ACIT, CENTRAL CIRCLE - 2(1), AHMEDABAD, AHMEDABAD vs. DEEPAK JYOTIPRASAD CHIRIPAL, AHMEDABAD
THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD “B” BENCH
Before Dr. BRR Kumar, Vice President
And Ms. Suchitra Kamble, Judicial Member
The ACIT,
Central Circle-2(1),
New Cloth Market O/s
Raipur Gate
Ahmedabad-380002
PAN: AARPA2982Q
(Respondent)
Assessee by: Shri Dhrunal Bhatt, A.R.
Revenue by: Shri Abhijit, Sr. D.R.
Date of hearing
: 09-07-2025
Date of pronouncement
: 03-09-2025
आदेश/ORDER
Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 30-01-
2025 passed by CIT(A)-12, Ahmedabad for assessment year
2014-15. 2. The grounds of appeal are as under:-
“(i) "In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.
2,13,85,066/- on account of disallowed exemption claimed u/s.
2(14) (iii) of the Income Tax Act, 1961, without considering the fact of the case that the land sold by the assessee was treated as non-agricultural land as per provisions of Section 63(AA) of the Land Revenue Code."
Assessment Year 2014-15
I.T.A No. 566/Ahd/2025
Deepak Jyotiprasad Chiripal, A.Y. 2014-15
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(ii) "In the facts and on the circumstances of the case and in law, the Ld CIT(A) has erred in ignoring the fact that it has clearly been mentioned in the sale deed that the underlying land is to be used for industrial purposes and the same is being transferred as per provisions of Section 63(AA) of the Land Revenue Code."
(iii) "In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that, as per section 63(AA) of the Land Revenue Code, a non-agriculturalist cannot purchase an agricultural land in Gujarat and if the land is purchased by a non-agriculturist for Bonafide industrial purpose then such land would be treated as non-agricultural land."
(iv) "In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has not appreciated that, the underlying land is to be treated as a non-agricultural land transaction due to the provision under section 63(AA) of the Land Revenue Code, hence, the exemption under section 2(14)(iii) of the Income Tax Act, 1961
was not allowed to the assessee and the sale of underlying land should be treated as a capital asset transaction subject to the capital gains tax."
(v) "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal."
The assessee filed return of income on 30-09-2014 declaring total income at Rs. 45,36,970/-. The said return was processed u/s. 143(1) of the Income Tax Act. The assessment u/s. 143(3) was completed on 03-11-2016 and return of income was accepted as assessed income. On verification of the assessee’s case, it was found by Revenue that the assessee had sold 4 units of agricultural land situated at village Dhuli to Dholi Integrated Spinning Park Ltd. The Assessing Officer further observed that para 5 of the sale deed clearly stated that the land to be used for industrial purposes and land is transferred as per provisions of section 63(AA) of Land Revenue Code. The Assessing Officer further observed that the assessee claimed exemption of Rs. 2,13,85,066/- u/s. 2(14)(iii) on account of I.T.A No. 566/Ahd/2025
Deepak Jyotiprasad Chiripal, A.Y. 2014-15
3
profit of sale of agricultural land. Since the land sold by the assessee is treated as non-agricultural land, the A.O. issued notice u/s. 148 dated 30-03-2021. In response, the assessee filed return of income on 04-02-2012. The assessee also filed reply dated 10-03-2022. Final show cause notice issued on 22-03-2022 along with draft assessment order but the assessee did not file any reply and therefore the A.O. disallowed the exemption u/s. 2(14)(iii) of the Act thereby making addition of Rs. 2,13,85,066/-.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The ld. D.R. submitted that the CIT(A) was not right in deleting the addition of Rs. 2,13,85,066/- on account of disallowed exemption claimed u/s. 2(14)(iii) of the Act without considering the fact that the land sold by the assessee was treated as non-agricultural land as per provisions of section 63(AA) of the Land Revenue Code. The ld. D.R. further submitted that the said land was to be used for industrial purposes and the same was transferred as per the provisions of Section 63(AA) of the Land Revenue Code. As per the said section, a non-agriculturist cannot purchase an agricultural land in Gujarat and if the land is purchased for bonafide industrial purpose, then such land would be treated as non-agricultural land. The ld. D.R. relied upon the assessment order.
I.T.A No. 566/Ahd/2025
Deepak Jyotiprasad Chiripal, A.Y. 2014-15
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The ld. A.R. submitted that the CIT(A) has followed the decision of the Tribunal in assessee’s own case being ITA No.124/Ahd/2004, A.Y. 2016-17 and also the order of the CIT(A) in case of Vedprakash Devkinandan Chiripal wherein the CIT(A) has allowed the appeal of the assessee therein. Vedprakash Devkinandan Chiripal’s case is also decided by the Tribunal in ITA No. 617/Ahd/2024 wherein the appeal of the Revenue was dismissed vide order dated 29-05-2005. 7. We have heard both the parties and perused all the material available on record. It is pertinent to note that in assessee’s own case for A.Y. 2016-17, the Tribunal has categorically held that the land in question is not in municipal area and is used for agricultural purposes only and the assessee had sold the land as agricultural land. Thereafter, the land has been converted into non- agricultural purposes by the buyer of the land. In such circumstances, the assessee cannot be held to pay long term capital gain as held in the case of PCIT vs. Hinaben Bhadresh Mehta (2018) 96 taxman.com 164 (Guj). The decision in the case of Vedprakash Devkinandan Chiripal also categorically gave the finding hereinbelow: “We find that transfer u/s 63(AA) is conditional and has to be converted into non-agricultural land within 90 days and if not converted, the sale deed automatically gets cancelled.
Ld. CIT(A) held that at the point of sale by the assessee of the land, the land remained agricultural in nature and it was the purchaser who has to apply for conversion of the land into non- agricultural land before the State Government.
I.T.A No. 566/Ahd/2025
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It also stipulates that failure to convert the land to non-agriculture would lead to cancellation of the sale deed.
Thus, it can be found that the assessee has purchased agricultural land and sold agricultural land which has been subsequently converted into non-agricultural land by the purchaser which does not ipso facto make the agricultural land sold by the assessee as the non-agricultural land.
Hence, we decline to interfere with the well-reasoned order of the Ld. CIT(A).
In the result, the appeal of the Revenue is dismissed.”
Thus, in light of consistency and the facts of the assessee’s case is identical to that of Vedprakash Devkinandan
Chiripal’s case, the appeal filed by the Revenue is dismissed
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 03-09-2025 (Dr. BRR Kumar) (Suchitra Kamble)
Vice President Judicial Member
Ahmedabad : Dated 03/09/2025
आदेश क त
ल प अे षत / Copy of Order Forwarded to:-
1. Assessee
Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार
आयकर अपीलय अधकरण,
अहमदाबाद