2025 (10) TMI 201 - AT - Income Tax

Assessee wins: land sold 04.09.2014 found rural, not a capital asset under s.2(14)(iii)(b); LTCG annulled

ITAT (Del) allowed the assessee's appeal, holding the Revenue failed to prove the land sold on 04.09.2014 fell within 8 km of Faridabad municipal limits ... LTCG - capital asset within the meaning of Section 2(14)(iii)(b) - gain on sale of land - Nature of land sold -distance between the assessee’s land and the Faridabad Municipal limits - agricultural land v/s capital asset - HELD THAT:- Although a little bit mutually contradicting going by the said reports, it is clear that the Revenue has not been able to substantiate it’s case that the assessee’s land sold/transferred herein on 04.09.2014, infact is a “capital asset” since falling within 8 kms from the Faridabad municipal corporation’s limits. We thus, see no reason to sustain the learned lower authority’s action assessing the impugned consequential long term capital gains once the assessee’s land(s) sold in the relevant previous year are found to be rural agricultural land. Assessee’s appeal is allowed. Appeal against assessment under section 143(3) for AY 2015-16 contested characterization of land as a 'capital asset' under Section 2(14)(iii)(b). Lower authorities relied on a sub-registrar report stating the distance from the land to Faridabad municipal limits was 'between' 7-8 Kms, thereby classifying the land as non-agricultural for capital gains purposes. The assessee produced a Municipal Corporation reply to an RTI stating the distance was 'around' 9 kms. The Tribunal found these competing authorities unconvincing for Revenue and held Revenue failed to substantiate that the land sold on 04.09.2014 fell within 8 kms of municipal limits. Consequently the land was treated as rural agricultural land and not a capital asset under the cited provision, and the consequential long-term capital gains assessment was not sustained. Appeal allowed.