INCOME TAX ACT, 1961

Section 2(14)

Capital gains - Capital asset - Agricultural land sold after conversion and land use restricted to construction of environmental friendly residence (farm house) -

Assessee sold certain piece of land but did not offer capital gain to tax. Assessee's case was that land was in the nature of agricultural land. AO assessed the capital gain arising from sale of said land on the ground that before the sale of land in question, it was converted into Farm House.Held: As as per terms and conditions of lease issued by JDA, land in question was converted to farm house and only activity permitted in the area was construction of low coverage, low height structure for residential use and once land use was changed from agriculture to environmental friendly residence, land in question was no more an agricultual land at the time of transfer, and same could not be considered as agricultural land for the purposes of section 2(14) and AO had rightly taxed capital gain.

REFERRED : Asstt. CIT v. Sunil Bansal vide Order, dated 6-11-2018 ITA. No. 523/JP/2012.

FAVOUR : Against the assessee

A.Y. : 2010-11

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