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TMI Blog2020 (2) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... 23/JP/2018 - - - Dated:- 20-2-2020 - Shri Ramesh C Sharma, AM And Shri Vijay Pal Rao, JM For the Assessee : Shri Vijay Goyal (CA). For the Revenue : Shri Sanjog Kapoor (CIT-DR) ORDER PER: R.C. SHARMA, A.M. This appeal by the revenue is directed against the order dated 10/09/2018 of ld. CIT(A)-IV, Jaipur for the 2016-17 in the matter of order passed U/s 143(3) r.w.s. 153A of the Income Tax Act, 1961 (in short, the Act). 2. The solitary grievance of the revenue involved in the appeal is exclusion of profit on sale of agricultural land while computing book profit U/s 115JB of the Act. 3. Rival contentions have been heard and record perused. Facts in brief are that during the year under consideration, the assessee sold agricultural land at village Gidani and earned gain of ₹ 3,01,19,198/-. Since the land was not capital assets by virtue of provisions of Section 2(14)(iii) of the Act, the same was claimed to be not taxable. The same fact was also accepted by the A.O. However, the A.O. opined that the gain on sales of the land is taxable under the provisions of Section 115JB of the Act and he charged the tax on this income U/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 30 per cent of such book profits and is taxed accordingly. It also provides for certain adjustments by way of adding amounts and granting deductions for computing the chargeable income under section 115J (1). Sub-section (2) provides that determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years will have to be made unaffected by the provisions in sub-section (1) of section 115J. The very object of the provisions of section 115J is to tax such companies which are making huge profits and also declaring substantial dividends but are managing their affairs in such a way as to avoid payment of income-tax, as a result of various tax concessions and incentives and for that purpose, the taxable income is determined under sub-section (1) of section 115J. An assessee is enabled to claim carry- forward and set-off of losses, unabsorbed allowance, in view of the specific provisions of the Act enabling an assessee to claim. But because of this provision a company will have to pay tax on at least 30 per cent of its book profits. Therefore, what is taxed is not fictional or hypothetical income. Under the law though it is permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be subjected to tax under any other provision of the Act. 5.4 Taking into consideration the facts and circumstances of the case and case laws relied on (supra) I am of the view that the profit from sale of agricultural land, which is not a Capital Asset , cannot be included for the purpose of computing book profit u/s 115JB of the Act. Thus the appeal of the assessee on this ground stands allowed. 5. Against the above order of the ld. CIT(A), the revenue is in further appeal before the ITAT. 6. We have considered the rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld. AR and ld. DR during the course of hearing before us in the context of factual matrix of the case i.e. taxability of exempted gain on sale of agricultural land. From the record, we found that the assessee is a private limited company incorporated on 19-01-2004. The assessee filed its regular return u/s 139(1) on 17-10-2016 declaring loss of ₹ 20,14,959/-. The assessment of the assessee in pursuance to proceedings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, referred to in item (a) (b) of Section 2(14)(iii) from the definition of revenue derived from land. But the assessee's land does not fall under the item (a) (b) of Section 2(14) (iii) therefore, restriction provided in Explanation-1 of Section 2(1A) is not application for the case of the assessee. The Explanation- I divided the land into two categories (i) which falls under the item (a) (b) of section 2(14)(iii) or may say urban agricultural land and (ii) which are outside the item (a) (b) of section 2(14)(iii) or may say rural agricultural land. The Explanation-1 says that income arising from transfer of land under category (1) above shall not be treated as revenue derived from land for the purpose of section 2(1A). But this restriction is not application for the lands under category (ii) above, therefore, in view of the provisions of section 2(IA). Clause (a), the income derived from transfer of such land should be treated as revenue derived from land for the purpose of section 2(1A). e) The income arising on the transfer of agricultural land is not taxable, being in the nature of agricultural income. The provisions of Chapter XII-B of the Act do not, op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 390/JP/2018 as decided by the Jaipur Benches of the ITAT, we observe that in this case the ITAT has followed its earlier decision in the case of Sunil Bansal and held in para 8 as under:- 8. Following the above decision, in the instant case, the assessee company is in the business of real estate development including purchase and sale of land where the sole purpose of purchase of the land is to sell the same to third parties or to carry out non-agricultural development activities. The AO has also given a finding that the assessee has incurred expenditure on conversion charges on the pieces of land which have been sold during the year which shows clearly the future use of land for non-agriculture purposes and the said finding remain uncontroverted before us. The land in question thus loses its character as agriculture land and any gain arising on sale of such land cannot be regarded as agriculture income exempt under section 10(1) of the Act. The facts of the instant case are different. The assessee held the agricultural land for more than 9 years as investment and this land was situated in rural area more than 17 Km away from Municipal Limit. This land was used for agri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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