TaxTMI 
TaxTMI 
2020 (2) TMI 1141
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....e fact was also accepted by the A.O. However, the A.O. opined that the gain on sales of the land is taxable under the provisions of Section 115JB of the Act and he charged the tax on this income U/s 115JB of the Act. 4. By the impugned order, the ld. CIT(A) excluded the profit on sale of agricultural land after observing as under: "5. I have perused the written submissions submitted by the learned A/R and the order of AO. I have also gone through various judgments cited by the Ld. A/R and those contained in the order of AO. It is seen that the agriculture land so sold by the assessee was not the capital assets by virtue of the provisions of section 2(14) of the Act and this fact is also not disputed by Id. AO also. Thus there remains no dispute that the Profit arising on sale of agricultural land, which does not fall in the category of "Capital Asset" as defined under sec. 2(14) of the Act does not come under the purview of the Income tax Act at all. In this regard it is relevant to mention here that as per explanation (1) of the section 115JB certain amounts are required to be reduced from book profit and as per point No. (ii) of list of amou....
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.... claim. But because of this provision a company will have to pay tax on at least 30 per cent of its book profits. Therefore, what is taxed is not fictional or hypothetical income. Under the law though it is permissible to bring to tax hypothetical income, what is really done under section 115J is not exactly bringing to tax hypothetical income. What is really done is to limit or restrict or curtail deduction, carry-forward and setoff of losses, unabsorbed depreciation, unabsorbed allowance, etc. Ordinarily these deductions are permissible in view of the provisions introduced in the statute by the Parliament and the Parliament is equally competent to take away or restrict or limit such allowances for a definite purpose." 5.3 Thus, the legislature never intended to bring tax in such events which otherwise are not taxable at all under the provisions of the Act and such a provision cannot be so interpreted so as to tax any capital receipt. It is also relevant to refer the decision of a special bench in the case of Sutlej Cotton Mills vs. ACIT (Spl. Bench), (1993) 45 ITD 22, wherein it was held that particular receipt which is admittedly not an income cannot be brought....
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....rivate limited company incorporated on 19-01-2004. The assessee filed its regular return u/s 139(1) on 17-10-2016 declaring loss of Rs. 20,14,959/-. The assessment of the assessee in pursuance to proceedings initiated as a result of search action was completed by the AO vide his order dated 30.12.2017 and the assessment was made at returned loss. During the year under consideration the assessee sold agricultural land at village Gidani and earned gain of Rs. 3,01,19,198/-. Since the land was not capital assets by virtue of provisions of section 2(14)(iii) of the Act, thus the same was not taxable. The same fact was also accepted by the AO. However, the AO opined that the gain on sales of the land is taxable under the provisions of section 115JB of the Act and he charged the tax on this income u/s 115JB of the Act. 7. By the impugned order, the ld. CIT(A)held that profit from sale of agriculture land which is not a "Capital Asset" cannot be included for the purpose of computing book profit u/s 115JB of the Act. The agriculture land so sold by the assessee does not fall into category in item (a) or item (b) of sub clause (iii) of section 2(14) as this land was situated more than 17....
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....d for the purpose of section 2(1A). e) The income arising on the transfer of agricultural land is not taxable, being in the nature of agricultural income. The provisions of Chapter XII-B of the Act do not, operate to extend the scope of 'total income' scope of which has been defined under section 5 on which the charge to tax u/s. 4 is attracted, but is only toward providing an alternative basis for computing the same. The receipt is being admittedly as capital receipt. f) The AO has accepted the fact that the land in question sold be the assessee was agricultural land beyond the distance of 8 KM from the Municipal limits and, therefore, the gain arising from the sale of said land was accepted as not taxable under capital gains tax in view of the provisions of section 2(14)(iii) of the Act. Thus, the gain from sale of rural agricultural land would be in the nature of agricultural income as per section 2(1A) and Explanation-1 to said section. 9. Our view is fortified by the following judicial pronouncements: (i) ACIT V/s Nilgiri Tea Estate Ltd. IT APPEAL NO. 37 (COCH.) of 2014 AY 2008-09. (ii) ITAT Kolkata in the case o....