2019 (10) TMI 12

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....013-14 on 26.09.2013 declaring a loss of Rs. 13,36,965/-. During the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee has sold agricultural land admeasuring 43 acres and 29 guntas for a total consideration of Rs. 54,65,625/- which was purchased during the financial year 2008-09 for Rs. 13,29,610/-. He observed that the assessee has earned a profit of Rs. 41,36,015/- on such sale and has shown as income in the P&L A/c. But while computing the total income, the assessee has claimed deduction of Rs. 41,36,015/- i.e. profit on sale of agricultural lands from the total income on the ground that it is on sale of agricultural land. He observed that in the Balance sheet, the agricultural land shown as fixed asset. On ....

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...., therefore, held that it is a capital asset liable for capital gains on transfer. He, therefore, computed the long term capital gain after allowing the cost of acquisition and the stamp duty and directed the AO to compute the capital gains accordingly. Against the order of the CIT (A), the assessee is in appeal before us by raising the following grounds of appeal: "1. The order of the learned CIT (A) is erroneous both on facts and in law to the extent it is prejudicial to the interests of the assessee. 2. The learned CIT (A) erred in holding that though the lands sold are capital asset they are not agricultural land and hence gains are taxable. 3. The learned CIT (A) failed to appreciate that there is no such con....

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.... CIT (A) be set aside and the addition made by the AO be deleted. 5. The learned DR, on the other hand, supported the orders of the authorities below and also placed reliance upon the decision of the Hon'ble Kerala High Court in the case of Sreedhar Ashok Kumar vs. CIT reported in (2018) 89 taxmann.com 145 (Ker.) and the decision of the Coordinate Bench in the case of D.S. Karunakar Reddy vs. Dy. CIT in ITA Nos.752 to 757/Hyd/2011 dated 30.11.2011. 6. Having regard to the rival contentions and the material on record, we find that the only dispute is whether the land purchased by the assessee as agricultural land and also sold as agricultural land, is a capital asset u/s 2(14) of the Act, or and whether the income from such sale is....

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.... D.S. Karunakar Reddy (Supra), the assessee therein had purchased the agricultural land and had converted the same into plots and sold to various purposes. It is for this reason that the Tribunal had held that the intention of the assessee therein was to do business in the real estate. In the case of Sreedhar Ashok Kumar (Supra) also, it was held that mere classification of agricultural land by the Revenue authorities is not sufficient to hold that the land as agricultural land. However, the facts of the relevant case are not available in the order. Therefore, we are not in a position to understand the facts and circumstances under which the above observations have been made by the Tribunal. Hence, deem it fit and proper to grant the benefi....