2019 (6) TMI 51 - HC - Income Tax

Revenue challenges ITAT's decision on agricultural land sale under Income Tax Act, appeal dismissed for not meeting tax effect.

Deputy Commissioner of Income Tax 1 (1), Bhilai, Durg, Chhattisgarh Versus Shri Ketan Moolchand Shah, Block A-5, Surya Vihar, Junwani, Bhilai, District Durg, Chhattisgarh.

The Revenue challenged the ITAT's decision granting relief to the Assessee on the addition of amount from the sale of agricultural land under the Income ... Monetary limit for maintainability of appeal in HC - tax effect - Addition on account of LTCG on sale of agricultural land - entitled for exemption u/s. 2(14) - HELD THAT:- Revenue fairly concedes that the appeal was filed way back in June, 2018. By virtue of the 'new litigation policy' and the circular issued subsequently on 11.07.2018 by the Central Board of Direct Taxes (CBDT), the subject matter of litigation for approaching the High Court shall be of a minimum value of ₹ 50,00,000/- which requirement is not satisfied in the instant case, as in the present case, the tax effect is to the extent of ₹ 2,36,480/- only. This Court is also aware of the fact that the scope of the said circular was considered by the Apex Court and in terms of the contents of such circular, it has been held that the same is having retrospective application i.e. in respect of the pending litigations as well. Learned Standing Counsel seeks permission of this Court to withdraw this appeal. Issues:Challenge by Revenue against ITAT's order granting relief to Assessee regarding addition of amount on sale of agricultural land under Income Tax Act, 1961.Analysis:1. The Revenue challenged the ITAT's order granting relief to the Assessee regarding the addition of Rs. 1,37,72,502 on the sale of agricultural land. The Revenue contended that the land in question did not qualify as agricultural land under Section 2(14)(iii) of the Income Tax Act, 1961, and cited a previous decision by the Apex Court in support of their argument.2. The appeal raised substantial questions of law, including whether the ITAT was justified in setting aside the CIT (A)'s order and directing the Assessing Officer to delete the addition on account of long-term capital gains on the sale of agricultural land. The appeal also questioned the ITAT's decision to ignore the decision of the Supreme Court and the tests laid down by the Gujarat High Court to determine if the land qualified as agricultural land.3. The ITAT's decision to delete the order of CIT (A) was challenged on the grounds that it contradicted the evidence on record regarding the land being non-agricultural. The Revenue argued that the ITAT's decision was factually incorrect and perverse, as it did not align with the evidence presented.4. During the hearing, the Revenue's Standing Counsel acknowledged that the appeal did not meet the minimum value requirement set by the CBDT's circular issued in 2018. The circular stipulated that appeals to the High Court must involve a minimum tax effect of Rs. 50,00,000, which was not met in this case as the tax effect was only Rs. 2,36,480. The Standing Counsel sought permission to withdraw the appeal, which was granted by the Court.5. The Court noted that the CBDT's circular had retrospective application, including to pending litigations. As a result, the appeal was dismissed as withdrawn based on the Revenue's request to withdraw the case due to not meeting the minimum tax effect requirement set by the circular.This detailed analysis covers the issues raised in the judgment, the arguments presented by the parties, and the Court's decision based on the legal provisions and circumstances of the case.