SHIVA CORPORATION (INDIA) LIMITED,JAIPUR vs. DY. CIT, CC-3, JAIPUR

ITA 1219/JPR/2024Status: DisposedITAT Jaipur21 August 2025AY 2015-1629 pages
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What did the Tribunal hold?

The Tribunal held that the agricultural lands sold by the assessee were not capital assets as defined under Section 2(14) of the Income Tax Act, 1961. The Tribunal analyzed the provisions of Section 2(14)(iii) concerning the definition of capital assets, specifically sub-clause (b) which deals with lands situated within specified distances from municipalities and their populations. The Tribunal found that while the population of Samalakha exceeded 10,000, the lands were not situated within 2 Kms. of the local limit of the Municipality of Samalakha, as required by limb (I) of sub-clause (b). Furthermore, considering Panipat, the population was less than 10,00,000, and the lands were situated at distances of 10.96 Kms. and 12.01 Kms., which exceeded the 6 Kms. limit stipulated in limb (II) of sub-clause (b). Therefore, the lands did not fall within the exceptions provided for treating them as capital assets. The Tribunal directed the AO to delete the addition of Rs. 38,56,889/-. Grounds 1 and 1.1 of the assessee's appeal were allowed.

What were the facts?

The assessee, Shiva Corporation (India) Limited, filed its return of income for Assessment Year 2015-16. The Assessing Officer (AO) treated two agricultural lands sold by the assessee in Villages Jorashi Khalasa and Garhi Jaju, Tehsil Samalakha, District Panipat, as capital assets under Section 2(14) of the Income Tax Act, 1961, and made an addition of Rs. 38,56,889/- on account of long-term capital gains. The assessee contended that the lands were rural agricultural lands and not capital assets. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's order. The assessee appealed to the Income Tax Appellate Tribunal (ITAT). The procedural history involves the AO's assessment order, the CIT(A)'s appellate order, and the present appeal before the ITAT.

What were the issues?

1. Whether the agricultural lands sold by the assessee are to be treated as capital assets within the meaning of Section 2(14) of the Income Tax Act, 1961, and thus liable for capital gains tax? (Question of law and fact) - Assessee's contention: The lands were rural agricultural lands, situated beyond the prescribed municipal corporation limits and in villages with a population below 10,000, thus not falling under the definition of capital asset. - Revenue's contention: The lands were within the circumference of 4 Kms. of the Municipal Corporation of Tehsil Samalakha and the population of Samalkha exceeded 10,000, fulfilling the conditions of Section 2(14)(iii)(b)(ii) of the Act, making them capital assets. Reliance was placed on the decision in DCIT Vs. Dinesh Kumar Jain regarding the admissibility of evidence.

Which sections of the Income-tax Act were involved?

Section 2(14),Section 143(3),Section 250(4)

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Income Tax Appellate Tribunal, JAIPUR BENCHES,A JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

For Appellant: Shri Tarun Mittal, C.A
Hearing: 10/07/2025Pronounced: 21/08/2025

PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal the assessee appellant challenges the finding of the learned Commissioner of Income Tax, Appeals-4, Jaipur [ for short CIT(A) ] dated 09.08.2024 for Assessment Year 2015-16. Ld. CIT(A) passed that order because the assessee challenged the order of assessment dated 30.03.2017 passed u/s 143(3) of the Income Tax Act 1961 [for short 'Act'] by Deputy

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