INCOME TAX ACT, 1961

Section 14

Head of income - Business income or capital gains - Profit on sale of agricultural land - Assessee having taken permission for conversion of land but not having carried on any developmental activity

The assessee owned agricultural land and he had applied for conversion of agricultural land into non-agricultural purposes which was approved. The above agricultural land was remained as agricultural land till 31-3-2008. It was submitted that proposal for lay out as well as approval by concerned authorities were made subsequent to 31-3-2008 and the assessee cultivated the land till 31-3-2008 as agricultural land and the said agricultural land was divided into plots after the receipt of approval from the Town Planning Authority subsequent to 31-3-2008. The assessee stated to have incurred certain company towards conversion charges, fees, travellings of land, cost of soil, transport charges and labour charges etc., and the assessee had sold the converted plots during the year under consideration in nine documents. Held: Assessee carried on agricultural activity till 31-3-2008 and subsequently sold the land in plots. Though assessee had taken permission for conversion of land for plotting into various units, however, no evidence was brought on record by AO that assessee had carried on any developmental activity. Assessee had not incurred any other expenditure except for payment of conversion fees, transport charges, labour charges, etc., and therefore, income had to be taxed as capital gains, but not business income.

Relied:CIT v. Suresh Chand Goyal (2008) 298 ITR 277 (MP) : 2008 TaxPub(DT) 470 (MP-HC) and B. Narasimha Reddy v. ITO (12994) 49 TTJ 329 (Hyd-Trib) : 1993 TaxPub(DT0 980 (Hyd-Trib), Dy. CIT v. B. Venu Madhav in ITA No. 82/Hyd./2015 dt. 24-4-15.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 54F

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