2018 (6) TMI 270 - AT - Income Tax

Tribunal upholds Section 50C application for non-agricultural land sale

The Tribunal dismissed the appeal, holding that the land sold was not agricultural, making Section 50C applicable for determining the sale consideration. ... Long term capital gains on sale of land - nature of land - Whether the land sold was agricultural land? - Held that:- Whether the land is agricultural bear mainly on the nature or character of the land, and not merely on the actual user - assessee has no intention to do any agricultural operation in impugned land - thus it appears that assessee did not file any explanation before A.O. that property in question is agricultural land - decision of the Hon'ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim (1993 (9) TMI 10 - SUPREME Court) squarely apply to the facts of the case - thus there is no merit in appeal of assessee hence dismissed. Issues Involved:1. Determination of whether the land sold by the assessee was agricultural land within the meaning of Section 2(14)(iii) of the Income Tax Act.2. Applicability of Section 50C of the Income Tax Act concerning the sale consideration of the land.3. Admission of additional evidence under Rule 46A of the Income Tax Rules.Issue-wise Detailed Analysis:1. Determination of whether the land sold by the assessee was agricultural land within the meaning of Section 2(14)(iii) of the Income Tax Act:The primary issue in this case was whether the land sold by the assessee qualified as agricultural land under Section 2(14)(iii) of the Income Tax Act. The assessee claimed the land was agricultural, supported by a certificate from the Tehsildar and copies of the khasra for the relevant period. However, the A.O. and subsequent authorities found contrary evidence. The A.O. collected reports from the Tehsildar, PWD, and Income Tax Inspector, which indicated no crops were grown on the land during the years 2005-2007. Additionally, the land was within the municipal limits of Greater Noida Authority and within 8 KM of Noida Authority and Ghaziabad Nagar Nigam. The sale deed described the land as residential, with existing constructions, further corroborating that the land was not used for agricultural purposes. The Tribunal upheld the findings of the A.O. and CIT(A), concluding that the land was not agricultural at the time of sale.2. Applicability of Section 50C of the Income Tax Act concerning the sale consideration of the land:The second issue was the applicability of Section 50C, which mandates adopting the value assessed by the stamp valuation authority as the sale consideration for computing capital gains. The assessee initially declared the sale value of the land at Rs. 11 lakhs, but the A.O. assessed it at Rs. 44,60,000/- based on the circle rate. Given the finding that the land was not agricultural, the provisions of Section 50C were applicable. The Tribunal agreed with the A.O.'s assessment, noting that the assessee himself declared long-term capital gains, implying the land was a capital asset and not agricultural.3. Admission of additional evidence under Rule 46A of the Income Tax Rules:The assessee sought to admit additional evidence, including an affidavit and returns for A.Ys. 2005-06 and 2006-07, to support the claim of agricultural income. However, the CIT(A) rejected the application for admission of additional evidence under Rule 46A. The Tribunal noted that the assessee did not file any further appeal against this rejection. Consequently, the additional evidence was not considered in the final judgment.Conclusion:The Tribunal dismissed the appeal of the assessee, affirming that the land was not agricultural at the time of sale, thus making Section 50C applicable for determining the sale consideration. The decision was based on substantial evidence collected by the A.O. and corroborated by various authorities, which the assessee failed to rebut. The Tribunal also upheld the CIT(A)'s decision not to admit additional evidence under Rule 46A, as the assessee did not pursue further appeal on this matter.