Wealth tax deleted as land had not been converted for non-agricultural purpose
Wealth tax deleted as land had not been converted for non-agricultural purpose
Assessee had sold 6.7 acres of ancestral agricultural land on which no capital gains tax was paid. He submitted that land was situated beyond 8 KM from municipal limits and was agricultural. AO held it to be not an agricultural land, and treated it as capital asset, liable to LTCG. CIT(A) deleted the tax and held that as assessee had not made any attempt to convert land for non-agricultural purpose. ITAT upheld CIT(A)'s order.-501330
1. Assessee was an employee of National Geo Physics Research Institute. In response to the notice issued under section 148 (of Income Tax Act, 1961), assessee declared total income at Rs.1,97,210. During the course of assessment proceedings, the Assessing Officer noticed that he along with his two brothers sold ancestral agricultural land of 6.7 acres of land and received total sale consideration of Rs.1,97,60,000 on which no capital gains tax was paid. When confronted, assessee submitted that the land is situated beyond 8 KM from municipal limits and it is agricultural land. AO following Hon'ble Supreme Court in the case of Smt. Sarifabibi Md. Ibrahim vs. CIT 204 ITR 631 to conclude that the land sold was not an agricultural land. It should be treated as capital asset and consequently the sale proceeds thereof are liable to long term capital gains. 1/3rd share of the assessee was brought to tax under the Head "Long Term Capital Gains".
2. CIT(A) held that as assessee had not made any attempt to convert the land into non-agricultural purpose, the same cannot be considered as capital asset and consequently, the question of capital gains does not arise.
3. On Revenue's appeal, the ITAT held as under:
“4. Since the facts in the present case indicate that assessee has sold away the agricultural land and there is no intention or evidence that land was converted to non-agricultural land or put to use for non- agricultural purposes, the contention that purchaser used the land for the purpose of Engineering College cannot be held against the assessee so as to treat the land as non-agricultural land.
5. It is also further noticed that the land in question was sold on 4th March, 2008, the fact of which was also stated in the assessment order. However, for the best reasons known to the A.O. he treats the previous year as 2008-09 whereas the previous year should have been 2007-08. Consequently, the issue could have been considered in A.Y. 2008-09 and not in A.Y. 2009-10 in which year there is no such transaction of sale of land. The A.O. in our view, has considered the assessment year wrongly and initiated proceedings in a later year, when the property was sold on 04.03.2008 relevant to A.Y. 2008-09. In view of that the contentions of the Revenue does not require any consideration. There is no merit in the Revenue grounds. In the result, appeal of the Revenue is dismissed.”
Case Reference - The Income Tax Officer v Mr. Desham Satyanarayana.
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND
SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
ITA.No.1825/Hyd/2014
(Assessment Year 2009-2010)
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