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TMI Blog2018 (7) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We thus, not finding any infirmity in the order of the CIT(A) in context of the issue under consideration, thus uphold the same. The Ground of appeal No. 1 is dismissed. Entitlement towards deduction under Sec. 24(b) of the interest on housing loan to an amount - Held that:- The property under consideration was not a residential property referred to in Sec. 23(2) of the Act, but was a residential property which was admittedly let out during the year to a third party, hence the applicability of the second proviso to Sec. 24(b) was not applicable in its case. We are persuaded to subscribe to the aforesaid claim of the ld. A.R and are of the considered view that as the property under consideration viz. Flat No. 1503/2A, Sidhanchal, Thane was admittedly let out and had fetched a rental income of ₹ 70,000/- during the year under consideration, thus, the applicability of the second proviso of Sec. 24(b) stands excluded. We thus, set aside the order of the CIT(A) in context of the issue under consideration and direct the A.O to allow the claim of the assessee as regards interest paid on housing loan under Sec. 24(b) to the extent of ₹ 2,93,656/-. The Ground of appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit arising from the sale of land as Short Term Capital Gain (for short STCG ), thus, upheld the same. As regards the disallowance of the claim of deduction of the assessee in respect of interest on borrowed capital under Sec. 24(b), though the CIT(A) concluded that principally the claim of the assessee was as per the mandate of law, but by referring to the second proviso to Sec.24(b) he restricted the entitlement of the assessee to an amount of ₹ 1,50,000/-. On the basis of his aforesaid deliberations the CIT(A) partly allowed the appeal of the assessee. 4. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) for the assessee at the very outset of the hearing of the appeal submitted that the lower authorities had erred in assessing the profit arising from sale of rural agricultural land situated at Village-Kurund, Taluka- Bhiwandi, District: Thane as STCG in the hands of the assessee. The ld. A.R submitted that as the land under consideration was a rural agricultural land, which was neither situated in any area comprised within the jurisdiction of a municipality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manubhai A. Sheth Ors. Vs. N.D. Nirgudkar, ITO Anr. (1981) 128 ITR 87 (Bom) and submitted that for claim of exemption of profit on sale of rural agricultural land, it was not mandatory for the assessee to demonstrate that agricultural operations were being carried on the same. The ld. A.R further submitted that the exception carved out in Sec. 2(14)(iii) for excluding certain agricultural lands from the sweep of the definition of capital asset did not postulate the receipt of agricultural income by the assessee. In support of his aforesaid contention the ld. A.R relied on the judgment of the Hon ble High Court of Bombay in the case of Shankar Dalal Ors. Vs. CIT Ors (2017) 247 taxman 170 (Bom). The ld. A.R further in order to drive home his contention that where agricultural land was neither within the municipal limits or the notified area limits, the same would not come with the purview of the definition of a capital asset as per Sec.2(14)(iii), relied on the order of a coordinate bench of the Tribunal viz. ITAT, Kolkata Bench C in the case of DCIT, Circle-8, Kolkata Vs. Ajit Mitra (2011) 16 taxman.com 66 (Kolkata). The ld. A.R further assailed the restricting of the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a capital asset. We shall in the backdrop of the aforesaid position of law deliberate on exigibility to tax of the profit arising to the assessee on the sale of the land under consideration. We find that the assessee had sold various pieces and parcels of land situated at Village: Kurund, Taluka: Bhiwandi, District: Thane, vide registered agreement dated 31.01.2011 and 04.02.2011 to M/s Prakhyat Infra Projects Pvt. Ltd. for a sale consideration of ₹ 1,14,56,250/-The profit arising on the said sale transaction was claimed by the assessee as exempt on the ground that the land under consideration was a rural agricultural land covered by the exceptions carved out in Sec.2(14)(iii) of the Act. It was the claim of the assessee that as the land was not a capital asset within the meaning of the provisions of Sec. 2(14)(iii), thus the profit on sale of the same could not be brought to tax as capital gain in her hands. In the course of the assessment proceedings it was observed by the A.O that the land under consideration was notified by Government of Maharashtra for establishing industrial park. On a perusal of the facts as had unfolded during the course of the assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter within a short span of one year purchased by the aforementioned company viz. M/s Prakhyat Infra Project Pvt. Ltd. from the assessee for a consideration of ₹ 1,14,56,250/-. On a perusal of the registered sale agreement dated 31.01.2011 and 04.02.2011, it emerges that the land which was sold by the assessee to M/s Prakhyat Infra Project Pvt. Ltd. was stated to be an industrial non agricultural land. It is in the backdrop of the aforesaid facts, that we shall now adjudicate as regards the validity of the order of the lower authorities in bringing the profit arising from the sale of the aforesaid land to tax under the head capital gains. 7. We find from a perusal of the aforesaid facts that the land under consideration as on the date of its sale by the assessee to M/s Prakhyat Infra Project Pvt. Ltd., vide a registered agreement dated 31.01.2011 and 04.02.2011 was an industrial non-agricultural land. The aforesaid fact stands established beyond any scope of doubt on a perusal of the aforesaid sale agreement, dated 31.01.2011 and 04.02.2011, which as observed by the lower authorities clearly refers to the land being transferred by the assessee to M/s Prakhyat Infra Proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that the CIT(A) had erred in restricting her entitlement towards deduction under Sec. 24(b) of the interest on housing loan to an amount of ₹ 1,50,000/-. On a perusal of the records it was observed by the A.O that the assessee along with her spouse Mr. Sandip Bagla, both having equal share each, had jointly purchased a Flat No. 1503/2A, Sidhanchal, Thane. It was observed by the A.O that the share of investment made by the assessee towards purchase of the aforesaid property amounted to ₹ 32,61,305/-. In her return of income, the assessee had claimed interest on borrowed capital of ₹ 6,59,065/- as against the rental income of ₹ 70,000/- derived from renting of the said property during the year under consideration. The A.O observed that the assessee had obtained unsecured loans from various parties totalling to ₹ 69,92,151/- on which interest of ₹ 6,59,066/- paid by her was claimed as deduction under Sec. 24(b) of the Act. It was noticed by the A.O that the assessee had out of the aforesaid unsecured loans of ₹ 69,92,151/-utilised only an amount of ₹ 31,15,000/- for purchase of the residential property. In the backdrop of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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