G. Vijay Padma v. ITO - Taxpublishers.in

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The Tax Publishers2020 TaxPub(DT) 3901 (Bang-Trib) : (2021) 186 ITD 0109 : (2020) 208 TTJ 0530

INCOME TAX ACT, 1961

Section 2(14)(iii)

Assessee did not produce any evidence of having spent human labour in the sense of preparing the land for cultivation, tiling, sowing seeds, planting, on a regular basis. The property was situated in fast developing area and access to all modern facilities. At the time of sale of land, no agriculture activity was carried out by assessee. Accordingly property sold by assessee was not an agricultural land and was to be treated as a capital asset liable to capital gains tax.

Capital gains - Capital asset - Sale of land claimed to be agricultural land - No agricultural activity carried out by assessee

Assessee sold certain piece of land and did not offer resulting profit to tax. AO taxed said profit as capital gains. Assessee contended that though subject land was located within 8 k.m., of municipal limits of Devanahalli Municipality, in the asbence of any notification issued under clause (b) to section 2(14)(iii) it could not be considered as capital asset within meaning of section (14)(iii)(b) and was to be considered as agricultural land. Held: Piece of land is an agricultural land, only if said land is subject to agricultural operation and agricultural activities is carried thereon. There is no presumption that all land situated outside the notified area are agricultural land and there is no automatic treatment of land as an agricultural land on the ground that it is covered by sections 2(14)(iii)(a) and (b). In instant case, assessee did not produce any evidence of having spent human labour in the sense of preparing the land for cultivation, tiling, sowing seeds, planting, on a regular basis. The property was situated in fast developing area and access to all modern facilities. There was a real estate activity in the area where property was situated. The sale consideration received by assessee showed that no bona fide agriculturist would pay such huge price for 1.35 Acres of land. Land was situated in Devanahalli Taluk in Bangalore North where there was rapid development activities and it has become a bustling suburban. The area was upcoming residential area with many private residential flats are coming up. The property sold by the assessee was in the middle of development activity being carried out by builders in and around Devanahalli Taluk on the reason of coming up of Kempe Gowda Airport in immediate vicinity. At the time of sale of land, no agricultural activity was carried out by assessee. Accordingly, property sold by assessee was not an agricultural land and was to be treated as a capital asset liable to capital gain tax.

Supported by:Smt. Sarifabibi Mohmed Ibrahim (1993) 204 ITR 631 (SC) : 1993 TaxPub(DT) 1509 (SC), CIT v. Siddharth J. Desai (1982) 28 CTR (Guj) 148 : (1983) 139 ITR 628 (Guj) : 1983 TaxPub(DT) 437 (Guj-HC), CWT v. Officer-in-charge (Court of Wards) (1976) 105 ITR 138 (SC) : 1976 TaxPub(DT) 825 (SC), Dr. Motibhai D. Patel v. CIT (1981) 127 ITR 671 (Guj) : 1981 TaxPub(DT) 790 (Guj-HC),CWT v. H. V. Mungale (1984) 145 ITR 208 (Bom) : 1984 TaxPub(DT) 254 (Bom-HC), CIT v. Manilal Somnath (1977) 106 ITR 917 (Guj) : 1977 TaxPub(DT) 503 (Guj-HC) and Gopal C. Sharma v. CIT (1994) 116 CTR (Bom) 377 : (1994) 209 ITR 946 (Bom) : 1994 TaxPub(DT) 0726 (Bom-HC).