INCOME TAX ACT, 1961

Section 10(1)

Exemption under section 10(1) - Agricultural income - Assessee sold agricultural land -

Assessee-HUF purchased agricultural land. It did agricultural operations on such land and also showed agricultural income from the same. Subsequently, as assessee found that the said land was not suitable for large-scale agricultural operations, it sold the same during the relevant assessment year. Consequently, it claimed exemption under section 10(1). AO denied the said claim on the ground that there was no evidence to show that the agricultural activities were done on the said land and as the land was sold for setting up a SEZ, such land could not be considered as an agriculture land. Held: It was found that AO did not make any addition on account of the rejection of the assessee's claim of agricultural income. Further, perusal of assessment order clearly showed that the AO examined the VAOs of the various villages wherein the assessee properties were situated. The examination of the VAOs clearly showed that the land sold by the assessee was agricultural land and also agricultural operations were done on the said land. Therefore, merely because the assessee was not able to generate desired agricultural income from the said land and thus, it sold the said land within one year of its purchase, would not change the character of agricultural land to a non-agricultural land. Consequently, the assessee would be entitled to claim the benefit of exemption under section 10(1).

Relied:The CIT v. Ashok Kumar Rathi (2018) 404 ITR 0173 (Mad): 2018 TaxPub(DT) 0203 (Mad-HC), MS and Srinivasa Naicker & Others v. ITO (2007) 292 ITR 481(Mad): 2007 TaxPub(DT) 0946 (Mad-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

SUBSCRIBE FOR FULL CONTENT