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2018 (3) TMI 797 - HC - Income TaxNature of sale of land - whether plot of land is agricultural land or non agricultural land - maintainability of appeal - Held that - The question of whether a plot of land is in effect and in substance agricultural land or non agricultural land is a matter of fact. Of course, by reason of deeming provisions contained in law, certain principles may have to be applied for determination of whether a plot of land is agricultural land or non agricultural land. There can be no doubt that registration simpliciter of a plot of land as agricultural land would not in itself mean that the land was being used for the purpose of agriculture. Records are showing that the lands are agricultural land, classified as dry land for which Kisthu has been paid and falls far exclusion from the definition of capital asset u/s.2(14) of Income Tax Act. The case laws relied upon by the assessee are squarely applicable in the assessee s case. Therefore, we hold that the land in question sold by the assessee was agricultural land and cannot be held as capital asset and no capital gains are chargeable and hence we set aside the orders of the lower authorities and the assessee s appeal is allowed. The learned Tribunal arrived at the factual finding that the land in question sold by the assessee was agricultural land and could not be said to be capital asset. Right of appeal is not automatic. Right of appeal is conferred by Statute. If the right of appeal conferred by the Statute is limited to cases where there is a substantial question of law, this Court cannot sit in appeal over factual findings by re-weighing and re-analysing the evidence and materials on record. The questions raised in this appeal do not meet the tests laid down by the Supreme Court in Sir Chunilal V. Mehta s case 1962 (3) TMI 77 - SUPREME COURT for holding that the questions are substantial questions of law. - Decided against revenue
Issues Involved:
1. Determination of whether the land sold by the assessee was agricultural land or a capital asset. 2. Whether the Income Tax Appellate Tribunal's decision involved a substantial question of law warranting an appeal to the High Court. Issue-wise Detailed Analysis: 1. Determination of whether the land sold by the assessee was agricultural land or a capital asset: The assessee, a registered firm running a nursing home and pharmacy, sold 2 acres and 78 cents of agricultural land at Thirutheri Village, Kattangalathur Panchayat for ?8,01,00,000/- during the assessment year 2012-2013. The assessee claimed exemption from capital gains tax on the ground that the land was agricultural. The Village Officer certified that the land was beyond 8 kms from the municipality and the population was less than 10,000. However, the Revenue contended that mere entry of land in revenue records as agricultural land does not imply its use for agricultural purposes. It was noted that the assessee had shown income from business in returns from 2006-2007 to 2012-2013, suggesting non-agricultural use. The Tribunal held that the land was indeed agricultural, referencing the case of Mrs. Sakunthala Veachalam & Mrs. Vanitha Manickavasagam Vs. ACIT (2014) 369 ITR 558 (Mad), which stated that adjacent land being divided into plots for sale does not automatically classify the land as non-agricultural. The Tribunal concluded that the land sold by the assessee was agricultural and not a capital asset, thus exempting it from capital gains tax. 2. Whether the Income Tax Appellate Tribunal's decision involved a substantial question of law warranting an appeal to the High Court: The High Court examined whether the Tribunal's decision involved a substantial question of law under Section 260-A of the Income Tax Act. It was emphasized that the right of appeal is not automatic and is confined to cases involving substantial questions of law. The Court referred to precedents, including Sir Chunilal V. Mehta & Sons Ltd. vs Century Spg. & Mfg. Co. Ltd. [AIR 1962 SC 1314] and Hero Vinoth Vs. Seshammal [(2006) 5 SCC 545], which define a substantial question of law as one that is debatable, not previously settled, and materially affects the case's outcome. The Court found that the Tribunal's decision was based on factual findings that the land was agricultural and not a capital asset. The issues raised did not meet the criteria for a substantial question of law, as they were covered by the judgment in The Commissioner of Income Tax v. Late Dr. N. Rangabashyam, MANU/TN/2523/2017. Conclusion: The High Court concluded that there was no substantial question of law involved in the appeal. The Tribunal's finding that the land was agricultural and not a capital asset was upheld, and the appeal was dismissed with no costs.
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