9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (9) TMI 124 - AT - Income TaxLTCG on sale of agricultural land Land constitute capital asset as defined u/s. 2(14) or not - Held that - The CIT(A) was of the opinion that the report cannot be given credence since the factual position reported pertains to the year 2013 and not before 5 years i.e., 2006 which is the year in which the assessee sold the land - CIT(A) observed that the AO did not given any opportunity to the assessee to rebut the contents of the report and cross examine the authorities who has received the report relying upon CIT vs. Sashiben 2006 (7) TMI 105 - GUJARAT HIGH COURT - the fact of non-agricultural use by the buyer will not alter the character of land in the case of seller. Determination of sale consideration Held that - The lands sold by the assessee are agricultural lands and the assessee satisfied most of the tests which are laid down in Sarifabibi Mohmed Ibrahim And Others Versus Commissioner of Income-Tax 1993 (9) TMI 10 - SUPREME Court - the CIT(A) has observed that the AO had not given opportunity to the assessee to rebut the contents of the report called for from the MRO, Ghatkesar Mandal on 28.1.2013 - no opportunity of cross examination of the authorities who had issued the report was given to the assessee - CIT(A) was constrained in giving a direction to the AO inasmuch as many years have lapsed from the time the transaction taken place which was in the year 2006-07 and also the case was heard by the CIT(A) which was on 4.10.2013 - giving the benefit of doubt to the assessee, the MRO, Ghatkesar had given a report evidencing the correct status of the land wherein he has mentioned that agriculture operations were being carried on the land - the lands sold by the assessee are agricultural lands, and the CIT(A) has rightly allowed the assessee s appeal Decided against Revenue.
Issues Involved:
1. Whether the land sold by the assessee qualifies as agricultural land and thus exempt from capital gains tax. 2. Determination of the correct sale consideration of the land sold by the assessee. Issue-wise Detailed Analysis: Issue 1: Agricultural Land Status and Capital Gains Tax Exemption Facts and Arguments: - The assessee filed a return of income declaring Rs. 87,878. The assessment was completed determining the income at Rs. 2,23,58,107 by adding Rs. 2,22,70,229 towards long-term capital gains on the sale of agricultural land for Rs. 2,29,75,000. - A survey conducted in the case of M/s. Sri Surakshita Homes revealed the sale of lands by the assessee, leading to the reopening of the assessment under Section 147 of the Income-tax Act, 1961. - The assessee argued that the land sold was agricultural, not a capital asset under Section 2(14), and thus exempt from capital gains tax. The sale consideration mentioned was Rs. 65,25,000, not Rs. 2.39 crores as claimed by the AO. Assessment Proceedings: - The AO requested details such as Pattadar Passbook, crops grown, bills/vouchers for expenditure and sale of agricultural produce, and proof of taxes paid. - The AO concluded that the land was converted into plots and no agricultural activity was carried out, thereby taxing the amount as long-term capital gains. CIT(A) Findings: - The CIT(A) considered the assessee's submissions and various legal precedents, including the fact that the land was situated outside any municipality or cantonment board limits, and thus not a capital asset under Section 2(14). - The CIT(A) found that the AO's report was based on a 2013 enquiry, not reflecting the position in 2006. - The CIT(A) held that the land was agricultural, and the sale consideration should not be taxed as capital gains. Tribunal's Analysis: - The Tribunal noted the land's location in a village outside municipal limits, confirming it was not a capital asset. - The land was used for agricultural purposes, and the AO did not provide concrete evidence to the contrary. - The Tribunal relied on various judicial precedents supporting the assessee's claim, including decisions from the Supreme Court and High Courts. - The Tribunal concluded that the land sold by the assessee was agricultural, affirming the CIT(A)'s order and dismissing the Revenue's appeal. Issue 2: Determination of Sale Consideration Facts and Arguments: - The assessee claimed the sale consideration was Rs. 65,25,000, while the AO determined it as Rs. 2,29,75,000. - The CIT(A) did not delve into the merits of the sale consideration, deeming it redundant after concluding the land was agricultural and exempt from capital gains tax. Tribunal's Analysis: - The Tribunal upheld the CIT(A)'s decision, finding no need to adjudicate on the sale consideration since the land was exempt from capital gains tax. - The Cross Objection by the assessee regarding the sale consideration was dismissed as infructuous. Conclusion: - The Tribunal confirmed the CIT(A)'s order that the land sold by the assessee was agricultural and not subject to capital gains tax. - The appeal by the Department was dismissed, and the Cross Objection by the assessee was deemed infructuous. Pronouncement: - The judgment was pronounced in the open court on 31st July, 2014.
|
