TaxTMI 
TaxTMI 
2023 (3) TMI 1238
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....factor while deciding eligibility of exemption u/s 2(14) (iii) of the Act. 2. The Ld CIT(A) has erred in law and on facts in deleting the disallowance of the interest expense of Rs 47,72,054/- without appreciating the fact that the nexus between the interest expense and the property were not proved by the assessee. 2.1 The CIT(A) failed to consider the fact that the property has been purchased way back in 2008 and sold on 10.1.2011, whereas portion of interest payments have been made subsequent to the date of sale i.e. March 2011. 3. The appellant craves leave to amend alter any ground or add a new ground, which may be necessary." Ground number 1: eligibility of exemption under section 2(14)(iii) of the Act: 3. The brief facts of the case are that the assessee has purchased agriculture land at Soyala Gam on 16/07/2008 and sold it on 10/01/2011 and claimed the profit of Rs.1,67,024/- as exempt on the ground that the land was agriculture land u/s 2(14)(iii) of the Act and therefore the capital gains on sale of such land was exempt under the Income Tax Act. However, the AO did not allow the claim on the ground that appellant has not carried out any agr....
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....extract, copy of certificate from Soyala Gram Panchayat stating that the population is below 10000 and distance from Ahmadabad Municipal Corporation is more than 8 km were submitted before the AO for his consideration. Thus, the addition made in respect of Capital Gains earned on rural agriculture land of Rs. 1,67,024/- is exempt u/s. 2(14)(iii) of the Act and the same deserves to be deleted. 4.2 The Ld. CIT(A) concurred with the submissions of the assessee and allowed this Ground of Appeal of the assessee with the following observations: Decision: 3.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The appellant has purchased agriculture land at Soyala Gam on 16/07/2008 and sold it on 10/01/2011 and claimed the profit of Rs.1,67,024/- as exempt because the land was agriculture land. However, the AO has not allowed the claim merely on the ground that appellant has not carried out any agriculture activity and not shown any agriculture income. The appellant has contended that land is situated in Soyala Gram Panchyat which is beyond the 8 Kms. limit of Ahmedabad Municipal Corporation and having population of le....
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.... as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;] 5.1 In our view, Ld. CIT(A) has correctly observed that the assessee is neither covered in clause a) or clause b) of the section 2(14)(iii) and thus, it qualifies as a rural agriculture land. Further, the assessee has also submitted relevant details in support of its contention that the said land is a rural agriculture land in the form of sale deed, purchase deed, 7/12 extract, copy of certificate from Soyala Gram Panchayat stating that the population is below 10000 and distance from Ahmadabad Municipal Corporation is more than 8 kms. 5.2 In the case of CIT v. Smt. Debbie Alemao196 Taxman 230 (Bombay), the assessees had purchased a piece of land for a sum of Rs. 8 lakhs as an agricultural land. Later on, they sold said land to 'V' Ltd. for a sum of Rs. 73 lakhs. The assessees filed separate returns of income wherein capital gain arising out of sale of agricultural land was claimed by each of them to be exempt. The Assessing Officer rejected assessees' claim and b....
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....1. The said land had been purchased by the assessee on 25-06-2008 for a consideration of Rs. 3.92 crores. The sale transactions thus resulted in the profit of Rs. 74,24, 659/-. However, the assessee claimed interest expenses to the tune of Rs. 47, 72,054/- against the said profit and declared a net income of Rs. 26,52,635/-. During the course of assessment, the AO observed that the assessee has claimed to have paid interest amounting to Rs. 47,72,054/- which was including an amount of Rs. 24,85,581/-which was paid to Ganesh Plantation. On verification from the interest ledger account which the assessee submitted during assessment, the AO observed that the aforesaid interest expenses paid towards land of Rs. 24,85,581/- paid to Ganesh Plantation was for the period 01-03-2011 to 31-03-2011. Therefore, the AO observed that while these interest expenses were for the period March 2011 but the land in question was already sold on 10-01-2011. Therefore, these interest expenses are not related to the above land transaction. Accordingly, the AO held that the assessee has not been able to establish that the said loan had been taken by it for purchase of land only and not for any other busine....
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.... of land relating to M/s. Ganesh Plantation Ltd. has been claimed and included in interest of Rs.47,72,054/-. It is evident from the ledger account, that appellant has purchased land out of borrowed fund and the interest paid has also been duly recorded in the books of account. Assessing Officer's observation that interest expenses of Rs.24,85,581/- is included in interest claim of Rs.47,72,054/- related to period 01/03/2011 to 31/03/2011 is not correct, in view of the above, and the fact that interest paid is relating to cost of land, AO's observation is not justified to disallow the claim of interest expenditure. The ground of appeal is accordingly allowed." 8.1 On going through the facts of the case and the observations made by Ld. CIT(A) in the appellate order, we observe that Ld. CIT(A) on appreciation of the facts of the case has observed that the assessee has been able to establish the nexus between interest paid on borrowed fund and the sale of land and accordingly the assessee in the instant set of facts was justified in claiming interest expenditure of Rs. 47,72,054/-as interest paid on the purchase of said land against sale of land at Soyala Gam. Further, Ld. CIT(....