Land classified as capital asset, short-term gain confirmed.

The Tribunal upheld the CIT(A)'s decision, dismissing the appeal. The land was classified as a capital asset due to the lack of evidence of agricultural activity, and the addition of Rs. 47,58,980 as short-term capital gain was confirmed.

---

---

Issues Involved:
1. Addition of short-term capital gain on sale of agricultural land.
2. Classification of land as agricultural land under section 2(14) of the Income Tax Act, 1961.
3. Requirement of actual agricultural activity for land classification.
4. Applicability of Supreme Court and High Court decisions regarding agricultural land.
5. Onus of proof for establishing land as agricultural.

Issue-wise Detailed Analysis:

1. Addition of Short-term Capital Gain on Sale of Agricultural Land:
The assessee challenged the addition of Rs. 47,58,980 as short-term capital gain on the sale of land, claiming it was agricultural land and thus not a capital asset. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] disagreed, treating the land as a capital asset and adding the gain to the total income.

2. Classification of Land as Agricultural Land Under Section 2(14) of the Income Tax Act, 1961:
The primary contention was whether the land sold qualified as agricultural land under section 2(14) of the Act, which would exempt it from capital gains tax. The assessee provided purchase and sale deeds and land revenue records (7/12 extracts) showing the land as fit for cultivation. However, the AO and CIT(A) found no evidence of actual agricultural use, classifying the land as a capital asset.

3. Requirement of Actual Agricultural Activity for Land Classification:
The CIT(A) held that for land to be classified as agricultural, it must not only be capable of agricultural use but must have been used for such purposes at some point. Temporary non-use for agriculture might not affect its classification, but permanent non-use would. The assessee failed to prove any agricultural activity on the land, leading to its classification as a capital asset.

4. Applicability of Supreme Court and High Court Decisions Regarding Agricultural Land:
The CIT(A) and the Tribunal referred to various judicial precedents, including the Supreme Court's decision in Raja Benoy Kumar's case and the Bombay High Court's decisions, which emphasized actual agricultural use as a crucial test. The Tribunal also considered the decision in Abhijit Subash Gaikwad vs. DCIT, which supported the view that mere classification in revenue records without evidence of agricultural activity is insufficient.

5. Onus of Proof for Establishing Land as Agricultural:
The Tribunal reiterated that the burden of proof lies on the assessee to establish the land as agricultural. The assessee failed to provide evidence of agricultural use, either during or prior to their ownership. The Tribunal found no merit in the assessee's claim based solely on revenue records and conveyance deeds.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, dismissing the appeal. The land was classified as a capital asset due to the lack of evidence of agricultural activity, and the addition of Rs. 47,58,980 as short-term capital gain was confirmed. The appeal by the assessee was dismissed, and the order was pronounced in the open court on 03.10.2022.

---