2023 (4) TMI 1047 - AT - Income Tax

Gain on sale of land - nature of land sold - Eligibility of exemption u/s 2(14)(iii) - HELD THAT - In the present case, in the land sold by the assessee, already mango trees and coconut trees are in existence. The assessee has not reported any agricultural income and simply because income was not reported, the agricultural land cannot be held as non-agricultural land. We hold that the land sold by the assessee is an agricultural land and the income is eligible for claiming exemption under section 2(14)(iii) of the Act. Thus, the ground raised by the assessee is allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Determination of whether the land sold by the assessee qualifies as agricultural land eligible for exemption u/s 2(14)(iii) of the Income Tax Act, 1961.

Summary:

Condonation of Delay:

The appeals filed by the assessee were delayed by three days. The assessee filed petitions for condonation of the delay supported by affidavits. The ld. DR did not raise any serious objection. Consequently, the delay was condoned, and the appeals were admitted for adjudication.

Determination of Agricultural Land:

The assessee, an individual, filed returns for the assessment years 2011-12 and 2012-13. The Assessing Officer (AO) noticed an escapement of income and issued a notice u/s 148 of the Act. The AO noted that the assessee sold agricultural land and questioned the nature of the land. The assessee provided evidence including purchase deeds, VAO certificates, and revenue records to prove the land's agricultural status. The AO, however, denied the exemption u/s 2(14)(iii) on the grounds that the land was sold to a real estate company and no agricultural income was declared.

On appeal, the Tribunal examined the evidence and found that the land was classified as agricultural in both purchase and sale deeds, situated beyond 8 kms from the nearest municipality, and had mango and coconut trees as per the VAO certificate. The Tribunal noted that the AO did not provide evidence that the land was converted for non-agricultural purposes. Citing the Hon'ble Madras High Court's decision in PCIT v. M/s. K.P.R. Developers Ltd., the Tribunal held that merely not reporting agricultural income does not change the character of the land.

Therefore, the Tribunal concluded that the land sold by the assessee was agricultural and eligible for exemption u/s 2(14)(iii) of the Act. This decision applied to both assessment years 2011-12 and 2012-13. Consequently, both appeals filed by the assessee were allowed.

Order pronounced on 29th March, 2023 at Chennai.