for agriculture. - The Tribunal highlighted that the land's classification in revenue records alone is not conclusive. Conclusion: The Tribunal restored the issue to the AO for fresh adjudication, emphasizing the need to consider the actual and intended use of the land for agricultural purposes. Issue 2: Substitution of Sale Consideration with Jantri Value The second issue concerns whether the sale consideration should be substituted with the Jantri value for calculating short-term capital gains under section 50C of the Income Tax Act, 1961. Arguments by the Assessee: - The assessee argued that the sale consideration declared in the registered documents should not be substituted with the Jantri value, as the deal was negotiated based on the lower Jantri value at the time. Findings of the AO and CIT (A): - The AO used the Jantri value of ?3,13,00,568 as the sale consideration, leading to a higher short-term capital gain calculation. - The CIT (A) upheld this approach, noting that the land was within the AUDA limits and thus, the Jantri value was applicable. Tribunal's Analysis: - The Tribunal reiterated the importance of verifying the actual sale consideration received versus the Jantri value. - The Tribunal noted the need for a detailed examination of whether the Jantri value should apply, given the specific circumstances of the sale. Conclusion: The Tribunal restored the issue to the AO for fresh adjudication, requiring a thorough review of the sale consideration and the applicability of the Jantri value. Final Judgment: The Tribunal allowed the appeal for statistical purposes, remanding the case to the AO for fresh adjudication on both issues, ensuring a detailed and fair examination in line with the legal provisions and judicial precedents. Order Pronounced: The order was pronounced in the Court on 09/04/2021 at Ahmedabad.
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