2023 (8) TMI 1187 - AT - Income Tax

Capital gains on sale of land - Nature of land sold - agricultural land or capital asset - No capital gain was offered on the ground that agricultural operations were carried out on the said land and the land is situated more than 8 kms. away from nearest Tambaram municipality - alternate claim of deduction u/s. 54B on the ground that sale consideration was invested in agricultural land in the name of her son - HELD THAT - We are of the considered opinion that Ld. CIT(A) erred in not admitting additional evidences since the same would have material bearing on the computation of capital gains in the hands of the assessee. It could also be seen that the assessee has made alternative claim u/s 54B which has not been considered primarily in the absence of sufficient evidences. Considering the prayer made before us in the appeal as well as in the cross-objection, we restore the matter of assessment back to the file of Ld. AO to frame fresh assessment keeping all the issues open. Assessee s appeal stand allowed for statistical purposes.

Issues involved:
The issues involved in the judgment are the classification of land as a capital asset, denial of deduction u/s. 54B, admission of additional evidences, and taxation of sale consideration.

Classification of land as a capital asset:
The appeal arose from the assessment of the appellant for AY 2014-15, where the appellant sold agricultural land which was disputed by the revenue. The appellant contended that the land was agricultural and not a capital asset. However, the revenue argued that the land fell within the definition of a capital asset due to its proximity to a municipality, leading to the computation of capital gains. The AO held that the land was a capital asset and calculated the capital gain. The appellant's claim of deduction u/s. 54B was also denied due to lack of evidences supporting the investment in agricultural land. The CIT(A) upheld the AO's decision, stating that TDS was deducted on the sale consideration, making it taxable in the appellant's hands. The Tribunal found that additional evidences submitted by the appellant were not admitted by the CIT(A) and that the matter required further assessment by the AO with all issues open.

Denial of deduction u/s. 54B:
The appellant claimed deduction u/s. 54B for investing a portion of the sale consideration in agricultural land in the name of her son. However, this deduction was denied by the AO due to the absence of documentary evidences supporting the investment. The Tribunal noted that the appellant submitted new evidences during the appellate proceedings, but these were not admitted by the CIT(A) as no application under Rule 46A was made. The denial of the deduction was a key point of contention in the appeal.

Admission of additional evidences:
The Tribunal observed that the CIT(A) did not admit the additional evidences submitted by the appellant, which could have impacted the computation of capital gains. The appellant argued that these evidences were crucial to establish that the property was not a capital asset. The Tribunal found that the non-admission of these evidences was an error, leading to the decision to remand the matter back to the AO for fresh assessment with all issues open.

Taxation of sale consideration:
The sale consideration received by the appellant was subjected to TDS under section 194IA, and the appellant claimed credit for the same. The CIT(A) upheld the taxation of the sale consideration in the appellant's hands based on the TDS deduction. This aspect of the assessment was challenged by the appellant in the appeal. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for a fresh assessment by the AO to address all issues comprehensively.

← Previous Next →