2024 (7) TMI 700 - AT - Income Tax

Revision u/s 263 - gain on sale of agricultural land which was an urban agricultural land - assessee has sold an agricultural land which was an urban agricultural land but the same was treated as agricultural land not exgible to capital gains tax - HELD THAT - During the course of the proceedings u/s. 263 of the Act the assessee accepted that properties are in question is a capital asset under the IT Act. On such concession and finding that the impugned asset was a capital asset assessment was set aside by the Pr. CIT. Thus, as the sale consideration of impugned land is exigible to capital gains tax as per relevant provisions of the Act and, therefore, we do not find any error or infirmity in the order of the Pr. CIT and decline to interfere. Appeal of the assessee is dismissed.

Summary

Issues:
1. Jurisdiction of CIT under section 263 of the Act.
2. Classification of agricultural land for capital gains tax.
3. Assessment order validity.

Analysis:
1. Jurisdiction of CIT under section 263 of the Act:
The appeal challenged the CIT(A)'s order dated 20.03.2022 under section 263 of the Act. The grievance of the assessee was that the Principal CIT wrongly assumed jurisdiction under section 263 and deemed the assessment order as prejudicial to the revenue's interest. The Principal CIT issued a notice to the assessee questioning the validity of the assessment order, leading to the appeal.

2. Classification of agricultural land for capital gains tax:
The case revolved around the classification of an urban agricultural land as a capital asset under the relevant provisions of the Act. The assessee had sold the land during the year under consideration, which was initially treated as agricultural land not subject to capital gains tax. However, during the proceedings under section 263, the assessee acknowledged that the property in question was indeed a capital asset under the IT Act. Consequently, the assessment was set aside based on this acknowledgment.

3. Assessment order validity:
After careful consideration of the orders by the Principal CIT, Faridabad, and hearing the Counsel, the Appellate Tribunal concluded that the sale consideration of the land in question was subject to capital gains tax as per the relevant provisions of the Act. The Tribunal found no error or deficiency in the Principal CIT's order dated 20.03.2022 and declined to intervene. As a result, the appeal by the assessee was dismissed during the open court decision on 07.12.2023.

This comprehensive analysis covers the core issues of jurisdiction under section 263, the classification of agricultural land for tax purposes, and the validity of the assessment order, providing a detailed overview of the legal judgment.