2023 (10) TMI 367 - AT - Income Tax

Successful Appeal Allows Exclusion of Capital Gain from Agricultural Land Sale

Mushtaque Ahmed Versus Income Tax Officer Ward-40 (4), Kolkata

Mushtaque Ahmed Versus Income Tax Officer Ward-40 (4), Kolkata - TMI Issues:The only issue raised in the appeal is the disallowance of deduction under section 10(37) of the Income Tax Act, resulting in the addition of Rs. 90,62,720 as long-term capital gain on the sale of agricultural land.Summary:The appellant contested the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of deduction under section 10(37) of the Act, leading to the inclusion of Rs. 90,62,720 as long-term capital gain from the sale of agricultural land. The appellant's return of income initially disclosed earnings from interest, but the case was reopened under section 147 due to alleged non-disclosure of capital gain from land acquisition for non-agricultural purposes. The appellant received compensation for the land acquisition, claimed as exempt under section 10(37) as it was used for agriculture before acquisition. The Assessing Officer deemed the land as non-agricultural, resulting in the addition to the appellant's income. The Commissioner of Income Tax (Appeals) upheld this decision without providing a rationale.Upon review, it was found that the appellant received compensation with TDS deducted, seeking a refund based on the land's agricultural use before acquisition. Evidence presented, including an RTI reply certifying the land as agricultural, supported the appellant's claim. Details indicated agricultural activities on the land, satisfying the conditions of section 10(37). Consequently, the Tribunal overturned the Commissioner's decision, allowing the appellant's appeal and directing the exemption under section 10(37) of the Act.In conclusion, the appellant's appeal was allowed, and the exemption under section 10(37) was granted.