TaxTMI 
TaxTMI 
2024 (8) TMI 1728
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....tal gain/loss on sale of Lands. During the year the assessee declared agricultural income of Rs. 3,80,352/- after deducting agricultural expenses of Rs. 1,26,782/-. The assessee is the owner of 34 bighas of agricultural land at Janshali doing seasonal agricultural goods. The assessee was consistently showing agricultural income from the above agricultural lands from Asst. Year 2011-12 ranging from Rs. 4,96,779/- to 8,13,361/. During the financial year 2016-17, the assessee sold agricultural lands on 09.08.2016 for a consideration of Rs. 10,53,81,144/- to M/s. Industrial Cluster Private Ltd. who has obtained permission from Industries Commissioner, Government of Gujarat for purchasing agricultural land parcels for bonafide Industrial use, which is approved under Gujarat Industrial Policy, 2015 to set up an Industrial Park project vide Industries Commissioner letter dated 13.10.2015. 2.1. It is seen from the registered Sale Deed dated 09.08.2016 by the assessee for land measuring 21954 Sq. Mtrs. in Survey No. 162, Janshali Village, the following Clauses in the Sale Deed which explain the details as follows: (B) The Vendor has acquired the ownershi....
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....resolution. 2.3. However without considering the above documents and submissions, the Assessing Officer called for information from Director, Bhaskaracharya Institute for Space Applications and GeoInformatics, Gandhinagar calling for satellite image of the land owned by the assessee, whether cultivation was being done by the assessee. Based on the above report the A.O. held since the agricultural land was sold to non-agriculturist, as per the provisions of Section 63AA of Land Revenue Code, treated the sale transaction is to be non-agricultural land. Thus Ld. A.O. denied the claim of exemption u/s. 2(14)(iii) of the Act and determined the Long Term Capital Gain of Rs. 9,78,66,687/- and demanded tax thereon. 3. Aggrieved against the assessment order, the assessee filed an appeal before Ld. CIT(A). During the appellate proceedings, the assessee submitted if a non-agriculturist purchases agriculture land for bonafide industrial purposes, as per provisions of Section 63AA of Land Revenue Code, the said land is to be treated as agricultural land only. Since the permission issued by Industries Commissioner also mentioned the land to be agricultural and the Sale Deed registered....
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....Clause (b) to (g) of the Sale Deed (copy already extracted in Para 2.1 above) registered as Document No. 1305 of 2016. More particularly, Clause (f) of the Sale Deed which clearly specifies the above land was purchased from the assessee u/s. 55 of the Saurashtra Gharkhed Tenancy Settlement and Agricultural Land Act r.w.s. 65B of the Gujarat Land Revenue Code for bonafide industrial purpose. Ld. Counsel referred to various case laws and more particularly, the Co-ordinate Bench of this Tribunal decision in the case of Hiten Tulshibhai Engineer -Vs-ITO reported in (2023) 157 Taxmann.com 81(Ahmedabad-Trib.) and thus submitted the sale of land is not a capital asset within the definition of Section 2(14)(iii) of the Act and not liable for capital gains and the additions made by Ld. A.O. is liable to be deleted. 7. We have given our thoughtful consideration and perused the materials available on record including the Paper Book and case laws filed by the Assessee. It is clearly seen from record that the Assessing Officer has misconstrued the provisions of Section 63AA of the Land Revenue Code, thereby treated the sale of land as nonagricultural. Even though the assessee's land whi....
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.... in the State, it would lose its character as agricultural land and would be treated as non-agricultural land. 3.3 At this stage, definition of capital asset as provided under section 2(14) of the Act is required to be referred to. As per section 2(14) of the Act "capital asset" means property of any kind held by an assessee whether or not connected with his business or profession, but does not include... (3) agricultural land in India which is situated in an area within such distance not being more than 8 Kms from local limits of any Municipality or Cantonment Board. Considering the aforesaid facts and circumstances of the case, it cannot be said that the ITAT has committed any error in holding the land in question not as capital asset and not liable to be taxed. While holding that the land in question is not a "capital asset" within the meaning of section 2(14) of the Act and deleting addition of Rs. 18,70,749/- on account of long term capital gain, and addition of Rs. 4,56,83,750/- on account of short term gain, the Tribunal in para 15 has observed and held as under:- "15. We have heard the parties with reference to material on record. The im....
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....the case of PCIT-Vs-Heenaben Bhadresh Mehta reported in (2018) 96 taxmann.com 164 wherein it was held that when the purchaser use the land other than agricultural activities or industrial purpose that cannot be the determinative factor to treat the profit earned by the assessee on sale of agriculture land as "business income" by observing as follows: "....8. Therefore, on plain reading of Section 2(14) of the Act, if the "agriculture land" as mentioned in Section 2(14)(iii) is sold, the assessee shall be entitled to claim exemption on profit earned on sale of agricultural land as per Section 2(14) read with Section 45 of the Act, unless it is established and proved that the transaction carried out was "adventure in the nature of trade" and the profit thus required to be taxed as business income. On appreciation of evidence, the learned Tribunal has specifically observed and held that the transaction carried out by the assessee was not "adventure in the nature of trade" and therefore, profit earned was not required to be taxed as business income. The aforesaid is the finding recorded by the learned Tribunal on appreciation of evidence. 9. As observed hereinabove, t....
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....ess and he along his mother and brother purchased the land with a view to earn profit and therefore, it was having a characteristics of "adventure". Therefore, on facts, the said decision shall not be applicable to the facts of the case on hand. 4 14. In view of the above and for the reasons stated hereinabove, we are of the opinion that in the facts and circumstances of the case, the learned Tribunal has not committed any error in directing the Assessing Officer to treat the profit of Rs. 68,18,800/- earned by the assessee on the sale of agriculture land as exempt under Section 2(14) of the Income Tax Act. No substantial question of law arises. Hence, the present appeal deserves to be dismissed and it is accordingly dismissed." 7.3. Further Co-ordinate Bench of this Tribunal in the case of Hiten Tulshibhai Engineer-Vs-ITO reported in (2023) 157 taxmann.com 81 considered the provisions of Section 63AA of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997 and held that the sale of land to non-agriculturist is not liable to Capital Gain by observing as follows: "....16. What transpires from a conjoint reading of the relevant provisions of Guja....