2018 (8) TMI 755 - AT - Income Tax

Reassessment u/s 147 - nature of transfer of land - assessee claimed as an agriculturist and sold agriculture land and agriculture activity was done on the land at the time of transfer of agricultural land. - It is claimed that The purchaser has purchased the land for industrial purpose but assessee has not sold the land as industrial plot. - Held that - The copy of the sale deed dated 24.03.2009 shows that the properties in question have been referred as industrial plot for industrial purposes. In the sale deed it is also mentioned that the plot under sale have been declared as industrial area by Khurja Development Authority as per master plan. Thus on the date of sale the land in question was not an agricultural land. The same would qualify to be considered as capital assets u/s 2(14) of the IT Act. The sale deed in question is executed by the assessee and is document produced by the assessee. The assessee is therefore bound by the contents of the registered sale deed. The Agreement to Sale has no relevance to the matter in issue on execution of the registered sale deeds. Since prior to sale of the property in question it was declared as industrial plot by the competent authority therefore it could not assume the character of agriculture land. Additions confirmed - Decided against the assessee.

Summary

Issues:
1. Assessment of long-term capital gain on sale of property claimed to be agricultural land.
2. Rejection of assessee's claim regarding the nature of the land sold and the applicability of capital gain tax exemption.

Analysis:
1. The appeal was against the order of the Ld. CIT(A) concerning the assessment of long-term capital gain for the Assessment Year 2009-10. The AO initiated proceedings after the assessee sold an immovable property. The AO computed long-term capital gain and allowed exemption under section 54F. The Ld. CIT(A) rejected the assessee's claim that the land sold was agricultural, noting that possession was not transferred at the time of the agreement to sell. The land was declared non-agricultural before the sale deed was registered, making it a capital asset. The Ld. CIT(A) directed the AO to verify the claim of purchasing agricultural land and allow benefits accordingly.

2. The assessee contended that agricultural activities were conducted on the land at the time of sale, supported by documents. However, the Ld. CIT(A) found that the land was referred to as an "industrial plot" in the sale deed and had been declared non-agricultural before the sale. The possession was not transferred initially, and the land's character changed to non-agricultural before the sale deed was executed. The Ld. CIT(A) upheld the assessment of capital gain, considering the property as a capital asset. The Tribunal confirmed these findings, emphasizing that the sale deed and the land's designation by the competent authority as industrial plot were crucial in determining the nature of the land. The appeal was dismissed based on the established facts and legal provisions.

In conclusion, the Tribunal upheld the assessment of long-term capital gain on the sale of the property, considering it a capital asset based on the change in land use and the contents of the sale deed. The rejection of the assessee's claim regarding the nature of the land and the application of capital gain tax exemption was supported by the findings of the Ld. CIT(A) and confirmed by the Tribunal.