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2022 (8) TMI 523 - AT - Income TaxCapital gain earned by the assessee on sale of agricultural land - Nature of land - assessee purchased the land as agricultural land held them as agricultural land used them for agricultural activities and finally sold them as agricultural lands only - HELD THAT - We find that very detailed findings / reasoning has been rendered by the coordinate bench in the case of the Joint Owner 2016 (3) TMI 491 - ITAT CHENNAI . After weighing all the surrounding circumstances as well as after considering the various judicial pronouncements the bench reached a finding that the land could not be held to be an agricultural land. No change in facts have been demonstrated before us and facts are pari-materia the same in the present case before us. Nothing has been shown to us that the aforesaid order has been reversed in any manner by any higher judicial authority. Therefore we see no reason to deviate from the findings of coordinate bench as above. Respectfully following the same we reverse the order of Ld. CIT(A) and restore the assessment framed by Ld. AO.
Issues Involved:
1. Whether the land sold by the assessee qualifies as agricultural land or capital asset. 2. Validity of the assessment framed by the Assessing Officer (AO) under Section 143(3) read with Section 147 of the Income Tax Act. 3. Applicability of judicial precedents and case laws in determining the nature of the land. Detailed Analysis: Issue 1: Whether the land sold by the assessee qualifies as agricultural land or capital asset. Assessment Proceedings: The assessee and her son jointly owned 7 acres of land in Navaloor Village, Chennai, sold for Rs. 600 Lacs to M/s. Menakur Infrastructure Pvt. Ltd. The assessee claimed the land as agricultural, not a capital asset under Section 2(14) of the Income Tax Act, citing its location beyond 8 kilometers from city limits and a population under 10,000. The land was used for agricultural purposes until the sale, and agricultural income was reported for tax. Appellate Proceedings: The CIT(A) reversed the AO's decision, holding the land as agricultural based on its purchase, usage, and sale as agricultural land. The CIT(A) noted that a similar issue was decided in favor of the joint owner, Shri Aboobucker, by the first appellate authority. Tribunal's Findings: The Tribunal referenced its earlier decision in the case of the joint owner, Shri Aboobucker, where the land was deemed non-agricultural. Key points considered included: - The sale price of Rs. 86 Lacs per acre suggested non-agricultural use. - The purchaser was a real estate company. - The land was situated in a developing area with modern amenities. - No evidence of significant agricultural activities or expenses was provided. The Tribunal applied the 13 tests laid down by the Supreme Court in Smt. Sarifabibi Mohmed Ibrahim v. CIT, which include factors like classification in revenue records, actual use for agricultural purposes, and the nature of the surrounding area. The Tribunal concluded that the land could not be considered agricultural due to its location, sale to a non-agriculturist for non-agricultural purposes, and the high sale price. Issue 2: Validity of the assessment framed by the Assessing Officer (AO) under Section 143(3) read with Section 147 of the Income Tax Act. The AO reopened the assessment and framed it under Section 143(3) read with Section 147, bringing the sale proceeds to tax as Long Term Capital Gains (LTCG). The CIT(A) reversed this, but the Tribunal upheld the AO's assessment, finding the land to be a capital asset. Issue 3: Applicability of judicial precedents and case laws in determining the nature of the land. The CIT(A) relied on the decision in the case of the joint owner, Shri Aboobucker, which was in favor of the assessee. However, the Tribunal noted that this decision was reversed by the coordinate bench, which found the land to be non-agricultural. The Tribunal emphasized that it is not bound to follow its earlier decisions if they do not reflect the correct legal position, as per the Madras High Court ruling in CIT Vs Hi Tech Arai Ltd. Conclusion: The Tribunal allowed the Revenue's appeal, reversing the CIT(A)'s order and restoring the AO's assessment. The land was held to be a capital asset, not agricultural land, based on a detailed evaluation of the facts and judicial precedents. Order Pronounced: 03rd August, 2022.
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