INCOME TAX ACT, 1961

Section 2(14)(a)(iii)

Capital gains - Capital asset - Agricultural land - Land shown as agricultural land in revenue records but no agricultural activities carried out thereon

Assessee along with three other co-owners sold certain piece of land and claimed exemption on sale proceeds of land, claiming it to be agricultural land. AO rejected assessee's claim of exemption and held the same as taxable under the head 'capital gain'. On the reasoning that no agricultural activities were carried out on the land. Assessee furnished various documents before AO to substantiate that land sold was agricultural land, situated beyond 13 kms. from nearest Municipal limits and population of Village A was, where agricultural land was situated was less than 10,000. To further substantiate nature of land, assessee filed copies of 7/12 Extracts as additional evidence. Held: As subject piece of land was shown in revenue records to be used for agriculture purpose and no permission was ever obtained for non-agriculture use, it was inconsequential whether any income from agricultural operation was declared by the assessee in the return of income or not. Further, department in case of other co-owners of the land, had accepted their respective return of income wherein, said co-owners have declared their respective share of income from sale of same agricultural land (as that of assessee) as exempt. Thus, department could not have two divergent views in case of two assessees who were on same footing, having common source of income germinating from same transaction. Accordingly, land sold by assessee was agricultural land within the meaning of section 2(14)(a)(iii) and sale proceeds thereof were exempt.

Followed:CIT v. Smt. Debbie Alemao (2011) 331 ITR 59 (Bom) : 2011 TaxPub(DT) 0464 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

APPELLATE TRIBUNAL RULES, 1963

Rule 34(5)(c)

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