https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=459547 https://www.taxtmi.com/caselaws?id=459547 Nature/Character of the land sold - whether agricultural land or not? - qualification as a capital asset in terms of section 2(14)(iii) - whether capital gain earned thereon is taxable or not in terms of the provisions of law in this regard? - HELD THAT:- We hold that the Revenue authorities have wrongly held the land to be non-agricultural in nature and have totally mis-appreciated the relevant provisions of the Land Laws, i.e. Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997, in this regard. Our reasoning for the same follows. AO deems the land to be non agricultural noting the fact that the assessee had sold the land to M/s. Steel Strips Wheels Ltd. who had purchased it for bona fide industrial purposes u/s 63AA of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997. Since the emphasis is on 63AA of GT ALL, we shall elaborate on the said provision so as to understand its implication. What transpires from a conjoint reading of the relevant provisions of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997 and the Bombay Land Revenue Code, 1879, is that in case of agricultural lands designated by authorities for bona fide industrial purposes the requirement of seeking prior permission for land use change is done away as per the Bombay Land Revenue Code, 1879. Such agricultural lands can be transferred to non agriculturist as per section 63AA of the GT ALL Act, which Act otherwise prohibits such transfers. Thus Lands purchased u/s 63AA of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997, is nothing but agricultural land. Applying this to the facts of the present case where in the land has been sold u/s. 63AA of the GT ALL, undoubtedly the said land is agriculture land. This fact is further evidenced by various covenants of the conveyance deed stating the character of the land sold in clear terms to be agricultural. As per the facts of the present case the purchaser of land, i.e the company, after purchase of the agricultural land from the assessee u/s 63AA of the GT ALL Act, notified the purchase of agricultural land for bonafide industrial use and was issued a certificate in this regard by the collector after verifying its user for bonafide industrial purposes. Thus, it was subsequent to purchase of land, that its use was changed to non-agriculture purpose. Therefore that the AO/DRP has erred in interpreting section 63AA of the Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997 to mean that the land sold by the assessee had been converted into non-agriculture prior to the date of sale. At the cost of repetition, we may state that what it only implies is that the land was designated for use for non-agriculture purpose. It was only designated so, and its user for non-agriculture purpose was completed only when the non-agriculture usage was commenced and notified to the Collector, which in the present case was done by the company, which purchased the land subsequent to its purchase. The conveyance deed, all along mentions the land sold by the assessee as agricultural land. Its conversion from agricultural to non-agricultural land is certified by the Collector post-sale of the land. Land sold by the assessee, having been held to be agricultural land, and since there is no dispute vis- -vis its distance from the municipal limits, the impugned land, we hold, did not qualify as capital asset in terms of section 2(14)(iii) of the Act. The claim of the assessee to the entire capital gain earned on these piece of land amounting to Rs. 3,56,70,539/-, as not being liable to tax is, we hold, in accordance with law. The order passed by the AO, therefore, treating the land sold by the assessee, as non-agricultural and subjecting to capital gain thereonas liable to tax, is set aside. Ground of assessee is allowed. Case-Laws Income Tax Wed, 13 Sep 2023 00:00:00 +0530