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TMI Blog2015 (9) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: "4. Both the lower authorities erred in law and on facts in invoking provisions of Section 45(5) of the Act for treating compensation received by the Appellant on compulsory acquisition of land as Long term capital gains not appreciating that the conditions of section 10(37) of the Act having been fully satisfied, compensation received is fully exempt u/s 10(37) of the Act. It be so held now and addition may be deleted." 3. The ld. Sr. D.R. had no objection to the admission of the above additional ground of appeal raised by the assessee. Therefore, the additional ground of appeal of the assessee was admitted and the parties were allowed to make their submissions thereto. 4. Both the parties before us, agreed that the issue was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain tax was payable. The AO, however, rejected such contention on the ground that the land in question was situated within the municipal limits of Gandhinagar, which had population of more than 10000. Section 10(37) of the Act therefore, does not apply to the assessee. 4. The assessee thereupon approached the CIT (Appeals), who dismissed the appeal. He agreed with the assessee that exemption under section 10(37) of the Act would be available also to agricultural land situated in urban area, but he held that such exemption would be subject to fulfillment of certain conditions. One of them being that such land, during the period two years immediately preceding the date of transfer was used for agricultural purpose by such Hindu undivided fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o agricultural land situated in urban area. Therefore, A.O.'s objection to this extent was not tenable. However, he was of the view that such exemption u/s 10(37) was available on fulfillment of certain conditions. One of the vital conditions, according to him, for such exemption was that such land during the period of two years immediately preceding the date of transfer, was being used for agricultural purpose by such hindu undivided family or individual or parent of his and then he went on to say that since assessee was staying away from these agricultural lands and was also involved in some business activities, he could not have carried out agricultural activities himself and therefore, exemption u/s 10(37) was not available to him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision for collection of capital gains on transfer of capital assets. 7. Section 10(37), however, grants exemption from payment of capital gains on transfer of agricultural land under certain circumstances. Section 10(37) reads as under: "10(37) in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the heads "Capital gains" arising from the transfer of agricultural land, where- (i) such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately preceding that date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a pare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Tenancy and Agricultural Lands Act, 1948, cultivation of a land through hired labourer or through member of one's family. Merely because the assessee was not residing close to the land or was also pursuing some other business would not by itself be sufficient to hold that the land was not used for agricultural purposes by the assessee. The Tribunal recorded that in the earlier years, the assessee had declared agricultural income, which was also accepted by the Revenue. 10. Under the circumstances, in our opinion, the Tribunal correctly ruled in favour of the assessee. No question of law arises. The tax appeal is dismissed." Therefore, we set aside the order of the lower authorities and allow the ground of appeal of the assessee. 6. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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